Momentum is increasing in Congress to repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
In March, Reps. Garret Graves (R-La.) and Abigail Spanberger (D-Va.) called on the House Ways and Means Committee to hold a markup on their bipartisan bill, H.R. 82, the Social Security Fairness Act, to fully repeal both the WEP and GPO.
On Tuesday, Ways and Means held a hearing on the subject.
“We are here today to talk about fairness in the Social Security system related to the Windfall Elimination Provision and the Government Pension Offset,” Social Security Subcommittee Chairman Drew Ferguson (R-Ga.) said in his opening statement. “The WEP and GPO were intended to make Social Security more fair, but for millions of Americans, they’ve fallen far short.”
The WEP and GPO are two provisions dating back to 1983 that reduce regular Social Security benefits for workers and their eligible family members if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security, according to the Congressional Research Service (CRS).
“The WEPs purpose was to remove an unintended advantage or ‘windfall’ that the regular Social Security benefit formula provided to workers who also had pensions from noncovered employment,” CRS notes. “The GPO is intended to replicate the dual entitlement rule for spouses and widow(er)s who receive pensions based on noncovered employment. The Social Security spousal benefit is reduced by an amount equal to two-thirds of the noncovered government pension (i.e., a 67% offset).”
Ferguson said Tuesday that the policies were put in place to prevent unfairness by addressing a flaw in Social Security’s formulas that results in unintentionally generous benefits for some people with earnings that were exempt from Social Security’s payroll tax.
“But the WEP and GPO share the same flaw that they were meant to address in Social Security’s benefit formulas,” he argued. "[T]hey can’t factor in earnings from outside of Social Security because only a few years of noncovered earnings data was available then. As a result, they rely on ad-hoc adjustments that in some cases unfairly reduce benefits and in others still provide those with noncovered earnings with an unintended advantage over those who spent their whole careers in jobs covered by Social Security.”
The hearing’s witness list included Jason Fichtner, Ph.D., Chief Economist with the Bipartisan Policy Center, who focused on three points.
He first explained how the WEP is “overly complex and unfair.” He then explained that reforming the Social Security benefit formula would improve the simplicity and fairness of the WEP, while maintaining its original public policy purpose. Lastly, he discussed other potential reforms that would assist SSA in the administration of the WEP and GPO, absent any legislative changes to the Social Security benefit formula.
“In sum, while the WEP is intended to ensure that Social Security beneficiaries are treated fairly and that benefits are provided only for years in which people paid into the Social Security system, the result is that the replacement rate for some people with high lifetime combined earnings is higher than those with low lifetime earnings,” Fichtner said. “The WEP mistakenly treats some high-income earners as if they were low-income earners.
