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21–290 2017

SOCIAL SECURITY AND PUBLIC SERVANTS 

ENSURING EQUAL TREATMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MARCH 22, 2016

Serial No. 114–SS03 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKEM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

TOM RICE, South Carolina 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

DAVID STEWART, Staff Director 

JANICE MAYS, Minority Chief Counsel and Staff Director 

SUBCOMMITTEE ON SOCIAL SECURITY 

SAM JOHNSON, Texas, Chairman 

ROBERT J. DOLD, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

TOM REED, New York 

XAVIER BECERRA, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

JIM MCDERMOTT, Washington 

iii 

C O N T E N T S 

Page 

Advisory of March 22, 2016 announcing the hearing ........................................... 2 

WITNESSES 

Jeannine English President, AARP ........................................................................ 79 

Jason Fichtner Ph.D. Senior Research Fellow, Mercatus Center, George 

Mason University ................................................................................................. 61 

Stephen C. Goss Chief Actuary, Office of the Chief Actuary, Social Security 

Administration ..................................................................................................... 47 

Tim Lee Executive Director, Texas Retired Teachers Association ...................... 71 

Samara Richardson Acting Associate Commissioner, Office of Income Security 

Programs ............................................................................................................... 30 

(1) 

HEARING ON SOCIAL SECURITY AND PUBLIC 

SERVANTS: ENSURING EQUAL TREATMENT 

TUESDAY, MARCH 22, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON SOCIAL SECURITY, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:06 a.m., in Room 

1100, Longworth House Office Building, the Honorable Kevin 

Brady [chairman of the subcommittee] presiding. Advisory 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON SOCIAL SECURITY 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Tuesday, March 22, 2016 

No. No. SS-03 

Chairman Johnson Announces Hearing on 

Status of the Social Security and Public Servants: 

Ensuring Equal Treatment 

House Ways and Means Social Security Subcommittee Chairman Sam Johnson 

(R-TX) announced today that the Subcommittee will hold a hearing on ‘‘Social Security and Public Servants: Ensuring Equal Treatment.’’ The hearing will focus on Social Security provisions that affect certain public employees, as well as proposals for 

calculating public employees’ benefits in a proportional manner. The hearing will 

take place on Tuesday, March 22, 2016 in B-318 Rayburn House Building, 

beginning at 10:00 AM. 

In view of the limited time to hear witnesses, oral testimony at this hearing will 

be from invited witnesses only. However, any individual or organization may submit 

a written statement for consideration by the Committee and for inclusion in the 

printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written 

comments for the hearing record must follow the appropriate link on the hearing 

page of the Committee website and complete the informational forms. From the 

Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the 

hearing for which you would like to make a submission, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed 

the online instructions, submit all requested information. ATTACH your submission 

as a Word document, in compliance with the formatting requirements listed below, 

by the close of business on Tuesday, April 5, 2016. For questions, or if you encounter technical problems, please call (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

1. All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. The name, company, address, telephone, and fax numbers of each 

witness must be included in the body of the email. Please exclude any personal identifiable information in the attached submission. 

3. Failure to follow the formatting requirements may result in the exclusion of a submission. 

All submissions for the record are final. 

3 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at http:// 

www.waysandmeans.house.gov/. 

f 

The subcommittee met, pursuant to notice, at 10:00 a.m., in 

Room 1100, Longworth House Office Building, the Honorable Sam 

Johnson, [chairman of the subcommittee] presiding. 

Chairman JOHNSON. Good morning, and welcome to today’s 

hearing on ensuring equal treatment for all workers who receive 

Social Security benefits. 

I would like to welcome to the subcommittee Mr. Smith of Nebraska, Mr. Buchanan of Florida, both join us again after working 

on the subcommittee previously, as well as Mr. Rice from South 

Carolina. We are glad to have you all onboard. 

Without objection, I would like to at this time recognize the 

chairman of the Ways and Means Committee, Chairman Brady, to 

make a few remarks. 

Chairman BRADY. Thank you, Mr. Chairman. 

I am so grateful to have the opportunity to talk today about how 

we are working to help America’s teachers, police and firefighters 

and other public servants. 

As you know, Social Security benefits are based on the workers’ 

earnings. The benefit formula is designed so that the lower lifetime 

earners receive a higher replacement rate than higher lifetime 

earners. 

However, for some workers Social Security’s formula does not 

work well. Some teachers, firefighters, police officers and others 

work in jobs where they do not pay Social Security taxes. They pay 

into a Social Security substitute, and so this causes their average 

lifetime earnings to appear lower to Social Security than they actually are because all of those years they did not pay Social Security 

tax but into a substitute count as zeros. 

The Windfall Elimination Provision, or WEP, created in the 

1980s addresses this problem, but unfortunately its one size fits all 

approach is just unfair. This is not just a Texas problem. It affects 

people in Massachusetts, California, Ohio, Illinois, Louisiana, 

frankly, all over the country. 

We all hear often from constituents whose benefits are reduced 

substantially by the WEP, asking when Congress is going to address this problem. 

Since 2004, I have worked to repeal the WEP and replace it with 

a formula that treats our firefighters, police officers, teachers and 

other affected workers fairly. One that looks at all earnings and 

bases Social Security benefits on proportions of earnings that were 

subject to Social Security taxes, in other words, providing equal 

treatment. 

Most recently I have partnered with Representative Neal to introduce H.R. 711, ‘‘The Equal Treatment of Public Servants Act of 

4 

2015.’’ We worked with many organizations representing teachers, 

firefighters, police officers and other retirees who have had their 

benefits unfairly reduced by the WEP. 

Many of them are in the audience today, and specifically I would 

like to thank the Association of Texas Professional Educators, 

Texas Retired Teachers Association, Mass Retirees, and the Ohio 

Public Employees Retirement System for all of their work on this 

issue. Representative Neal and I have received overwhelming support from the non-covered worker community, including groups 

such as the Fraternal Order of Police, the California Public Employees Retirement System, National Active and Retired Federal 

Employees Association, and many others. 

And I ask unanimous consent to place these letters into the 

record. 

Chairman JOHNSON. Without objection. 

[The information follows: The Honorable Kevin Brady Submission] 

5 


21290.000.eps

a 

Real Possibilities 

March 10, 2016 

The Honorable Kevin Brady 

Chairman. 

Committee on Ways and Means 

u S. Hol)se of Representatives 

f102Longworth House Office Buirdihg 

Washinglo_n DC 20515 

601 E Street, NW· t ~s.hington, DG 2oo49 

lOZ-434-2277 ! 1-888!0UR""'-RP I 1-!!aa~J:2<l7 l t rY1l·B77-<!34--7S9a 

\\·\1•''\'J-aarp.crg ! twittei: @aarp~ J faCtibOC?~: cOr. (aa p L,yo,Jtube,comfaarR 

The Honorable Richard Neal 

Ranking Member 

Subcommittee on Select Revenues 

Committee on_Waysano Means 

U.S. Ho(ISe of Representatives 

1106 Longworth House Office Blufding 

Washington. DC 20515 

Dear Chairman Brady and Ranking Subcommittee· Member Neal: 

AARP is pleased to support the Equal Treatment for Public Servants .Act AARP, with 

its nearly 38 million members in all 50 States and the District of Columbia, Puerto Rico. 

ahd' U.s. Virgin Islands, is. a nonpartisan, nonprofit, nationwide orgapization that heips 

people turn t.he!t goals <!nd dreams into real possibilities, strengthens communities and 

ftgh!s for the issues that matter most to families suc:h as heal!hcare, employment and 

incoh1e security, retirement planning, affordable utilities and protection from financial 

abuse. 

We commend yeti for developing a fair solution to a problem that-has confounded 

experts for decades. The Equal Treatment for Pubilc-Servants Actwlll provide more 

equitable treatment for the former state: and local government employees who have 

earned both Social S'ecl)rity and state and government pensions, and who ha'lfr 

received a reduced Soda! Security benefit because of it 

Uhder current law (known as the Windfall Elimination Provision orVVEP): worker$ who 

have both Social Security. and state or local pension coverage are required to offset 

their Social Security benefits for their years of service un,ter a non_-Social Security 

contributory state or local pension. E5efore the WEP was aoopted in 1983, workers Who 

were not required to pay Social Security payroll taxes wllile employed by t;tate or local 

:governments gained from a benefit formula that treated them as having earned a higher 

retirement benefit than their work history supported. Bu!, calculating an appropriate and 

fairWEP redUction in practice has been difficult and ·confusing for both retirees and theSocial Security At;Jministration (SSA). Moreover, some workers Who should be subject 

to aWEP reduction have not been treated as such. SSA estimates that 1.5 million 

Al~{t.llrt~l.Pl:a~k-<~JAftz"'ft:;.·jP . .-k,. ~-J c,jjjr~'~'"'~: l:·t·~Cir~ckq lf: c. -ii' doc'ul i tiW~~:I'e l tvii::t6fl:': ~i :'ioi:>4~ 1 k)• ~-~ f!·-et ;iii -'.l l'!lw:.;i'{ i~.M~·,! !rirl'l'-< lll~ 

j,:,.;Q: ./ f:.J<l;.:.J .! M <aa..:X:.;I_ 'Li i'\..l",Jt' ~ 'j \1~>:- { \;jJyi:m:q ~l .r.~,Jt: pm::. 1 ~fd:ig.!:."t ! Mht.,~ ·: \~r.i~~ j1 l Kli~!r;) m j ~ti)<'\f:.oi"l~ ·. Ntbi'~>O~ :o "N':l,.,; ~:b· 

t,tr~l H•• Ttp h~ ~:-J<>'f i t-ko'l :<i~~ -Jf.-1!. y,;..k' ! NvYth C..aHJrn'l r:i'l ?t'llt ~ta !'O?'·..lt) I Ul(i;m:.f11<1 'i i)r..-;pl> I ;;;.,-,;.~ .j.limlll ! f uc;r.5 RiUl 

Rho;!" lsl~nd i s ..... ,!:rC!t'"6f;.,l { cl h D<ti;';)tc! lt1l(,dl.tt:·rr ... •>~l{i lit l· I Vi:ot 'l;i)!<t:_;'~IHjin l::i:\l;'j::f:O:i V..-gV, h't l ws~hi:r:9_i~n WC t lff!g.ni:a l ~~~·n j'Ny;.Y:';f'}.ll 
6 


21290.001.eps

retirees are receiving reduced Social Security benefits because of the WEP, while 

another 600,000 should receive a reduced Social Security benefit, but do not. 

The Equal Treatment for Public Servants Act establishes a better rule to make it easier 

for individuals and the SSA to determine and receive their earned Social Security 

benefits. Under the bill: 

• For workers who retire after January 1, 2017, at age 62 or older, all of their Social 

Security earnings will be counted without any reduction, which will result in an 

average benefit increase of $200 a month; 

• For workers who already have retired, the SSA will re-calculate benefits, and 

according to SSA benefits may increase an average of about $100 a month; 

and 

• SSA will begin data matching Social Security and state and local pension 

databases to ensure accurate benefit calculations, beginning in 2017. 

In the FY 2017 Budget Request, President Obarna has also proposed a comparable 

process to more fairly calculate Social Security benefits for individuals who are subject 

to the WEP. We are encour·aged by the President's support for an approach that is 

consistent with your proposal, and we hope that an agreement can be reached to adopt 

bi-partisan legislation this year. 

Over the years. millions of retired state and local workers (including many teachers and 

fireftghters) have received a Social Security benefit that is excessively reduced because 

of the pension they have earned. In 1947, AARP's founder, Dr. Ethel Percy Andrus, 

established the National Retired Teachers Association (NRTA), to serve the needs of 

retired educators like her. Today, the NRTA is part of AARP's history and our 

organization. Your legislation is an opportunity to more fairly treat the public servants 

affected by WEP, including the many teachers who belong to the NRTA. 

AARP congratulates you on finding a fair solution to a longstanding problem for workers 

who have both private sector and state and local government service, and we urge its 

speedy enactment. For additional information or questions, please contact Michele 

Varnhagen senior legislative representative at (202) 434-3829. 

Sincerely, 

9'-f'A~ Joyce A. Rogers 

Senior Vice President 

Government Affairs 

2 
7 


21290.002.eps

Association of Texas Professional Educators 

California Public Employees Retirement System 

California Retired Teachers Association 

Colorado School and Pnhlic Employees Retirement Association 

Houston Firelighters' Relief and Retirement Fund 

lnternational!Jnion of Police Associations, APL-CIO 

Illinois Retired Teachers Association 

Louisiana Retired Teachers Association 

Missouri Retired Teachers Association 

National Active and Retired Federal Employees Association 

National Association of Police Organizations 

National Conference of State Social Security Administrators 

Ohio Public Employees Retirement System 

Retired State, County and Municipal Employees Association of Massachusetts 

School Employees Retirement System of Ohio 

School Employee Retirees of Ohio 

Texas Retired Teachers Association 

March 14, 2016 

On behalf of our members, we are writing to respectfully request that you co-sponsor H.R. 711, "The Equal 

Treatment of Public Servants Act of 2015" a bipartisan proposal introduced by Congressmen Kevin Brady (RTX) and Richard Neal (D·MA). 

Our organizations have been working for years to repeal or reform the Windfall Elimin<>tion Provision (WEP) 

of the Social Security Act. WEP reduces the Social Security benefits that retired public employees earned 

through payroll tax contributions du,ing Social Security-covered employment (e.g., private-sector 

employment) based on their non-covered public employment. More than one and a half million retired 

public employees, from every state, <!recurrently impacted by the WEP, with countless active employees 

set to fall victim to reduced Soda! Security benefits upon retirement. 

Over the years, we nave vdvocated for a full repea! of the WEP law, However, given the fiscal challenges 

associated with that effort, we have worked closely with one <mother to find common ground on a 

meaningful WEP reform proposal. Our collaboration, together with the leadership of both Mr. Brady and 

Mr. Neal, has resulted in H.R. 711. 

