Effort to Give Better Social Security Benefits to Many Feds Gains Momentum in Congress
5:12 PM ET
A longstanding effort to boost Social Security benefits for some former federal employees gained some momentum Tuesday, as powerful lawmakers from both parties embraced a reform proposal at a congressional hearing.
Members of the House Ways and Means Committee's panel on Social Security discussed the merits of a measure that would reduce the retirement penalty for federal civil servants and other public employees who also worked in the private sector. Tuesday's hearing marked the first action on the Equal Treatment of Public Servants Act since the ways and means Chairman Kevin Brady, R-Texas, introduced it in February 2015.
The bill would alter the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) formulas that have reduced Social Security benefits for older federal retirees for more than three decades. Opponents to WEP and GPO have long argued the laws unfairly and arbitrarily punish individuals who have worked in public service.
Brady's bill would impact federal employees and retirees hired before 1984 and therefore covered by the Civil Service Retirement System. Unlike Federal Employees Retirement System civilians, CSRS workers do not pay Social Security taxes, and are therefore ineligible for its annuities. Those who spent part of their careers in the private sector do receive checks from Social Security, but Brady's bill would introduce a more generous formula for determining the size of the payments.
Congress passed WEP in 1983 due to perceived overpayments of Social Security to public employees already receiving pensions from the government. GPO, passed in 1977, reduces the federal benefits pension-earning public employees receive from their spouses. In 2015, affected CSRS retirees lost up to nearly $5,000 in their Social Security annuities. For more details on WEP's practical impact, read here.
While public sector workforce advocates at the federal, state and municipal levels have pushed for decades to eliminate WEP and GPO entirely, Brady's measure would only mitigate its impact. The current formula counts years worked in public service -- years "non-covered" by Social Security -- as years in which the individuals earned no salary. The equal treatment act would instead take into account all income -- both public and private -- when calculating Social Security benefits, and reduce them proportionally based on how long employees were working in the public sector.
The new calculation -- the Public Sector Fairness Formula -- would apply only to employees becoming retirement eligible after 2016. Unlike a proposal put forward by President Obama in his fiscal 2017 budget, current retirees would also receive a rebate while remaining in the old, across-the-board formula.
"It's a one-size-fits-all approach and it's unfair," Brady said of the old formula.
Lawmakers from both parties echoed that assessment, calling WEP and GPO unpredictable for retirees and robbing them of the benefits they earned. Committee members spent the hearing referring almost exclusively to the bill's benefits to state and municipal workers, repeatedly highlighting teachers and firefighters from their home states, rather than federal workers.
Federal employee advocates, however, supported the measure for its impact on that constituency. More than 1.6 million beneficiaries are currently affected by WEP, according to the Congressional Research Service, though the government has not released data with a federal versus non-federal breakdown.
The current system is "punishing retirees for working in both the public sector and private sector," said Jessie Klement, legislative director at the National Active and Retired Federal Employees Association. "This [bill] is a step in the right direction."
While efforts to fully repeal WEP have cropped up in Congress for the last two decades, no legislation has made its way into law due to the associated high costs. CRS estimated full WEP repeal would come with a $40 billion price tag over 10 years, diminishing lawmakers' appetite for reform despite widespread acceptance the law creates inequity. Brady said his measure, however, is fully paid for through a crackdown on public employees receiving overpayments from Social Security. The chairman said his bill would even improve the program's solvency.
Clearing the pay-for hurdle, in addition to the backing of the administration and one of the most powerful chairmen in Congress, could finally allow for a breakthrough two decades in the making.
The momentum following Tuesday's hearing is "setting us up for congressional action this year," Klement said. Her optimism, however, was stymied by a lack of a Senate companion bill and the shortened, election year legislative calendar. She added the legislation could face better chances as part of a larger Social Security reform effort undertaken by the next administration.
For now, while NARFE has joined groups like the American Federation of State, County and Municipal Employees and the National Education Association in calling for complete WEP and GPO repeal, the group is supporting Brady's partial walk back.
"Some relief is better than no relief," Klement said. "You shouldn't sacrifice the good for the perfect."
(Image via Kim Reinick / Shutterstock.com)
5:12 PM ET
Effort to Give Better Social Security Benefits to Many Feds Gains Momentum in Congress
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