H.R. 711 would reform the WEP formula, replacing it with a new Social Security benefit formula designed to 

more accurately account for years a public employee paid into Social Sewrity versus the years paid into a 

public pension system in a non-Social Security covered position. As a result of this change, the Social 

Security actuary has projected that current retirees impacted by WEP would see one-third of their benefit 

restored. Those becoming eligib\e for Social Security after January 1, 2017 would have their benefit 

calculated under the new formula, thus receiving a benefit that rnore accurately reflects their actual 

participation in Social Securlty, 

We belie,Je the approach token in H.R. 711 is not only fair, but olso provides a workable solution to a 

problem we huvc struggled to resolve for over thirty years. Most importantly, th!.? Social Security 

AdrnfnistraHon hJs cr.rtifled the app-rouch taken in H.R. 711 is cosHleutrdi over the ten vear window and 
8 


21290.003.eps

actually produces savings over a 75~year horizon. Cost neutrality comes as a result of enhanced benefit 

accuracy procedures now set to take effect in 2017. 

Thank you lor your consideration. 

Sincerely, 

Association of Texas Professional Educators (Josh Sanderson - 800.777.2873) 

California Public Employees Retirement System (Tom Lussier -703.684.5236 or Tony Roda- 202.659.8201) 

California Retired Teachers Association (David Walrath- 916.441.3300) 

Colorado School and Public Employees Retirement Association (Kathy Zinter- 303.326. 1808) 

Houston firefighters' Relief and Retirement Fund (Tony Roda- 202.659.8201} 

International Union of Police Associations, AFL-CIO (Dennis Slocumb- 800.247.4872} 

Illinois Retired Teachers Association (James Bachman- 217.523.8488} 

Louisiana Retired Teachers Association (Rodney Watson- 225.927.8837) 

Missouri Retired Teachers Association/lim Kreider·- 573.634.4300) 

Active and Retired Federal Employees Association (John Hatton -703.838.7760) 

National Association of Police Organizations (Andy Edmiston- 703.549.0774) 

National Conference of State Sociol Security Administrators (Maryann Motta- 303.318.8061) 

Ohio Public Employees Retirement System (Carol No/on Drake- 614.348.5611 or Jim Miller 614.277.9421) 

Retired State, County and Municipal Employees Association of Massachusetts (Tom Lussier- 703.684.5236) 

School Employees Retirement System of Ohio (Laurellohnsan- 614.222,5918) 

School Employee Retirees of Ohio (Valerie Rodgers- 614,431.0387) 

Texas Retired Teachers Association {Tim Lee- 800.880.1650) 
9 


21290.004.eps

U.S. Hous~ 

30! Cannon 

Washington, DC 20515 

Dear Congressman Bmdy, 

Association of iexas Professional Educators 

467,0071 

467~2203 

Securttv 

worker's a:verage career earnings su~ec.t tn Social Sec.u1ty t;xes. 

We patll forward for 

at·d ensures thai: f3irer tre,fl.tmem oftheit under the formula, 

which more accurately reflect their full work history and con:ribetic:ns into Social Security. 

the WEP has created uninteoded to the 

educators; furthermore, bas been a signit1cant disincentive to 

consider .:::ntering into the cduca~ion profession ar1d 

under cun·ent law 

We look t~;nvard to yml anO Members ofthe Texas 

reform on the \Vindfa!l Thank y0t1 

imporrantto Tt:.xas pubHc educ;ti•Jn employees. 

Your Ally. Your Voice. 

to onact much :'eecled 

Stt)port and leadership on 
10 


21290.005.eps

California Public Employees' Retirement System 

Executive Office 

P.O. Box 942701 

sacrall\Clfllo. CA 94229-2701 

CalPERS • (916) 795-:)41 0 tax 

June 2, 2015 

The Honorable Kevin Brady 

House of Representatives 

301 Cannon House Office Building 

Washington, DC 20515 

The Honorable Richard Neal 

House of Representatives 

341 Cannon House Office Building 

Washington, DC 20515 

Dear Representative Brady and Representative Neal: 

I am writing on behalf of the California Public Employees' Retirement System (CaiPERS) 

and the more than 1.6 million public employees, retirees, and their families who depend on 

CaiPERS for their retirement security to express our strong support for H.R. 711, "The 

Equal Treatment of Public Servants Act of 2015. "We are grateful for your bipartisan effort 

to replace the Windfall Elimination Provision (WEP) of the Social Security Act with a new 

formula that more fairly reflects the unique employment history of all workers in the United 

States. 

H.R. 711 proposes to reform the WEP, which reduces Social Security benefits for many 

retired public employees who have earned retirement benefits through employment that is 

not covered by Social Security. By replacing the existing WEP formula, which uses an 

arbitrary reduction percentage, wit11 a new formula that takes into account the actual wage 

history for the public employee, your legislation is a fair and pragmatic compromise to a law 

that has been criticized since its enactment in 1983. 

Among active CaiPERS members, approximately 232,000 members are in positions that 

are not covered by Social Security; over 96 percent of CaiPERS safety members and over 

half of all non-safety contracting agency members do not participate in Social Security. As a 

result, WEP reform has been a priority for CaiPERS for many years. 

We applaud your leadership on this important issue and look forward to working with you 

and Members of the California Congressienal Delegation to enact H.R. 711 during the 

current Congress. If you have any questions, please do not hesitate to contact me at (916) 

795-3818, or your staff may contact Danny Brown, Chief of our Legislative Affairs Division, 

at (916) 795-2565. 

Sincerely, 

ec: Danny Brown, CaJPERS, Cl1ief, Legislative Affairs Division 
11 


21290.006.eps

February 16, 2015 

The Honorable Kevin Brady 

U.S. House of Representatives 

California Retired Teachers Association 

800 Howe Avenue· Suite 370 ·Sacramento· CA 95825 

{916} 923·2200 · (800) 523·2782 · www.calrta.org 

301 Cannon House Office Building 

Washington, D.C., 20515 

Dear Representative Brady: 

On behalf of the California Retired Teachers Association (CalRTA} I am writing in support of your 

sponsored H.R. 711, "The Equal Treatment for Public Servants Act of 2015." This act would repe;;l 

the Windfall Elimination Provision (WEP) and replace it with a more equitable formula addressing 

public employees with both Social Security covered and not-covered earnings. 

CaiRTA represents the more than 240,000 retirees from the California State Teachers' Retirement 

System (CalSTRS]. Many of these retirees have both types of earning based on prior to teaching, 

during teaching summer employment, and post-teaching employment. They are harmed by the 

current one-size-fits-all application of the WEP. Thank you for introducing H.R. 711 to provide more 

equity for these individuals. 

While CalRTA supports H.R. 711, we do have some concerns regarding implementation issues that 

are unclear in the bill. !lor example, CalRTA supports the equal application ofthe offset formula as a 

means of funding the new formula, but we are concerned about how that could affect older retirees 

who might not be currently identified. CalRTA hopes there will be some form of a statute of 

limitations on the amount to be recovered from individuals who have been retired for many years. 

CaiRTA also hopes that any recovery amount will be recovered as a percent of the newly calculated 

benefit amount 

CalR:'rA supports H.R. 711 and requests that you consider the issues raised in this letter as the bill 

moves in the 114'' Congress. If you have any questions concerning these issues, please contact me at 

;m~!IJ ... o.l.'"'"~·'-'"'"""'"-~'~"-'' Again, thank you for sponsoring H.R. 711. 

Sincerely, 

David Walrath 

Legls[atlve Advocate 

California Retired Teachers Association 
12 


21290.007.eps

26May2015 

The Honorable Kevin P. Brady 

U.S. House of Representatives 

Washington, DC 20515 

Dear Representative Brady, 

NATIONAL 

.JAMES 0. PASCO. Jf( f~{;:o(;t>T,•/>:1>!-·"/';,'"'C-" 

I am writing on behalf of the members of the Fraternal Order of Police to advise you of our 

strong support for'!LR. 711, the "£qual Treatment ofPublic Servants Acl," which would repeal 

the Windfall Elimination Provision (WEP) and replace it with a more equitable and 

individualized calculation of Social Security benefits. The repeal of the WEP and the 

Government Pension Offset (GPO) are top legislative priorities of the Fraternal Order of Police. 

We believe, as you do, that this is an issue of fairness. \\'hen the WEI' was enat'ted in I 983. its 

stated purpose was to remove a "windfall" for persons who spent some time in jobs not covered 

by Social Security (like public employees) and also worked other jobs where they paid Social 

Security taxes long enough to qualify for retirement bene!1ts. This provision has created a very 

real inequity lbr many public employees, particularly police officers, who retire earlier than 

other government employees to begin second careers which require them to pay inlo the Social 

Security system. Law enforcement ofllcers who have second careers face a sixty percent (60%) 

cut to their Social Security benefits. This is a reduction of a benefit to which they are entitled 

because they paid into the syslem-~not an adjustment for a "windfall." 

Your legislation repeals the WEP and would calculate benefits as if all the worker's earnings 

were subject to Social Security ta.,es using the standard benefit formula. To ensure Social 

Security benefits are based only on Social Security wages, the benefit would be multiplied by U1e 

percent ofeamings subject to Social Security ta.xes. 

On behalf of the more than 330,000 members of the Fraternal Order of Police, ]look forward to 

working with you and your staff to move this bill forward. If! can be of any additional help on 

this matter, please do not hesitate to contact me or Executive Director Jim Pasco in my 

Washington office. 

Chuck Canterbury 

National Pres!deut 
13 


21290.008.eps

f!REFlcHrms' 

Investing 

November 18,2014 

The Honorable Kevin Brady 

U.S. House of Representatives 

301 Cannon House Office Building 

Washington, D.C. 205!5 

Dear Congressman Brady: 

hJ'iD 

I am writing Oil behalf of the approximately 6,500 active and retired City of 

Houston Firefighters, who are members of the Houston Firefighters' Relief and 

Retirement Fund ("HFRRF"). As Pension Board Chair, I am invt11ved in many 

issues that are related to the HFRRF pension plan, including the Social Security 

program. On a number of occasions I have visited with you and other members of 

the Texas Congressional Delegation to discuss the Windfall Elimination Progmm 

(WEP) and other pieces offederallegislation and law. 

The current one·size-fits-all approach of the WEP offset is unfair to many 

retirees, It is an arbitrary calculation that does not take into account a retiree~s 

actual work history. The legislation you recently introduced, H.R. 5697, the Equal 

Treatment of Public Servants Act, would replace the current WEP calculation 

with the standard Social Security formula. For purposes of calculating the final 

benefit, the new catculation would take into account each worker"~s average career 

wage that is subject to Socia! Security taxes. This wiU ensure that each workcr1

s 

actual work history is used in determining the benefit and will result in a fairer 

approach to the benefit calculation. 

Therefore, it is with my utmost appreciation that l write today to lend my support 

to your efforts to enact H.R. 5697. Given the difficult financial times our fedetal 

government is facing today) we appreciate your continued leadership on this 

matter even more. Resolving the WEP offset issue is of critical importance to 

many families in the Houston area. We applaud your efforts . 

. ;;_;;:~ lj' ToddClark 

c.// Chair 
14 


21290.009.eps

March 23, 2015 

INTERNATIONAL UNION 

OF POLICE AS~;;oc~IA1"10t>JS 

AFL-CIO 

!!-if ONLY UNION FOR l.AW ENFtJF?CBV!ElVTOFF!CEP.S 

The Honorable Kevin Brady 

United States House of Representatives 

Washington, D.C. 20515 

Dear· Congressman Brady: 

On behalf ofthc International Union of Police Associations, (I.U.P.A.), I am proud to add our name to 

those supporting yo\U· thoughtful legislation, H.R. 711, the "Equal Treatment of Public Servants Act of 

2015.'' As you know, the LU.l'.A, represents more than 100,000 active-duty, rank and tile law 

enforcement and emergency medical professionals across tills great natio11 as well as in Puerto Rico a.t'ld 

the Virgin Islands. Many ofthem are unfairly affected by the current C{ltnpu!atioJlS of their Social 

Security benefits. 

Your bill will permanently repeal the Windfall Elimination Provision oftlte Social Security Act and 

replace it with a fair formula that treats public safety employees like the rest or American workers by 

guaranteeing that these brave men and women receive their fair share of Social Security that they paid 

into and earned during their careers. The Equal Treatment of Public Servants Act guarantees public 

servants will receive the Social Secmity benefits they earned while they paid into the federal program. 

We look forward tu working witl1 you and your staff to see this long overdue legisla6on move forward 

and tlnally ensure that public serv<UJls who cam both a SC'cial Security benefit and a retirement Jrom a 

Social Security substitute receive treatment equal to all other American workers. 

Sam A. Cabral 

International President 
15 


21290.010.eps

RETIRED STATE, COUNTY AND MUNICIPAL EMPLOYEES 

ASSOCLc\ TTON OF MASSACHUSETTS 

ll BEACON SlHEl!T BOSTON,MASSAC!!USETTS 

-·- 02108 (617) 723-7283 

November 12,2014 

The Honorable Kevln Brady 

301 Cannon House Office Bid. 

Washington, DC 20515 

Dear Representative Brady: 

WWW .MASSRET!REES. COM 

On behalf of our 62,000 members, we would like to express our wholehearted support for 

"The Equal Treatment for Public Servants Act" and advocate for its swift passage. 

As you kno;v, the Windfall Elimination Provision now impacts over 100,000 Massachusetts 

public retirees. In addition, over 90% of the Commonwealth's public workforce will be 

adversely affected by the WEP upon retirement 

This hill seeks to do what we have long advocated, simply to treat public retirees the same 

as all other retirees in the calculation of their Socia! Security benefit. 

Due to the arbitTary nature ofthe current WEP formula, most public retirees have 

witnessed an unfair reduction in their Social Security benefit. This not only serves as a 

financial hardship to retirees, but also undermines the overall public trust in the Social 

Security System. 

We would also like to take this time to thank you and your staff for the many years of hard 

work and dedication that you have afforded the WEP issue. Public retirees owe you a debt 

of gratitude for yam role in keeping the WEP in the public eye, which has now resulted in 

the filing of "The Equal Treatment for Pubiic Servants Act". 

Thank you again for your ongoing efforts, as well as for allowing our Association to 

participate in the development ofthis landmark proposal. Thefactthatyou welcomed our 

input speaks volumes about your commitment to finding a permanent solution to this 

national problem. 

We look forward to working together to bring greater equity to the Social Security system. 

Most Sincerely, 

a~.t;_lL· 

Frank Valeri 

President 

Shawn Duhamel 

Legislative Liaison 

The Voice Of The Retired Public Employee 
16 


21290.011.eps

February 19, 20 I G 

The Honorable Kevin Brady 

301 Cannon House Ofl:!ce Building 

Washington, D.C. 20515 

Dear Chairman Brady: 

Jon OuwiB: 

On behalf of the five million federal employees, retirees and their survivors represented by the 

National Active and Retired Federal Employees Association (NARFE}, I am writing to express 

our support tor H.R. 711, the Equal Treatment of Public Servants Act of2015, and thank you for 

the leadership you have shown by introducing and working to advance this refonn of the 

Windfall Elimination Provision (WEP). 

The WEP unfairly deprives dedicated public servants of the full Social Security benefits earned 

through the contributions they paid into the system. They are denied these benefits solely 

because they also worked outside of Social Security-covered employment, through government 

service. The WEP penalty often comes as a rude awakening, as tbe actual benefits received fail 

to meet the expectation created by the estimates provided by Social Security. All told, it has cost 

public servants hundreds of millions of dollars of Social Security benefits that they rightfully 

eamcd. 

This bill would help mitigate the WEP penalty by providing some relief for both current 

beneficiaries through a rebate and future Social Security recipients by improving the fonnula 

going forward. This relief is long past due, but very much appreciated by individuals who have 

for too long been penalized for their public service. 

NARFE applauds your continued and creative efforts to refonn WEP and that you have not 

given up on a problem that many seem to have forgotten. We look forward to working with you 

to move this bill through the legislative process. 

Thank you, again, for introducing I-l.R. 711. If you have any questions regarding this issue, 

contact NARFE Legislative Director Jessica Klement at 703-838-7760 or 

Sincerely, 

Richard Thissen 

National President 

National Active nnrl Retired Fedora! Employees Association 

ww•w.N·""'''·'''ii l l phono 
17 


21290.012.eps

SnwoL EMPLOYtEs RETlRE.\IE:VT .)'rsTE'~>J or Omo 300 EAST BROAD ST., SUITE 100 • COLUMBUS, OHIO 43215·3746 

614·222-5853 • Toll-Free 800·878-5853 • www.ohsers.org LISAJ MORRIS 

Executive Oif'fu;:lw 

HELEN M. NINOS lHip!Jf.rE.>rwu!ivet.Jfrcc:ftlr 

February 5, 2015 

The Honorable Kevin Brady 

301 Cannon House Office Building 

Washington, D.C. 20515 

Re: H.R. 711, the Equal Treatment for Public Servants Act 

Dear Representative Brady: 

On behalf of the more than 193.000 active and retired members ofthe School 

Employees Retirement System of Ohio (SERS) who will be unfairly disadvantaged by 

the Windfall Elimination Provision (WEP) when they retire, the SERS Retirement Board 

wholeheartedly supports the introduction of H.R. 711, the Equal Treatment for Public 

Servants Act, and advocates for its passage. 

In a non-Social Security state like Ohio, all public employees who qualify for a pension 

are subject to WEP reductions. In a SERS membership survey conducted in 2012, 93% 

of the respondents indicated that they paid into Social Security at a previous job, which 

means that nearly all SERS members will be affected by the WEP penalty. In most 

cases, SERS' retirees lose the maximum $408 in Social Security benefits they earned. 

Because the majority of our membership works in low·paying school support positions, 

the reduction of the modest Social Security benefit they earned is enough to cause 

financial hardships in retirement. 

Even !hough SERS educates members about the WEP penalty long before they retire, 

most members do not realize the financlal impact until they are ready to retire. The 

complaint we hear the most is that members believe that !hey should receive the Social 

Security benefits they earned, and the Equal Treatment for Public Servants Act does just 

that. 

Thank you for your efforts in introducing legislation that ensures that public servants 

receive n1e same level of Social Security benefits as private sector workers. We look 

forward to working with you to achieve passage of this important legislation. 

Regards, 

Usa J. Morris 

Executive Director 

RETIREMENT BOARD 

NANCY D, EDWARDS 

Appmnled Mcm.'mr 
18 


21290.013.eps

February 5, 2015 

The Honorable Kevin Brady 

House of Representatives 

301 Cannon House Offtce Building 

Washington, D.C. 20515 

Re: The Equal Treatment of Public Servants Act, HR 711 

Dear Representative Brady, 

On behalf of the Ohio Public Employees Retirement System 

(OPERS) and the more than one million individuals who depend on 

OPERS for their retirement security, we are writing to convey our 

gratitude to ycu for your efforts to reform the Windfall Elimination 

Provision (WEP). 

Due to the creation of OPERS prior to Social Security, the vast 

majority of Ohio's public employees do not contribute to Social 

Security. They may have worked in previous employment that is 

covered by Social Security and as a result, many of them will be 

subject to the WEP upon retirement In many cases, we have 

received feedback that they did not realize the extent to which their 

Social Security benefit would be reduced by the WEP. We appreciate 

your work to introduce legislation to replace the current WEP 

formula with a more equitable version that provides Ohio's public 

employees with the Social Security benefits they have earned 

We look forward to working with you and your legislative aide, Aindriu 

Colgan, on this legislation. If you have any questions, please contact 

us at your convenience. 

Sincerely, 

Karen E. Carraher 

Executive Director 

277 East Town Street Gollllnbus, On;c 43215-4642 >B00-222:-1'377 
19 


21290.014.eps

November 21, 2014 

The Honorable Kevin Brady 

301 Cannon House Office Building 

Washington, D.C. 20515 

Dear Representative Brady, 

(614) 431-0387 

(614) 431-0391 (lax) 

info@ohia-sero.com 

6161 Busch Blvd., Suite 131 

Columbus, Ohio 43229 

www.ohio-sero .com 

SERO was founded in 1978 as an advocacy and support organization for retired School Employees 

through the School Employees Retirement System. We support nearly 10,000 retirees who mostly 

reside in Ohio in their retirement. Our SERO Executive Board wishes to extend our appreciation for 

your introduction of the "Equal Treatment of Public Servants Act". We-wholeheartedly approve and 

support this bill for changes to the current WEP provisions. 

As retirees have continued to communicate to us, they feel they have been unfairly targeted by the 

reductions In the WEP. Many retirees claim that the contributions they have made during their work 

hist01y have all but been diminished by the reductions under the current WEP calculations. It has been 

a constant complaint from the members "Why can't we just get the contributions that we made, like 

everyone else. It appears to us that this new bill will do just that. 

Unfortunately, retirees learn the full effects ol the reductions when they are unable to make changes, so 

at a time when these retirees expected to be fully retired many have taken on additional jobs to 

supplement this loss to their retirement in<:omes. 

We know our retirees will be grateful to understand that this new legislation will give them the benefits 

they have earned and that they are no longer penalized for being a public servant. We look forward to 

working with you on this important legislation for our retirees. 

Sincerely, ~ 

__ d:t~C?]~ 

Sandra Lannen, President 

School Employee Retirees of Ohio, Inc. 
20 

f 


21290.015.eps
21 

Chairman BRADY. For new retirees, our bill repeals the WEP 

and replaces it with a formula that is fair. Our solution takes into 

account all earnings and reflects how much of a person’s earnings 

were subject to Social Security payroll taxes. Under our approach, 

two workers with the same lifetime earnings, one who has spent 

an entire career in Social Security covered employment and another who has worked in both covered and Social Security substitute work, will receive a Social Security benefit that is calculated 

the same way. No more unfair formula for teachers, firefighters 

and police officers. Instead we use the same benefit formula for everyone, looking at all earnings. 

Now, some of those earnings are not from Social Security covered 

employment. We adjust benefits to reflect the proportion that are. 

But it is not enough to fix the WEP for future beneficiaries. We 

have to provide relief to current seniors already affected by the 

WEP, and these individuals will have their monthly benefits increased using the savings from this bill. 

Finally, this bill makes sure that everyone is treated equally by 

requiring Social Security make sure that those current retirees who 

should be subject to the WEP have their benefits adjusted correctly. 

At this time I would like to yield, and I am pleased to yield, to 

the gentleman who has worked with me so hard on this, the gentleman from Massachusetts, Mr. Neal. 

Mr. NEAL. Thank you, Mr. Chairman. 

I am happy to be here this morning at this hearing of the Ways 

and Means Social Security Subcommittee. I no longer serve on this 

Subcommittee, but I have had a longstanding interest in the WEP 

issue and am an original cosponsor of this bill with Chairman 

Brady. 

I am pleased that the subcommittee is holding this hearing 

today, and it is also nice to see representatives from the Mass Retirees who are with us as well. 

Our bill, H.R. 711, permanently repeals the current Windfall 

Elimination Provision and replaces it with a fair formula that 

treats public servants like all other American workers. Public servants who earn both a Social Security benefit and a pension from 

Social Security’s substitute will finally receive treatment equal to 

other workers. 

This legislation was developed in close consultation with teacher 

and public servant organizations, particularly those in Massachusetts, Texas and Ohio. It provides relief to current retirees already 

affected by WEP, and it guarantees public servants receive the benefits they earned while they paid into Social Security. 

In addition, H.R. 711 is budget neutral in the short run and improves Social Security solvency over the long run. 

The Equal Treatment of Public Servants Act guarantees public 

servants will receive Social Security benefits that reflect their actual work history. Social Security benefits will no longer be figured 

by the arbitrary WEP formula established in 1983, but will be 

based on each worker’s Social Security contributions just like everybody else. 

Under the Public Servant Fairness Formula, the worker’s benefit 

amount will be calculated using total lifetime earnings and then 

22 

adjusted for the proportion of earnings that came from the job that 

was covered by Social Security. Public servants who turn 62 on or 

after January 1st, 2017, will benefit from the new Public Servant 

Fairness Formula. Social Security benefits will increase for teachers, firefighters, police officers, and other public servants currently 

subject to WEP. 

Retired public servants currently subject to the WEP and those 

who turn 62 before December 31st, 2016, will see a reduction in the 

WEP offset leading to an increase in Social Security benefits. 

Repealing the WEP has been a priority of mine for many, many 

years, and I want to thank Chairman Brady for the attention he 

has paid to this issue, and I look forward to working with him and 

the others who are panelists today, as well as the expert testimony 

we are about to receive, in passing this legislation in this session 

of the Congress. 

Chairman BRADY. Reclaiming my time, I thank my colleague 

from Massachusetts for his work on this important issue through 

the years and all of my committee colleagues as well as those who 

have interest in it. 

It seems to me the police, teachers, firefighters I know never 

worked just one job. They have a second and a third. They have 

first careers. They have last careers, and creating equal treatment 

for them just seems like the right thing to do. 

So today’s hearing is critically important. As Speaker Paul Ryan 

has said, we are returning to regular order. So today is an important step in that process, having a hearing to talk about this problem and some good solutions to fix it. 

I have had a chance to review the excellent testimony from our 

witnesses that they have submitted, and I look forward to advancing this bill in the weeks ahead. 

And, again, Chairman Johnson, thank you for your leadership on 

this issue and, Ranking Member Larson, thank you for helping 

lead this hearing today. 

I yield back. 

Chairman JOHNSON. Thank you, Mr. Chairman, for your leadership on this issue. 

You know, hard-working Americans who have paid into Social 

Security ought to have their benefits calculated fairly, and they deserve to know how much they can expect to receive from Social Security. 

Unfortunately for many of our teachers, firefighters, police officers and others, that is not the case. When Social Security was created in 1935, some State and local governments already had a retirement program in place, and the law allowed those governments 

and workers to keep their separate program and not participate in 

Social Security. 

In fact, in Texas many firefighters, police officers and teachers do 

not participate in Social Security because they have an alternative 

retirement program. However, many of these good folks have had 

other jobs either in the summer when school is out or working for 

a different employer where they paid into Social Security. 

So if there is an issue I regularly hear about when it comes to 

Social Security, it is the Windfall Elimination Provision, or WEP. 

Take, for example, Janice from Plano, who recently wrote to me. 

23 

She has worked for 31 years as a teacher. In the summers she also 

worked in the private sector paying Social Security taxes on those 

earnings. Because Janice has some earnings that were not subject 

to payroll tax and others that were, she is subject to the Windfall 

Elimination Provisions, or WEP, and she very much wants us to 

address this. 

So now what is WEP exactly? And when did it come about? And 

what can we do about it? 

Simply put, WEP uses a slightly different benefit formula than 

the regular Social Security formula, but this slight difference can 

have a meaningful impact on benefits. WEP came about as part of 

the Social Security reform effort in 1983. The idea was to ensure 

that workers who pay into a separate retirement system are treated similarly to other workers with respect to Social Security benefits. 

Both the House and Senate wanted to modify the benefit formula 

for those workers who spent part of their careers not paying Social 

Security taxes. I guess it should come as no surprise that the 

House and Senate did not agree on the numbers. The Senate took 

a more aggressive approach than the House. As tends to happen 

here, they ended up somewhere in the middle. 

Ever since the WEP was put into place, those public servants 

have pointed out just how arbitrary it is, and they are right. 

On top of that, right now the WEP and Government Pension Offset, or GPO, make it really hard for our firefighters, police officers 

and teachers to plan for retirement. As we will hear today, the Social Security statement, that is required by law, shows them the 

wrong number. Their statement gives them the amount of Social 

Security benefits they would receive if the WEP and GPO did not 

exist. 

These workers, just like every other American, have a right to 

know what their Social Security benefit is going to be so they can 

prepare for their retirement. 

Bottom line, it is time to replace the WEP and GPO with an approach that treats all workers fairly, and so that is what Chairman 

Brady and Representative Neal are trying to do. They have introduced a bill that does just that for the WEP. I am a proud cosponsor of their bill. The President included a similar proposal for WEP 

and GPO in his budget this year. 

Some folks may call for a full repeal of the WEP and GPO. While 

these provisions are not fair, getting rid of them would not be fair 

either. Public employees who are eligible for Social Security should 

be treated just like everyone else, no better and no worse. And just 

as important, at a time when Social Security is already in trouble, 

doing so would only worsen the financial standing. 

Today we are going to hear from one panel of witnesses. Our witnesses will provide background on the WEP and GPO, discuss the 

problems with the current approach, including their own frontline 

experiences, and talk about ways we can finally fix it. 

I want to thank each of our witnesses for being here today and 

look forward to hearing your testimony. 

Chairman JOHNSON. I now recognize Mr. Larson for his opening statement if he wishes to make one. 

Mr. LARSON. Well, thank you, Mr. Chairman. 

24 

And I want to thank our panelists as well for being here, but I 

especially want to give kudos to our chairman for his continued 

work and Chairman Brady and Representative Neal, and primarily 

something beyond this particular hearing today, but something this 

Committee has distinguished itself in doing, and that is working in 

a collaborative manner across the aisle to come to compromise and 

move the Nation forward. 

This is just one of several examples of how this Committee has 

stepped forward to do it, and while there may be differences, et 

cetera, the end goal here, which is to move the country forward and 

in this case, as has already been well stated by Chairman Brady 

and by Mr. Neal and Chairman Johnson, is that so many people 

have been adversely affected who have worked other jobs. 

As a former school teacher myself and having a daughter who is 

a school teacher in the State of Connecticut, as Mr. Johnson does 

in Plano, I hear back in my district from those individuals impacted all the time, and frankly, it is unfair. 

In Connecticut, more than 75,000 people, mostly teachers, work 

in non-covered employment and face the prospect of having their 

future Social Security reduced by the WEP. And while it was the 

intent of the WEP to equalize the benefit formula for workers with 

similar earnings, the WEP takes a one size fits all approach that 

has the effect of unfairly penalizing public servants, as you have 

heard here today, as well. 

I have long been a proponent of reducing and eliminating the 

WEP and the GOP [sic] altogether. This bill works towards that 

goal, although I think there are winners and losers in this provision. 

Chairman BRADY. Would the gentleman yield? 

Mr. LARSON. I would yield. 

Chairman BRADY. Please do not eliminated the GOP. 

[Laughter.] 

Chairman BRADY. Please do not do that. We have just got to be 

around. 

Mr. LARSON. I think Donald Trump is doing a pretty good job 

of that, Mr. Chairman. 

Mr. NEAL. Would the gentleman yield? 

That was the most important thing you said. 

[Laughter.] 

Mr. BRADY. So much for the bipartisanship. 

I yield back. 

Mr. LARSON. A Freudian slip there. I apologize, but Shakespeare would say more truth is said in jest than not, but thank you 

for correcting me. 

But I would also point out that as someone who has long felt 

that these were unfair, and I concur with Mr. Johnson that we 

have to work on this to bring about the fairness, I am anxious to 

hear from our panelists because I do think this is a great compromise. This is a great step forward, but I do think it may have 

some uneven results. 

And I want to submit for the record a letter from the NEA with 

the unanimous consent of the chair. 

Chairman JOHNSON. Without objection. 

25 

[The information follows: The Honorable John Larson Submission] 


21290.016.eps
26 

f 


21290.017.eps
27 

Mr. LARSON. And I look forward to the consideration. The longterm goal here is that we have to focus on Social Security, and I 

am so pleased that Stephen Goss is here today because I think the 

one thing that we ought to make sure with respect to Social Security is its actuarial soundness, and not only its actuarial soundness, but that it is sustainably solvent for its required 75 years. 

I look forward to future hearings. We have legislation that we 

think will accomplish that goal that I hope we can approach 

bipartisanly. Certainly the discussion needs to be put on the table 

because increasingly as we saw after 2008 when people’s 401(k)s 

became 101(k)s that they are more and more and more reliant on 

Social Security. That makes this legislation have an added sense 

of urgency for people already in the system who have been treated 

unfairly. 

But the long-term goal that was neglected in 1983, or shall I say 

as we dealt with what is an insurance issue, that we did not look 

to adjust or index the concerns that would be created by a growing 

number of Baby Boomers into the future. This is a responsibility 

of this Committee. I know we have the talent on both sides of the 

issue to address this. 

I look forward and welcome the hearing today and what we are 

going to hear from our value added witnesses and look forward as 

well to discussing Social Security 2100 in the future. 

Thank you, Mr. Chairman, and I yield back my time. 

Chairman JOHNSON. Thank you, sir. 

As is customary, any member is welcome to submit a statement 

for the hearing record. 

Before we move on to our testimony today, I want to remind our 

witnesses to please limit their oral statement to five minutes. However, without objection, all of the written testimony will be made 

a part of the hearing record. 

We have one witness panel today. Seated at the table are Samara Richardson, Acting Associate Commissioner, Office of Income 

Security Programs, Social Security Administration. That is a 

mouthful, is it not? 

Stephen Goss, Chief Actuary, Office of the Chief Actuary, Social 

Security Administration. 

Jason Fichtner, Senior Research Fellow, Mercatus Center, 

George Mason University. 

Tim Lee, Executive Director, Texas Retired Teachers Association. 

Jeannine English, President, AARP. 

Welcome, and thanks for being here. 

Ms. Richardson, you are recognized. Please go ahead. 

STATEMENT OF SAMARA RICHARDSON, ACTING ASSOCIATE 

COMMISSIONER, OFFICE OF INCOME SECURITY PROGRAMS, 

SOCIAL SECURITY ADMINISTRATION 

Ms. RICHARDSON. Thanks. Chairman Johnson, Representative 

Larson, and Members of the Subcommittee, thank you for inviting 

me to discuss Social Security coverage and treatment of individuals 

who receive pensions based on work not covered by Social Security. 

My name is Sam Richardson, and I am the Acting Associate 

Commissioner in the Office of Income Security Programs at SSA. 

28 

Social Security is rooted in principles of equity. Workers earn 

benefits based on contributions to Social Security that accumulate 

throughout a worker’s career. In jobs covered by Social Security, 

workers and employers each contribute 6.2 percent of earnings. 

Workers earn credits through covered work, which allows them to 

qualify for benefits. 

In addition to the worker benefit, Social Security provides benefits for spouses of covered workers whether or not the spouse had 

earnings covered by Social Security. 

My written testimony details how we calculate Social Security 

benefits. I want to highlight two key points about Social Security 

benefits and the WEP and GPO provisions that affect non-covered 

workers. 

First, Social Security is progressive. Covered workers with low 

career earnings receive a benefit that replaces a greater portion of 

earnings than those with high career earnings. 

My second point concerns spousal benefits. A spouse’s benefit is 

generally reduced dollar for dollar by the amount of any Social Security benefit he or she earned as a worker in covered employment. 

Although most jobs today are covered by Social Security, some 

exceptions remain. These non-covered jobs tend to be in State and 

local government. In non-covered jobs, neither the employee nor the 

employer pays any Social Security contribution. Instead these employees may have retirement arrangements other than Social Security, such as pensions. 

When Social Security was enacted, the benefit formulas did not 

account for these scenarios, which resulted in two types of inequities. The first inequity affected individuals who had both covered 

and non-covered work. Because not all of their lifetime earnings 

were counted in the benefit formula, people with considerable noncovered earnings appeared to have spent their careers in low paying jobs. These beneficiaries received combined Social Security and 

pension benefits that exceeded those of individuals who worked 

solely in either covered or non-covered work. 

Congress addressed this inequity with the enactment of the WEP 

in 1983. The WEP requires us to reduce a worker’s Social Security 

benefit if he or she also receives a pension based on non-covered 

work. 

Second, spousal benefits were originally intended to benefit a financially dependent spouse. As both spouses began entering the 

workforce and one member of a couple worked in employment covered by Social Security while the other worked in primarily noncovered work, a second inequity resulted. In this scenario, the 

spouse in non-covered work could receive both a retirement benefit 

from a pension and an unreduced Social Security spousal benefit. 

Congress recognized this inequity and enacted the GPO in 1977. 

The GPO requires us to reduce a person’s spousal benefit by twothirds of the amount of his or her non-covered pension. 

With both WEP and GPO, a non-covered pension is seen as a 

substitute for a person’s non-covered earnings. Congress chose to 

use the pension for this purpose because at that time we did not 

have the non-covered earnings data in our records. 

To preserve Social Security’s fairness, benefits should continue to 

be adjusted if a person has covered and non-covered work, but the 

29 

WEP and GPO can be improved. Both provisions are complicated. 

Often non-covered workers realize late in their retirement planning 

that their Social Security benefit will be offset. These provisions 

are also very challenging to administer because we rely on beneficiaries to report when they receive a non-covered pension. 

The President’s Budget for Fiscal Year 2017 includes a legislative proposal that would improve how we offset benefits for noncovered work. First, it would require State and local government 

pension payers to provide us with data concerning non-covered pensions. This would reduce our reliance on beneficiary’s self-reporting 

to administer the WEP and GPO. 

Second, it would modify the WEP and GPO for individuals who 

become eligible for benefits in 2027 and later. We would no longer 

reduce benefits based on an individual’s receipt of a pension. We 

would simply use the information on non-covered earnings in our 

records to adjust benefits. 

Until now we have not had sufficient information on non-covered 

earnings to consider a more equitable benefit formula. Now we do, 

and with each year our records become more complete. 

Before concluding, I would like to acknowledge Chairman Brady’s 

leadership on this issue. The chairman’s bill has much in common 

with the Administration’s proposal, and we look forward to working 

with the Congress on this issue. 

I appreciate the opportunity to appear before you today and 

would be happy to answer any questions you may have. 

Chairman JOHNSON. Thank you, ma’am. We appreciate that. 

[The prepared statement of Ms. Richardson follows:] 

30 


21290.018.eps

COM~HTTEE ON WAYS AND MEANS 

SUBCO"'IMITTEE ON SOCIAL SECURITY 

lJI'IITED STATES HOUSE OF REPRESENTATIVES 

MARCH 22,2016 

STATEMENT FOR THE RECORD 

SAMARA RICHARDSON 

ACTING ASSOCIATE COYIMISSIONER, OFFICE OF INCOME SECURITY PROGRAMS 

SOCIAL SECURITY ADMINISTRATION 
31 


21290.019.eps

Chairman Johnson, Ranking Member Becerra, and Members of the Subcommittee: 

Thank you for the opportunity to discuss Social Security coverage and how we compute benefits 

for individuals who worked part or all of their careers in non-covered employment where they 

did not pay Social Security taxes ("non-covered work"). My name is Samara Richardson, and I 

am the Social Security Administration's (SSA) Acting Associate Commissioner for the Office of 

Income Security Programs. My testimony today will: 

• summarize the history of Social Security coverage; 

• describe the Windfall Elimination Provision (WEP) and the Government Pension Offset 

(GPO); 

• provide an overview of issues with iVEP and GPO and describe how we administer them; 

and 

• discuss the Administration's legislative proposal, which would simplify and improve 

administration ofWEP and GPO. 

Importance of Social Security 

Before discussing the topic at hand, I would like to describe briefly the Old-Age, Survivors, and 

Disability Insurance (OASDI) (or "Social Security") program. Social Security is a social 

insurance program, under which workers earn coverage for retirement, survivors, and disability 

benefits by working and paying Social Security taxes on their earnings. 

Few govenunent agencies touch as many people as we do. Social Security pays monthly 

benefits to more than 59 million individuals, consisting of 40 million retired workers and 3 

million of their spouses and children; 9 million disabled workers and 2 million dependents; and 6 

million surviving widows, children, and other dependents of deceased workers. Last year, these 

benefits totaled around $880 billion. Administrative costs are very low, at less than I percent of 

benefit payments. The Fiscal Year 2017 President's Budget for SSA will allow us to tackle our 

hearings backlog, improve overall service, and save billions of taxpayer dollars through 

increased program integrity work. 

Social Security Coverage 

When a job is covered by Social Security, the Social Security tax rate for wages paid (up to an 

annuallimit) 1 is set by law at 6.2 percent for employees and employers, each2 After paying 

Social Security taxes over a sufficient period, a worker becomes insured for Social Security 

benefits. Workers become eligible to receive retirement benefits beginning at age 62 or may 

receive disability benefits at earlier ages if other criteria are met. Workers also earn Social 

Security protection for their family members; for instance, the spouse of a worker may receive 

spousal benefits if the worker is receiving retirement or disability benefits. As discussed more 

fully below, spousal benefits will be reduced if the spouse is also eligible to receive retirement 

benefits based on his or her own work. 

1 In 2016. the amount of wages subject to OASDI taxes is $11 ~,500. 1 Self-employed income is subject to an OASDT tax rate of 12.4" up to the annual limit. 
32 


21290.020.eps

When Congress enacted the Social Security Act in 1935, fewer than 50 percent of the nation's 

workers were covered. But over time, Congress has expanded coverage to most jobs, and today 

it is nearly universal-about 96 percent of the nation's workforce is currently covered by Social 

Security and paying Social Security taxes. 

Most of the 4 percent of workers not covered by Social Security are State and local government 

employees who earn alternative pensions. Today about 28 percent of State and local workers are 

not covered by Social Security. Other non-covered employees include certain employees of 

railroads, non-profit organizations, and the Federal government hired before 1984. These 

employees do not pay Social Security taxes on their non-covered earnings and earnings from 

these jobs are considered non-covered for purposes of the Social Security benefit calculation. 

History of" Coverage 

Tn 1950, Congress enacted legislation that allowed States to enter into voluntary agreements to 

provide Social Security coverage to State and local employees not covered under a retirement 

system. After the 1950 legislation, Congress enacted a number of other changes that expanded 

coverage of government employees, including: 

• The 1954 amendments made coverage available to State and local employees covered 

under a retirement system, at the election of the employer and employees; 

• ln the 1983 amendments, Congress repealed a provision allowing States to rescind 

ah>reements extending voluntary coverage to State and local employees, and required 

Social Security coverage for Federal, railroad, and nonprofit employees hired in or after 

1984;and 

• Legislation in 1990 made Social Security coverage mandatory for State m1d local 

employees who are not under a retirement system. 

Social Security Benefit Formula 

Under the Social Security Act, the formula used to calculate Social Security benefits is 

prok,>ressive: that is, it is weighted so that people who spend their careers in low-paying or 

intermittent jobs receive a benefit that is higher as a share of their average prior earnings than the 

benefit provided to people with high career earnings. Appendix A provides the formula used to 

calculate a worker's primary insurance amount (PIA), which is based on a worker's average 

indexed monthly earnings (AIME); the PIA forms the basis of the worker's and his or her 

dependents' benefits. 

This formula "counts" only covered earnings. So, a person who has only non-covered earnings 

in a year is considered to have no earnings in that year. As a result, a person who spent most of 

his or her career in employment not covered by Social Security but had some covered work 

would appear to have low career earnings, and would be eligible for the higher benefit the 

weighted fonnula provides. This higher Social Security benefit, when combined with a 

government pension, would result in this person receiving a "windfall" as compared to those 

who had either only non-covered (and thus was ineligible for Social Security) or only covered 

2 
33 


21290.021.eps

work (and whose benefits are computed on a full accounting of their earnings. The Windfall 

Elimination Provision, described in the next section, is desi~,>ned to eliminate this windfall and 

ensure that those with a combination of covered and non-covered earnings are not treated better 

under the Social Security fonnula than other workers. 

Non-coHred Earnings and the Windfall Elimination Provision 

An individual's career may include some jobs that were covered by Social Security and some 

that were not covered. They may be eligible for Social Security benefits based on their covered 

work as well as for pension benefits based on their non-covered work The Social Security 

program did not initially adjust the benefits of individuals who received pension benefits for noncovered work Before provisions were put in place to address this windfall, individuals with 

non-covered work may have received combined Social Security and government benefits that far 

exceeded those of other individuals, with identical lifetime income, who worked solely in either 

covered or non-covered work Because not all of their lifetime eamings are counted for Social 

Security purposes, people with considerable non-covered eamings may appear to have spent 

their careers in low-paying or intermittent jobs, and so- because of the pro1,>ressive benefit 

fom1ula- would receive a relatively higher Social Security benefit than similar individuals who 

worked only in covered employment 

Congress recognized this inequity and enacted the Windfall Elimination Provision (WEP) under 

the Social Security Amendments of 1983 3 to correct it The WEP reduces a worker's retirement 

or disability benefits if such worker is also receiving a pension based on non-covered work 

Prior to the Social Security Amendments of 1983, the Report of the National Commission on 

Social Security Refimn (informally known as the Greenspan Commission) recommended two 

potential ways to address this scenario4 One approach would have modified the benefit formula 

as follows: 

{Afpplv the present benejitformula to an earnings record which combines both covered 

earnings and also non-covered earnings in the fitturejiJr the purpose of determining a 

replacement rate (i.e., the ratio ofthe benefit initially payable to previous earnings); 

then, that replacement rate would be applied to the average earnings based solely on 

covered employment. 

At that time, SSA did not have infonnation on non-covered work in its records. SSA first began 

receiving non-covered earnings records in 1978. Without tins data, Congress instead enacted the 

benefit reduction fonnula that is in the law today. Specifically, the WEP formula reduces 

benefits for individuals who receive a pension because of their non-covered work, on a sliding 

scale based on the number of years the person worked in covered employment Appendix B 

shows how WEP affects the primary insurance amount (PTA). Tn 2016, the WEP reduces 

1 Public Law 9X-21, 97 Stat 65. 4 See Report of the National Commission on Social Security Refonn, 

l:J,tJp_s_:_·:,~\~'l'Y\Y~S-~;l.gQ_Vj}j~lQry/):f.:RQf1S:_g;m_~lP-_:-b_t7;q__J.-

3 
34 


21290.022.eps

monthly retirement and disability benefits by a maximum of S428.00 per month_ Applying WEP 

never eliminates an individual's Social Security benefit completely 

There are several exceptions to the WEP_ The WEP does not apply to people who have 30 or 

more years of substantial 5 covered eamings, and it is gradually reduced for workers who have 21 

to 29 years of substantial covered earnings. In addition, the WEP does not affect beneficiaries 

who are not yet receiving pensions based on their non-coYered earnings. Finally, the WEP can 

never reduce benefits by more than one-half the amount of the beneficiary's pension, which 

protects individuals who receive relatively low pension amounts_ 

As of December 2015, the WEP reduced benetits for around I ,692,000 retired and disabled 

workers and their dependents_ The majority ofprimarybeneticiaries whose benefits are reduced 

by the WEP (99 percent) received benefits based on retirement 

Spousal (and 'Vidow's/Widower's Benefits) & the Government Pension Offset 

The spouses of workers receiving Social Security benefits may be eligible for spousal benefits_ 

The spousal benefit is equal to 50% of the retired or disabled worker's benefit and 100% of the 

deceased worker's benefit. Individuals who qualifY for both a Social Security worker benefit 

(retirement or disability) based on their own work history and a Social Security spousal benefit 

based on their spouse's work history are "dually-entitled" and are subject to the dual-entitlement 

rule, meaning that their spousal benefit is paid only to the extent it exceeds their own retirement 

benefit_ Individuals who qualify for both a non-Social Security-covered govemment pension and 

a Social Security spousal benefit are subject to the Government Pension Offset (GPO) provision_ 

The intent of the GPO is the same as that of the dual entitlement rule: to reduce the Social 

Security spousal benefits of indi-,-iduals who are not financially dependent on their spouse 

because tl1ey receive their own benefits_ The key difference is what is used to determine 

financial dependence- benefits based on Social Security-covered work or benefits based on 

non-Social Security-covered work 

f)ual-entitlement rufe_ The Social Security dual-entitlement mle requires that I 00% of a Social 

Security retirement or disability benefit eamed as a worker (based on one's own Social Securitycovered earnings) be subtracted from any Social Security spousal benefit one is eligible to 

receive (based on their spouse's Social Security-covered earnings), and only the difference, if 

any, is paid as a spousal benefit The Social Security spousal benefit of a person who receives a 

pension from govemment employment (federal, state, or local) that was based on work not 

covered by Social Security is reduced by a provision in the law known as the GPO, enacted in 

19776 

The GPO is intended to place annuitants whose government employment was not covered by 

Social Security and who are eligible for a Social Security spousal benefit in approximately the 

same position as workers whose jobs were covered by Social Security and are also eligible for a 

'The amount of earnings considered substantial for WEP purposes is $22.050 in 2016_ This amount is updated 

annually to account for inflation. 

Publi~Law 95-216,91 Stat. 1509_ 

4 
35 


21290.023.eps

Social Security spousal benefit Because SSA has not had complete earnings records of those 

who work in non-Social Security-covered positions, SSA has been forced to rely on the 

government pension as a measure of those uncovered eamings. Essentially, it is assumed that 

two-thirds of the government pension is equivalent to the Social Security retirement or disability 

benefit the spouse would have earned as a worker if his or her job had been covered by Social 

Security. Thus, the GPO attempts to replicate the Social Security dual-entitlement rule by 

requiring that an amount equal to two-thirds of the worker's non-covered government pension be 

subtracted from the Social Security spousal benefit. 

The GPO also has a variety of complicating exceptions. The Social Security Protection Act of 

2004 (P.L. 108-203) amended the GPO provisions to require that State and local government 

employees covered by Social Security throughout their last 60 months of employment be exempt 

from GPO. Prior to this legislation, GPO did not apply if an individual's last day of employment 

was in a position that was covered by both Social Security and a State or local government 

pension system. The "last day" exemption may still apply if the last day of employment was 

before July 1, 2004, or if the person filed for a Social Security spouse's benefits before April!, 

2004, and was entitled to those benefits based on that filing. Additionally, the GPO does not 

apply to individuals who had filed for and were entitled to spouses benefits prior to December 

1977. 

As of December 2015, the GPO reduced benefits for around 652,000 spouses. 

Issues with Current-Law WEP and GPO 

While both WEP and GPO address inequities that existed prior to their enactment, there is room 

for improvement Both provisions are difficult to administer and challenging for the public to 

incorporate into their retirement plans. 

issues of Administration 

Social Security benefit payments are highly accurate; over 99 percent of the benefit dollars we 

pay are free of either an overpayment or underpayment. However, the WEP and GPO provisions 

are complex and time-consuming to administer and applying WEP and GPO remains a 

significant cause of improper payments in the OASDI programs. 

To a large extent, this is because we do not have an automated way to access State and local 

pension information. Instead, we must rely primarily on beneficiaries to self-report when they 

receive a pension based on non-covered employment. 

When a beneficiary does report receiving a pension based on non-covered work, our field office 

and program service center staff must develop, verify, and document relevant information, 

including when the person first became eligible for the pension, the monthly amount, and when 

the pension stops. This often involves contacting the pension-paying organization. In addition, 

for certain non-covered employees in nonprofits, administration may be further complicated 

because the organizations themselves may no longer exist or retain older records. Our staff must 

also determine whether any of the WEP or GPO exceptions apply. 
36 


21290.024.eps

For federal pensions, we exchange information with the Office of Personnel Management (OPM) 

to identify Social Security benet1ciaries who are receiving a pension based on non-covered, 

Federal employment. We do not currently have similar exchanges with State and local 

governments. 

Issues of Retirement Planning 

We help people plan for retirement by making the Social Security Statement ("Statement") 

available to every worker by mail or through a Social Security account The Statement 

infom1s each individual ofthe amount of benefits he or she can expect to receive at retirement 

age or upon becoming permanently disabled. These amounts do not reflect application of the 

WEP or GPO because we lack infonnation in our records about the person's non-covered 

pension status. Consequently, as required by the Social Security Protection Act of 2004, every 

Statement includes a disclaimer indicating that benefits may be lower than stated if the person 

were to receive a pension based on non-covered work. Individuals subject to WEP or GPO are 

often surprised when their benefits are less than expected. 

Other Issues 

We must rely on those who worked in non-covered employment including former State or local 

workers to report these pensions to us. However, because we have access to OPM's infom1ation 

concerning Federal pensions based on non-covered work, we are much more likely to discover a 

Federal than a non-Federal pension. As a result, Federal workers are much more likely to be 

subject to the WEP and the GPO. 

Finally, while we reduce a Social Security spousal benefit on a dollar-for-dollar basis by the 

amount of the person's own Social Security retirement or disability benefit, under GPO, we 

reduce the Social Security spousal benefit by only two-thirds of the person's pension based on 

non-covered work 

The Administration's Proposal for the Fiscal Year 2017 Budget 

The President's Budget for Fiscal Year 2017 includes a legislative proposal that would improve 

the administration and fairness of the WEP and GPO provisions in several ways. First, it would 

eliminate our reliance on self-reporting by requiring State and local government pension 

providers to provide SSA with data on pensions based on non-covered, State and local 

employment. The proposal would also provide $70 million to establish these data exchanges, 

with up to S50 million of those funds dedicated to the States' costs. We will use these data 

exchanges to help us administer WEP and GPO for current beneficiaries and individuals eligible 

for benet1ts prior to 2027. This change would build our capacity to identify State and local 

government retirees receiving pensions based on non-covered work. lt would strengthen 

6 
37 


21290.025.eps

payment accuracy and provide equal treatment between Federal and non-Federal government 

workers. 7 

In addition. the Budget proposes to replace the current WEP and GPO for individuals who 

become eligible for benefits in 2027 or later. From that point forward, we would adjust benefits 

based directly on the worker's total earnings record. without regard to whether he or she receives 

a pension based on those earnings. Consequently. this would ensure that persons with both noncovered and covered earnings are not treated more favorably than persons who solely worked in 

jobs for which they paid Social Security taxes. 

We have collected and maintained information on non-covered earnings in our records since 

1978. By 2027. we will have nearly 50 years of data on non-covered employment, which will 

allow us to calculate the amount by which benefits should be reduced without relying on either 

the applicant or the pension provider. 

To carry out the proposed calculation that would replace WEP: 

(I) We would calculate a combined Average Indexed Monthly Earnings (AIME)R that 

includes any years of covered and non-covered earnings in a worker's highest 35 years of 

earnings. 

(2) We would then calculate a new "combined" PTA rrom this combined AIME. This 

amount is the equivalent Social Security retired worker benefit that the individual would 

have received had all of their work been in covered employment. 

(3) We would divide the combined PIA by the combined AIME to determine. as the 

Greenspan Commission recommended for WEP in 1983, a replacement rate based on the 

average covered and non-covered earnings. 

(4) We would then apply that replacement rate to the AIME based solely on covered 

employment to derive the actual PIA. 

( 

Covered and Noncovered PIA ) Covered AIME x = New PIA Covered and Noncovered AIME 

Additionally, the President's Budget proposal would similarly modify the GPO. As with the new 

calculation to deal with a worker's non-covered earnings, we would calculate a new AIME that 

includes any years of non-covered earnings. We would then calculate a new "combined" PIA 

from this new ATME. This amount is the equivalent Social Security retired worker benefit that 

the individual would have received had all of their work been in covered employment. 

'As I noted earlier in my testimony. we currently have a data exchange with OPM to idcmify individuals "ho 

receive a Federal pension based on non-covered work 8 The .AHdE is. in short, a person's average monthly wages. calculated using his or her 35 highest years of earnings. 

and indexed for inflation. Please sec Appendix A for more information. 

7 
38 


21290.025a.eps

As under current law spousal benefits, this new retired worker benefit would be subtracted doilar 

for dollar from the spousal benefit the non-covered worker would be eligible for and only the 

difference, if any, would be provided as a Social Security spousal benefit. 

Spouse's Covered and Noncovered PIA - Spouse's Covered PIA = New GPO Reduction 

Appendix C includes examples of the proposed new computations for non covered work. As the 

examples show, some individuals would receive more benefits than they would expect under 

current law, while others could expect to receive less. As with any policy change as significant 

as this one, it is critical to allow sufficient lead-time so dJat affected individuals can incorporate 

the change in their financial planning and decision-making. We believe that an effective date of 

2027 allows enough time for individuals to adjust their retirement plans. 

Conclusion 

Congress created the WEP and GPO provisions so that Social Security benefits would remain 

progressive and fairly reflect an individual's covered and non-covered earnings. However, in the 

absence of non-covered earnings data on which to calculate an appropriate benefit reduction, 

Congress based its reductions on the receipt of a non-covered pension. This approach was the 

most manageable solution, given the lima ted earnings information available for use in the late 

1970s and early 1980s. However, we wi II soon have more than 40 years of non-covered earnings 

data in our records. These data will give us the capability to transition toward an alternative 

WEP and GPO fornmla based on these earnings. The Administration recommends such an 

approach, as it would simplify administration, reduce improper payments, and provide all 

workers widJ more equitable treatment. ln the interim, the President's Budget proposes requiring 

State and local govenuuent pension payers to provide us with non-covered pension data, thereby 

enabling us to apply current-law WEP and GPO more consistently and correctly. 

We appreciate Chaim1an Brady's leadership on this issue and his interest in, and efforts toward, 

a similar solution through his introduced bill, H.R. 711 , the Equal Treatment of Public Servants 

Act o/2015. While there are a number of differences between the President's and the 

Chairman's proposed legislation, we would like to note their shared fonnula to replace the WEP. 

This concludes my testimony. I appreciate the opportunity to appear before you today and would 

be happy to answer any questions you may have. 

8 
39 


21290.026.eps

APPENDICES TO THE STATEMENT FOR THE RECORD 

Appendix A: Determining Primary Insurance Amount 

PIA Definition 

!'he "primary insurance amount" (PIA) is the benetlt a person would receive if he or she elects to 

begin receiving retirement benefits at his or her nom1al retirement age. At this age, the benefit is 

neither reduced for early retirement nor increased for delayed retirement. 

PTA Formula Bend Points 

The PIA is based on a person's average indexed monthly earnings (AIME). The PIA is the smn 

of three separate percentages of portions of a person's AIME. The portions depend on the year in 

which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62. 

For 2016, these portions are: 

the first $856 of AIME, 

the amount of AIME between $856 and $5,157, and 

the amount of AIME over $5,157. 

These dollar amounts are the "bend points" of the 2016 PIA fonnula. The table at the following 

link shows bend points for years beginning with 1979: "//~vw.s_,;fLZQY!J!actic_glllL\"2''0.ill?.Qi.nt?" 

PTA Formula 

For an individual who tlrst becomes eligible tor old-age insurance benetlts or disability 

insurm1ce benefits in 2016, or who dies in 2016 be tore becoming eligible for benefits, his or her 

PIA will be the sum of: 

90 percent of the first $856 of AlME 

+ 32 percent of AIME over $856 and throngh $5,157 

+ 15 percent of AlME over $5,157 

We round lhis amount to the next lower multiple of$.10 if it is nul ah·eady a mulliple of$.10. 

PIA Calculation Example: 

AlME $2,200 

fiirst bend point: 

+Second bend point: 

$856 X .9 ~ 

$1,344 X .32 -

PIA~ 

$770.40 

$430.08 

$1,200.48 (rounded down to $1 ,200.40) 

$1,200.40 
40 


21290.027.eps

APPENDIXB 

'-Vind:faU Elhniuatiou ProYisio.n (\·'VEP)-(CurTeut Law~) 

Under the VifEP. -..ve \'>rill reduce a v..·orker's retireinent or disabdity benefit 1f the "l,.'i!o-rker has fewet· than 30 years of 

'"5ubstantial eamings .. , Specifically. for those who reach 62 or bee rune d:is.abled in 1990 o1· later_ we reduce the first 

bend point (the 90- percent factor in our fonnula) to as little as. 40 pe1·cent. The bend point reduction depends upon 

the v;rorker's ntunber of Yean, of Coverage ($22,050 of covered earrtings in 2016) 

1983 1999 $] ,4: 

2000 $14.175 

1956 65 $L200 ! 3_985 $7,245 $14.925 

' 1986 $1..5.750 

$16,1::0.5 

,,,,,,, 

),1 ,,, 

$5.550 >-16 $22,050 

~ 1982 $12,675 

"'\V.EP Gua1·antei'" (or l\·IiniJnum): The la'W protects a worker v.rho receh:e-s a low pensi-on. We may not reduce a 

Social Security benefit by n1ore th~u1 halfofihe v.•orker's noncovered pension. 

"\VEP PIA Calculation Example: 

AllvlE $2.200: 20 YOCs (:first bend point 4-D<!.-:0) 

First bend point: 

+ Second bend noint: 

$856 X .4 = $342.4-Q 

$1.344 X .32 = $430.08 

$772.48 (rounded dov.'ll to $772.40) 

$772.4-0 

NE'\V (PresidenPs Proposal~ el"f"ec-hYe f"or ne'l'\' benefi("iai"ies beginning on January 1~ 2027) 

The President's proposal -..vould replace the current 1.VEP calculation by hnplementing 1..vhat the Greenspan 

Conunission recon:nnended: Detenntne a replace1nent rate based on the average covered and non-covered 

earnings. and then apply that ri?placement rare to the average earnings based soleJ.v on covered employ1nenr. 

( Covered and Noncovered PIA ) Covered AJME x = New PIA Covered and Noncovered AlJ\-1£ 
41 


21290.028.eps

Appl:'ndixC 

Examplf'~ of Estimated Offsf't 

Appendix C includes examples of how the proposed new computations could affect hypothetical benefit levels. including comparisons 

to benefit calculations nnder cunent law and under a potential repeal ofWEP or GPO. As the examples show, some individuals -could 

receive more benefits under the proposed new computations. tllan they could expect under cuuent law, while others could expect to 

receive less. 

Om examples assume the following: 

Each of our six example couples has $46.500 in annual household eamings (between both spouses. and between covered and 

non-covered eamings). 

All beneficiaries have filed for retirement insurance benefits (and/or smviving spouse's benefits) at full retirement age (no age 

reductions or delayed retirement credits apply). Pensions are assmned to be 67% of monthly average non-covered eamings. 

• Under "New Calculation:' when discussing both the President's proposal and Chaiiman Brady's bill (H.R 711), we presented 

the results as if both bills took effect in2016. The effective date of the new calculations in the President's proposal is 2027 

The effective date for H.R 711 is 2017. 

We have not included in the examples H.R 711 's supplemental benefit for individuals whose benefits would be reduced due to 

cunent-law WEP 

All estimated benefits are in 2016 dollars and use 20 16 earnings assumptions. 
42 


21290.029.eps

AppendixC 

Windfall Elimination Provision 

(Couple 1 and Couple 2 have identical earnings over 35 year<;_) 

Bob has. 25 years of covered eaming"> (avg. $46.500/yr.) and 10 years of non-covered eamings (avg. $46500/yr.) 

Bob receives a pension of$742/mo. based upon hi<> non-covered eamings 

Betty. his spouse. had no eamings 

Cnneut Law (Applying W"EP) 

i'i:e\Y Calculation 

(Presidt'nt's Proposal & 

H.R. 711) 

Repeai\VEP 

-~e~efH. 1168 1240 1382 

t_lbie~n~Ofi:!~·-,"~0-dai"secliriiYsiioii5e"s··t················· ······ ··-·-······5

·

8

·

4 

+ ········-············-··················6

-

20

···· '·-········-···- ····-····· -~~; 

Bob"spension 742 742 742 

Honsebold Total 2494 i 2602 2815 

Current Law ..•• 

1736 

868 

Household Total 2604 
43 


21290.030.eps

AppendixC 

Government Pension Offset 

(Couple 3 m1d Couple 4 have identical eamings over 35 years_) 

Abby has 35 yrs.non-covered earnings (avg. $20.000/yr.) without any covered eamings. 

Abby receives a pension of $1,117 !mo. based upon her non-covered eamings. 

Her deceased spouse had 35 years of covered earnings (avg. $26,500/yr.) and no non-covered earnings. 

Total i 1576 i 

Mike has 35 yrs. of covered earnings (avg. $20,000/yr.) without any non-covered eamings. 

His deceased spouse had 35 years of covered earnings (avg. $26.500/yr.) 

Currt'nt Law 

Mike's Social ··cc··~.c ··~· 

benefit 1029 

Mike's Social Security surviving 174 ___3?_QUse's benefit 

Total i 1203 

1291 1 2320 
44 

f 


21290.031.eps
45 

Mr. Goss, welcome. Please go ahead. 

STATEMENT OF STEPHEN C. GOSS, CHIEF ACTUARY, OFFICE 

OF THE CHIEF ACTUARY, SOCIAL SECURITY ADMINISTRATION 

Mr. GOSS. Thank you very much, Chairman Johnson, Mr. Larson, and other Members of the Committee. It is really a pleasure 

to be here with you today to talk about this important subject. 

I do want to say what an incredible pleasure it is working with 

people like Amy Shuart and the rest of your folks on this and other 

issues, and I much look forward to what Mr. Larson is talking 

about, talking about broader issues for Social Security maintaining 

its good actuarial status in the future. 

What we are here to talk about today really is principally the 

Windfall Elimination Provision, and what I want to focus on in the 

very brief time we have is this proposed change to the way that 

it has been functioning. 

As Samara and others have mentioned, we have the approach we 

have got now because that was put in the law back in 1983, and 

really there was no choice back then because of the nature of data 

that were available. 

The current approach really, if we think about this philosophically what these two approaches do, the current approach is basically a matter of a benefit offset. For people we know are receiving 

a pension based on non-covered employment, there is an offset applied to their worker benefit, retired worker or disabled worker 

benefit, up to one-half of the amount of that non-covered pension. 

But to apply this, it requires that we know and we have knowledge of this non-covered pension, and there are lots of complications in that. 

The proposal would take a very different approach. The proposal 

would take the approach as has been mentioned a few different 

ways here in basically saying: what if we looked at all of the earnings that a person had, covered and non-covered, and looked at the 

level of benefit that they would be getting if all had been covered, 

but then importantly, look at the replacement rate that would be 

provided for that person, that is, the ratio of the amount of benefit 

they would get versus their average earnings when they had been 

working, with all of their earnings, covered and non-covered. 

Now, because it is a progressive formula, people with higher 

overall career earnings get a lower replacement rate than people 

with lower career earnings. 

In a little example that I provided on page 2 of the written testimony, you can see we show that for a person who in their lifetime 

career earnings had an average earnings of about $48,000, which 

we call sort of our medium earner throughout their career of covered and non-covered earnings, if it was covered earnings only, 

they would get a benefit replacement rate of about 40 percent of 

the level of earnings they had been getting. That would be their 

benefit, about 40 percent at age 65. 

But if a little bit over half of those earnings were in non-covered 

employment, the way our formulas are working now, the person 

would get a benefit replacement rate of 53 percent, where 40 percent would seem to be more appropriate for a person with that kind 

of a lifetime career earnings level. 

46 

So what the proposals do basically is say for that portion of the 

earnings that were in covered employment, rather than providing 

the 53 percent replacement rate, provide the 40 percent replacement rate, which by our formula is deemed to be appropriate for 

that level of lifetime career earnings. 

So it is in that sense that it would be argued, I think, that the 

proposed formula by both Chairman Brady, Mr. Neal, and the 

President would be a more appropriate approach. 

And, by the way, they are really exactly the same formula for 

looking forward. The only difference is that the Brady-Neal proposal would start with people newly eligible for benefits in 2017, 

where the President’s would wait until newly eligible in 2027. 

Now, let me just share with you a couple of numbers related to 

this. Currently we have about 1.5 million retired worker and disabled worker beneficiaries subject to the Windfall Elimination Provision. About 84 percent, or one and a quarter million of those, if 

we were to be able to magically change to the new formula today, 

just to give you a sense of what the impact would be, 84 percent 

of them would have actually less reduction, that is, an increase in 

benefit, of about $77 per month. That would be about a 19 percent 

increase in benefits for about 84 percent of the people currently 

subject to the WEP. 

About one-quarter of a million of the people, or about 16 percent, would have about a $13 per month reduction or about an eight percent reduction in benefits. These are people who are currently reduced, but they are not reduced by very much under the current 

formula. 

Now, importantly, there is another group of folks. There are 

about 15 million people that we estimate in our retired worker and 

disabled worker population who are in receipt of benefits that are 

not being reduced by the Windfall Elimination Provision even 

though they do have some years of non-covered earnings. 

If we were to apply the new formula to them, about one million, 

or seven percent of those folks, would not receive any reduction at 

all. Why? Because their earnings even including all of the covered 

and non-covered earnings, are still well enough below our first 

bend point, and they have a 90 percent replacement ratio with or 

without consideration of the provision. 

The other 14 million, or 93 percent of this 15 million people, 

would receive a small reduction. It would average about $27 per 

month, which is about two percent, on average, of the benefits that 

they are currently receiving. These folks are relatively high level 

beneficiaries under current law. 

Chairman JOHNSON. The gentleman’s time has expired. Can 

you close it? 

Mr. GOSS. The one further little item on this is that about onehalf of these 15 million people who would be affected with a reduction, one-half of them would receive the least affected, only $3 on 

average. 

Chairman JOHNSON. I do not think you are listening to me. 

Your time has expired, sir. 

Mr. GOSS. Apologies, Chairman Johnson. Okay. I will stop at 

this point and look forward and hopefully you will have an opportunity for some questions. 

47 

[The prepared statement of Mr. Goss follows:] 


21290.033.eps

"Social Security and Public Servants: Ensuring Equal 

Treatment" 

Testimony by Stephen C. Goss, Chief Actuary, Social Security Administration 

House Committee on Ways and Means, Subcommittee on Social Security 

March 22, 2016 

Chairman Johnson, Ranking Member Becerra, and members of the subcommittee, thank you 

very much for the opportunity to speak to you today about the way Social Security benefits are 

adjusted currently for workers with earnings not covered under the program, and recent 

proposals to modify this adjustment. I will focus on the effects on Social Security beneficiaries 

of H.R. 711, introduced by Chairman Brady with Representative Neal on February 4, 2015, and 

the proposal included in the President's Fiscal Year 2017 Budget. Each of these proposals 

included modifications of the Windfall Elimination Provision (WEP) that applies to primary 

benefits for retired-worker and disabled-worker beneficiaries, as well as to auxiliary benefits for 

their spouses and children. Please refer to our enclosed letters providing estimates of the 

implications of these proposals for Social Security actuarial status, which are also available at 

https:/hvvy.·w.ssa.ggyjoJct/solvenccv/indcx.html. 

Present Law Windfall Elimination Provision (WEP) 

Under current law, retired-worker and disabled-worker beneficiaries have their primary 

insurance amount (PIA) computed with a three-segment fonnula, which applies a 90 percent 

factor to the lowest portion of their average earnings, 32 percent to a substantial "middle" portion 

of their average earnings, and 15 percent to the highest portion of earnings for high earners. 

Average earnings are computed reflecting the highest 35 years of covered earnings for most 

retirees, and fewer years included for most disabled workers. Career-average covered earnings 

for workers who have some non-covered earnings are generally lower than career-average 

covered earnings for similar workers who worked solely in covered employment. Therefore, a 

higher proportion of average covered earnings are in the lower PIA formula bracket, and in turn, 

the PIA formula provides a higher "replacement rate," (that is, the ratio of PIA to career-average 

indexed earnings) for these workers than for similar workers who worked solely in covered 

employment. 

In order to offset the advantage, or windfall, provided in the PTA formula for workers with noncovered earnings, the WEP gradually reduces the 90 percent PIA factor used for beneficiaries 

with 30 or more years of substantial covered earnings to 40 percent for those with 20 or fewer 

years of substantial covered earnings .. A similar adjustment is applied for disabled worker 

beneficiaries with non-covered earnings. 

The WEP is limited in application so that it does not reduce the PIA by more than one-half of the 

amount of the retirement or disability pension (periodic payment) received by the worker based 

on non-covered employment. Worker beneficiaries who are not known to be receiving periodic 

payments based on their non-covered earnings do not have their PIA reduced by the WEP. 
48 


21290.034.eps

2 

Proposed Change in WEP for Worker Beneficiaries Newly Eligible in the Future 

The proposal introduced by Chairman Brady and Representative Neal (H.R. 711) and the 

proposal included in the President's Fiscal Year 2017 Budget would ultimately alter the 

adjustment of worker primary benefits in the same way, starting with those newly eligible for 

worker benefits in 2017 for H.R. 711 and in 2027 for the President's proposal. This new 

adjustment would effectively apply the benefit replacement rate the worker would have had if all 

of his or her earnings had been covered under the Social Security program, to the worker's 

average indexed monthly eamings (AIME) using only covered earnings on which payroll taxes 

were paid. 

Adjusted PL\ ~ (PIA using all earnings I AIME using all earnings ) * AIME using covered earnings only 

This adjustment would be applied whether or not the worker is eligible for or receiving a pension 

based on non-covered earnings, and does not include a limitation based directly on the number of 

years of substantial covered eamings (in other words, the 30-years-of-coverage exclusion is 

eliminated). Because the Social Security Administration has records of non-covered earnings for 

years after 1977, but does not have universal access to records for receipt of non-covered 

pensions, this new adjustment would be much easier to apply, and would be applied much more 

uniformly to all workers with some years of non-covered eamings. 

The figure below illustrates how the benefit replacement rate varies for retired-worker 

beneficiaries (retirees starting benefits at age 65) depending on the level of their career-average 

covered earnings. 

Replacement Rates based on the 2015TR 

Source: An!lua! Recurring Actuanal Note #9 atwww.esa.gov/oact/NOT£S/ran9/mdex.htm! 
49 


21290.035.eps

For example, a worker with career-average earnings of$47,820, our "medium earner," receives a 

retirement benefit of about 40 percent of their career-average earnings. However, if the same 

worker happens to have worked in non-covered employment for a little over half their career, 

such that their career-average covered earnings are only at $21,519, the level for our "low 

earner," then the benefit will be about 53 percent of the career-average covered earnings. While 

the current WEP attempts to adjust for this disparity, the variability in pensions based on noncovered earnings and the reporting of these pensions leads to inconsistent adjustments in benefit 

levels. 

The change proposed in H.R. 711 and in the Fiscal Year 2017 Budget makes a direct adjustment 

to the replacement rate such that the worker described above (overall career-average earnings at 

the medium-earner level, with a little over half of the earnings in non-covered employment, so 

that their career-average covered earnings would be at the low-earner level) would receive a 

benetit replacement rate of 40 percent, instead of 53 percent. This adjustment would occur 

uniformly and consistently for individuals with split careers between covered and non-covered 

earnings. Differences in pension levels and reporting by various non-covered employers would 

no longer influence the adjustment to Social Security worker benefits. The implicit rationale for 

this approach may be characterized as: for years of non-covered earnings, where neither the 

employer nor the employee paid Social Security payroll tax, the employee and employer should 

be responsible for providing pension coverage and disability protection. 

Ultimate Effects on Beneficiaries of the New WEP Adjustment 

In order to meaningfully illustrate the effects of the new adjustment on workers who will become 

eligible starting in 2017 and 2027, respectively, under these proposals, we provide estimates of 

the effects of the new adjustments on all current beneficiaries in 2016, as though the new 

approach applied to them. The average monthly WEP reduction for workers in 2016 with the 

current approach is about $270. 

For the roughly 1.5 million retired-worker and disabled-worker beneficiaries in 2016 whose 

primary benefit is reduced under the cun·ent \VEP, the new adjustment would result in an 

increased primary benefit for about 1.25 million beneficiaries (about 84 percent of all currentlyaffected beneficiaries). The average reduction would be about S771ess on average, trom $274 

per month under the current WEP to about $198 per month under the new adjustment. The 

remaining 0.25 million beneficiaries (about 16 percent of all currently-affected beneficiaries) 

would see a further small reduction in their primary benefit. Their average reduction would be 

about $13 more on average, trom $190 per month under the current WEP to about $203 per 

month under the new adjustment. 

For 2016, we estimate that there are roughly 15 million retired-worker and disabled-worker 

beneficiaries with some non-covered earnings after 1977 who are not reduced under the current 

WEP. We estimate that for about 1 million (about 7 percent) of these beneficiaries, the new 

adjustment (if it were in place in 2016) would not change their primary benefit. For the other 14 
50 


21290.036.eps

4 

million beneficiaries, the average reduction in benefit would be about $27 per month for 2016. 

For the half of this 15 million least affected by the new adjustment, the average primary benefit 

reduction would be just $3 per month. For the half most affected, the reduction would average 

$46 per month. About 55 percent of the 15 million, or roughly 8 million beneficiaries, qualify for 

exemption from the current WEP because they have 30 or more years of substantial covered 

earnings. Because these 8 million retired-worker or disabled-worker beneficiaries have relatively 

few years of non-covered earnings, their reduction under the new approach would be relatively 

small. In addition, more than 75 percent of these 15 million workers have fewer than 5 years 

with any non-covered earnings. 

Proposed Change in WEP for Worker Beneficiaries Newly Eligible in the Past or Near Future 

Both proposals would expand the application of the current WEP to worker beneficiaries first 

eligible before the implementation of the new adjustment formula. 

Under H.R. 711, all individuals eligible for retired-worker or disabled-worker benefits for 

December 2016 who: (1) have any recorded non-covered earnings after 1977, (2) are not 

currently affected by the WEP, and (3) have less than 30 years of substantial covered earnings, 

would be required to obtain by the end of2016 certification from any employer who paid him or 

her non-covered earnings. This certification would indicate whether the worker is vested for a 

pension, and when and how much pension has been received. A WEP reduction would be 

applied if it is determined to be warranted for past or future benefits. If the WEP reduction is 

applicable for past benefits, an overpayment would be established to be repaid by the 

beneficiary, principally through recovery from his or her future benefits. If an individual does not 

obtain certification, then the WEP would be applied for past and future benefits limited only by 

the number of substantial years of covered earnings. 

Under H.R. 711, a "rebate" would be applied for all benefits reduced by the current WEP based 

on entitlement for months in 2017 and later. The rebate would be determined to be as high as 

possible, but not in excess of 50 percent of the WEP reduction, and limited to assure that the net 

effect of the Bill on Social Security program cost through 2025 would be neutral or positive. We 

estimate that the maximum permissible rebate percentage of 50 percent would be applicable. 

Under the President's proposal in the 2017 Budget, employers would be required to report all 

periodic payments (pensions) based on non-covered earnings for past and future years, for 

workers who were or will be tirst eligible for a retired-worker or disabled-worker benefit before 

2027. This additional reporting, particularly from state and local governments, will lead to 

additional workers being subject to WEP reduction for past and future benefits. 

Effects on Beneficiaries of the Increased Application of the Current WEP 

Under H.R. 711, we estimate that up to I 0 percent of the 7 million worker beneficiaries in 

December 2016 with some past non-covered earnings, fewer than 30 years of substantial covered 

earnings, and no current WEP reduction would be determined to warrant a WEP reduction on 
51 


21290.037.eps

5 

some past or future benefits. This assumption is very uncertain, and the actual number would 

depend substantially on the efforts made by beneficiaries and their former employers to produce 

and obtain valid certification of their pension vesting and payments received. We estimate that 

for this group, the average amount of overpayment made before 2017 that would be recovered in 

2017 through 2025 will be roughly $8,000. For future benefits to this group, the average total 

benefit reduction through 2025, net of the 50-percent rebate, will also be roughly SS,OOO. 

Recovery of overpayments for prior months would be limited by the financial status of the 

beneficiaries and the remaining duration of their benefit receipt. Thus, the number of individuals 

with recovery and reduction of benefits is very uncertain. 

Under the President's proposal, we estimate that establishing systems for reporting of pension 

payments based on non-covered earnings would require about 3 to 6 years to fully develop and 

would ultimately capture most but not all non-covered pension recipients. We estimate that the 

percentage of the 7 million worker beneficiaries in December 2016 with past non-covered 

earnings, fewer than 30 years of substantial covered earnings, and no current WEP reduction 

who would be determined to warrant a WEP reduction on some past or future benefits under the 

President's proposal would be significantly lower than for the process under H.R. 711. In 

addition, because reductions and recoveries would be applied only for months with verified 

receipt of pension payments and would be limited based on the size of the pension payments, the 

average reduction or recovery might be smaller per month than under H.R. 711. Overall, we 

estimate that program savings through 2025 for benefit reductions and recoveries under the 

President's proposal for worker beneficiaries entitled for December 2016 would be less than half 

the amount expected under the provisions of H.R. 711. Under the President's proposal, however, 

additional workers becoming newly eligible for retired-worker or disabled-worker benefits after 

December 2016, through 2026, would also be found to have non-covered pension payments 

requiring application of the WEP adjustment. 

Government Pension Offset (GPO) 

The President's proposal would utilize the additional reported pension data to improve 

application of the current law GPO. The proposal would also change the GPO provision for those 

eligible after 2026, limiting the offset to spouse benefits (including divorced and surviving 

spouses) at age 62 or older and to spouse benefits for those also receiving any Social Security 

benefit based on their own disability (including disabled worker, disabled widow, and disabled 

adult child beneficiaries under age 62). The offset would be applied to these auxiliary benefits 

more consistently, based on their past earnings in non-covered employment. The new offset 

would reduce the amount of the auxiliary benefit by the excess of ( l) the auxiliary beneficiary's 

own potential retired-worker or disabled-worker benefit based on all of his or her earnings over 

(2) the auxiliary beneficiary's potential worker benefit based on covered earnings only. This 

excess amount would be calculated and applied regardless of the insured status of the auxiliary 

beneficiary. This provision contributes to the program savings under the President's proposal as 

indicated in our letter to the Director of OMB. It is our understanding that the intent of this 
52 


21290.038.eps

hearing is to explore proposals affecting the WEP adjustments on primary benefits for workers, 

so I will not cover the details of the GPO provisions in this testimony. 

Conclusion 

Both H.R. 711 and the President's proposal in the Fiscal Year 2017 Budget would ultimately 

result in a more consistent and logical adjustment to the primary benefit amounts for workers 

with career earnings split between covered and non-covered employment. The analysis offered 

here reflects intense analytical work by several people in our office, but particularly Jacqueline 

Walsh and Bert Kestenbaum (now retired). We appreciate the opportunity to share the results of 

our analysis and our estimates for the effects of these proposals. They are, as always, a work in 

progress. I will be happy to attempt to answer any questions you may have. 

6 
53 


21290.039.eps

The Honorable Kevin Brady 

House of Representatives 

Washington, D.C. 20515 

Dear Chairman Brady: 

SOCIAL SECURITY -----------------

Offiee of the Chief Actumy 

March 17,2016 

I am writing in response to your request for our estimate of the financial effects on the Social 

Security Trust Funds ofH.R. 711, the "Equal Treatment of Public Servants Act of2015," which 

you introduced on February 4, 2015 with Representative Neal. This proposal would replace the 

windfall elimination provision (WEP) with a new formula that you have referred to as the 

''Public Servant Fairness Formula" (PSF). 

The proposal reflects your prior bills in concept, replacing the current complex WEP with a more 

straightforward approach designed to provide retired-worker and disabled-worker beneficiaries 

(and their dependents) with a benefit computed with all past earnings included (including 

earnings in employment that was not covered under the OASDl program in our records starting 

with 1978), then multiplied by the ratio of the average indexed monthly earnings (AlME) 

computed without non-covered earnings to a modified average indexed monthly earnings 

(AI ME') that includes both covered and non-covered earnings in our records. Another way to 

describe the new approach is that beneficiaries will receive a benefit that reflects the replacement 

rate applicable for a worker with the same career earnings, where all earnings had been covered. 

Effectively, the PSF formula would compute the worker's PlA as the ratio of PlA based on all 

earnings (covered and non-covered) to the average indexed monthly earnings (AIM E) computed 

based on all earnings, multiplied by the AIME based on covered earnings only. These two ways 

of describing the new approach are mathematically equivalent. 

Importantly, for workers becoming eligible for OASDI benefits after 2016, the proposal would 

eliminate the requirement for receipt of a pension based on earnings not covered by the OASDI 

program in order to apply the new PSF reduction. We have enjoyed working with Aindriu 

Colgan and Amy Shuart of your staff in the development of this proposal. Estimates provided for 

this proposal reflect the efforts of many in the Office of the Chief Actuary, but particularly 

Jacqueline Walsh. Chris Chaplain, and Karen Glenn. 

The new PSF would be applied for all retired-worker and disabled-worker beneficiaries who are 

newly eligible for benefits after December 2016. For workers who (1) were eligible for a Social 

Security retired-worker or disabled-worker benefit as of December 2016, (2) have at least one 

year with non-covered earnings in SSA records, (3) have no old WEP reduction under current 

law for December 2016, and (4) have less than 30 "years of coverage" (YOCs), certification 

would be required before the end of calendar year 2016 from each employer who paid the worker 

any non-covered wages since 1978. This certification would specify whether the worker is 
54 


21290.040.eps

The Honorable Kevin Brady- Page 2 

entitled to a periodic payment based on his or her non-covered earnings. Tn the absence of this 

certification from such employers, the WEP would be applied to all OASDI benefits paid on the 

worker's account starting in 2017, and would also be assessed on all past benefits paid on the 

worker's account, with any "overpayment" withheld trom future benetits. Reductions to benetits 

paid in 2017 and later on the basis of these overpayments would be subject to the SSA's use of 

waiver authority/payment plans where appropriate. 

For the purpose of this estimate, we are assuming that the employer certification would indicate: 

(1) whether the worker is eligible to receive (vested for) a benefit based on the non-covered 

earnings; (2) whether the worker is currently receiving a periodic payment based on the noncovered earnings and, if so, when payments started; (3) whether future payments are expected in 

the absence of a cun·ent payment; and ( 4) the amount of any current and past periodic payments 

based on non-covered earnings. Tfthe worker is certified to have no pension eligibility based on 

any past non-covered earnings, then no WEP will be applied. Tf certitication indicates current 

payments and the duration of past payments, then the WEP will be applied to current, future, and 

past benefits after the periodic payments started, with due consideration of the limit based on 

pension amount. If current payment is certified without indication of when payments started, 

then the current WEP will be applied to all current, past, and future benefits on the worker's 

account. If certification indicates eligibility for a pension based on non-covered earnings with no 

current payment, then SSA will develop procedures for determining when such payments will 

commence in the future, at which time the WEP would apply. 

Finally, a rebate, in the form of a percentage reduction in the amount of the WEP offset, will be 

provided for all WEP offsets applicable to benetits paid for 2017 and later. The size ofthe rebate 

percentage will be promulgated by the Commissioner of Social Security based on a calculation 

made by the Social Security Administration's Chief Actuary in November 2016. The Chief 

Actuary will use the best available data at the time to determine the rebate percentage to be as 

high as possible, but not in excess of 50 percent of the WEP reduction, and limited to assure that 

the net effect of the Bill on Social Security program cost through 2025 would be neutral or 

positive. At this time, we estimate that the maximum permissible rebate percentage of 50 percent 

would be applicable, resulting in a roughly $3.5 billion net reduction in cost through calendar 

year 2025. 

The proposal will result in added program cost for workers newly eligible for an OASDT benetit 

after 2016 whose benefit amount would be reduced less by the PSF than by the WEP. However, 

because this proposal does not require receipt of a pension based on non-covered earnings, and 

eliminates most exemptions from adjustments based on non-covered earnings for workers 

becoming newly eligible for OASDI benefits after December 2016, our estimate reflects small 

benefit reductions from the PSF for a relatively large number of workers who would not be 

reduced by the WEP. The net OASDI program benefit savings are estimated at $13.6 billion total 

for years 2017 through 2025 for those newly eligible for OASDT benefits after 2016. 

We estimate additional savings from benefit reductions for application of the WEP under this 

proposal to worker beneticiaries eligible for OASDT benefits in December 2016 who do not have 

a reduction for the WEP but are not certified to be exempt. The combination of the expected 

savings for the workers becoming newly eligible both before and after the end of 2016 are 
55 


21290.041.eps

The Honorable Kevin Brady- Page 3 

estimated to be sufficient to allow for a 50-percent reduction (rebate) for all workers eligible as 

of December 2016, in the amount of the WEP reduction applied for their benefits for entitlement 

in January 2017 and later. Over the long-range period, the net effect on the 75-year actuarial 

balance would be an increase (improvement) of0.05 percent of payroll. All estimates are based 

on the intermediate assumptions of the 2015 Trustees Report. 

Our estimates for the proposal reflect extensive innovative analysis of data for individuals born 

in 1950 with experience through June of 2013, including SSA records of earnings not covered by 

OASDI back to 1978. This analysis has allowed us to model the potential effect of the proposal 

for 2013 as if it were fully in effect for all retired and disabled workers at that time. Based on 

these results, we were able to model the expected effects of the proposal for benefit payments 

starting in 2017. Initially, the proposal would affect substantial numbers of current and former 

Federal, state, and local government employees, plus certain other individuals receiving 

payments counted as wages that are not covered. Over the long-range period, the implications of 

the proposal would progress because the closed group of Federal government employees who are 

not covered by OASDI were all hired before 1984. Eventually, the group affected by the 

proposal will be limited principally to the roughly 25 percent of all state and local government 

employees who are not covered by OASDI. 

Sincerely, 

Stephen C. Goss 

Chief Actuary 
56 


21290.042.eps

SOCIAL SECURITY 

February I 0, 20 16 

The Honorable Shaun Donovan 

Director, Office of Management and Budget 

Washington, D.C. 20503 

Dear Director Donovan: 

The President's Fiscal Year 2017 Budget, released yesterday, included a proposal for enhancing 

and modifying the approach taken to adjust benefits for Federal Old-Age and Survivors 

Insurance ( OASI) and Federal Disability Insurance (DI) beneficiaries who had earnings that were 

not covered under the Social Security program. Under the intermediate assumptions of the 20 I5 

Trustees Report, we project that enactment of this proposal would reduce OASDI program cost 

by about $8 billion total through Fiscal Year 2026, and that the long-range actuarial balance for 

the OASDI program would be improved by about 0.08 percent of taxable payroll. Table 1, 

enclosed, provides annual and summarized long-range estimates of the effects of this proposal on 

OASDI actuarial status. We have enjoyed working with your staff in the Income Maintenance 

Branch in the development of this proposal. Many in our office contributed to the development 

of the proposal and the estimates provided here, principally Jacqueline Walsh and Christopher 

Chaplain. 

Two changes related to OASDI beneficiaries with non-covered earnings are included in the FY 

2017 Budget. The first provision would make $70 million available to State and local 

governments to facilitate development of systems to provide SSA with complete records of 

employees who have worked in employment not covered under OASDI, where a vested pension 

(periodic payment) has been earned based on the non-covered earnings. This information will be 

required for all individuals attaining vested status before January I, 2027, and will include the 

timing and amounts of any periodic or lump-sum payments received based on the non-covered 

earnings: past, present, and expected future. This information will continue to be updated for the 

lifetime of included workers and will assure accurate and full application of the Windfall 

Elimination Provision (WEP) and the Government Pension Offset (GPO) applicable in current 

law for all workers who become eligible for any OASDI benefit prior to January l, 2027. We 

estimate that additional application ofWEP and GPO as a result of this enhanced reporting will 

result in reductions in OASDI benefit payments totaling about $8 billion through FY 2026. 

Estimated Reductions in OASDI Benefits from Requiring State and local Governments to Report Pensions Based on Non-Covered 

Employment Starting 2017 

FY 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 

(billions} 

2015 Trustees Report Intermediate Baseline 

$0 $0 $0 $0.4 $1.0 $1.4 $1.5 $1.4 $1.3 $1.2 

The second provision would apply to all individuals first becoming eligible for any OASDI 

benefit on or after January 1, 2027. New computations, replacing the former WEP and GPO 

provisions, will apply to worker and auxiliary beneficiaries for the WEP, and to spousal 

Total 

$8.3 
57 


21290.043.eps

Page 2- The Honorable Shaun Donovan 

beneficiaries for the GPO, when the worker or spouse has any non-covered earnings. The 

requirement to be in receipt of a pension based on non-covered earnings will be eliminated along 

with the WEP guarantee and all exemptions. 

WEP Replacement 

The new computation involves three components: (I) a "Super AIME" computed considering all 

earnings in SSA records (both OASDI covered and non-covered) up to the annual taxable 

maximum, (2) a "Super PIA" based on the "Super AIME", and (3) the standard AIME based 

only on OASDI covered earnings, or "Covered AIME." The governing PIA for a worker (also 

applicable for his/her auxiliaries) is then calculated as the Covered AIME multiplied by the ratio 

of the Super PIA to the Super AIME. 

The new computation will be effective for all payments on the record of a retired or disabled 

worker beneficiary becoming newly eligible for benefits on or after January I, 2027. As under 

current law, upon the death of the worker, the governing PIA will revert to the standard PIA 

based solely on covered earnings. 

GPO Replacement 

Again, three components are used in the computation: (I) a "Super PIA" computed using both 

OASDI covered and non-covered earnings, (2) a standard PIA ("Covered PIA") based only on 

OASDI covered earnings, and (3) an age reduction factor. Each component is calculated using 

the beneticiary's own earnings record, without regard to insured status, as if entitlement to 

worker benefits begins at the same time as application of the offset. If the beneficiary is entitled 

to any benefit on the basis of a disability, the PI As will be computed as for a disabled worker and 

no age reduction factor will apply. The new offset amount will be the difference between the 

Super PlA and Covered PIA, multiplied by the age reduction factor, if applicable. If the 

beneficiary is dually entitled, the offset will be deducted from the excess benefit payable as a 

spouse. 

The new offset will apply to benefits paid to a spouse, former spouse, or surviving spouse of an 

insured worker when the spouse is age 62 and older, or is entitled to any benefit on the basis of 

disability. The provision is effective for those attaining 62 or becoming newly eligible for a 

disability benefit on or after January I, 2027. 

We hope these estimates will be helpful. Please let us know if we may provide further assistance. 

Enclosure 

Sincerely, 

Stephen C. Goss 

Chief Actuary 
58 

f 


21290.044.eps
59 

Chairman JOHNSON. Thank you. 

Dr. Fichtner, you are recognized. 

STATEMENT OF JASON FICHTNER, Ph.D., SENIOR RESEARCH 

FELLOW, MERCATUS CENTER, GEORGE MASON UNIVERSITY 

Mr. FICHTNER. Thank you, sir. 

Chairman JOHNSON. Thank you. 

Mr. FICHTNER. Good morning, Chairman Johnson, Representative Larson, Members of the Committee. Thank you for inviting me 

to testify today. It is good to be back before you again. 

From my testimony I hope to leave you with the following takeaways: first, a full repeal of the Windfall Elimination Provision, 

WEP, or Government Pension Offset, GPO, would violate the principles of fairness and equity. These provisions were originally intended to protect. 

The original public policy intent of the WEP and GPO is to ensure fair treatment between workers with earnings covered by Social Security and workers with earnings that are not covered by Social Security. It is important that disparate treatment between covered and non-covered workers remain. 

Two, the current WEP and GPO provisions create an overly complex structure. This can sometimes result in higher replacement 

rates for some people with high lifetime combined earnings and 

those with low lifetime earnings. 

Further, the complexity and lack of transparency in the current 

WEP and GPO provisions can hinder people’s ability to accurately 

plan for retirement and potentially cause undue hardship for retirees. 

Third, a proportional or prorated formula would improve fairness 

of the WEP while maintaining fairness overall. This change would 

allow for the use of one benefit formula for all Social Security beneficiaries. It would be simple to understand and would be fairer 

than the current system, while still maintaining the original intent 

of fairness and equity of the WEP and GPO provisions. 

Social Security retirement disability benefits are funded via payroll tax on covered earnings. The system is designed as a progressive benefit formula that provides a higher replacement rate for 

low income earners than for higher income earners. 

The result is that monthly Social Security benefits represent a 

larger share of lifetime earnings for low income workers than high 

income workers. This does not mean that a low income worker’s 

monthly benefit amount is higher in nominal dollars than a higher 

income worker, but rather that the replacement rate is higher. 

For workers with entire careers in covered employment, lower 

lifetime wage earners receive a higher replacement rate than higher lifetime wage earners. But problems arise when workers have 

earnings from non-covered employment, such as earnings received 

through State and local governments and careers such as public 

school teachers, police officers or firefighters. If these workers have 

an entire career in State and local government that is not covered 

by Social Security, there is no problem with the WEP. 

However, many of these State and local government employees 

still qualify for some Social Security benefits either because they 

have employment history in both covered and non-covered employVerDate Sep 11 2014 08:28 Sep 05, 2017 Jkt 021290 PO 00000 Frm 00063 Fmt 6633 Sfmt 6602 I:\WAYS\IN\21290\21290.XXX 21290
60 

ment or because they work simultaneously in two or more jobs that 

include covered and non-covered employment. 

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 with high lifetime combined earnings is higher than those with low lifetime earnings. 

The WEP mistakenly treats some high income earners as if they 

were low income earners. That is unfair. The WEP formula is complicated and hard to explain to beneficiaries. 

Further, the current Social Security statement provides estimated monthly benefit amounts that are not adjusted for the WEP. 

For people relying on the Social Security statement as a retirement 

planning tool, the current non-WEP adjusted information in the 

statement could cause people to overestimate their financial readiness for retirement. 

Completely eliminating the WEP will only return Social Security 

to its pre-WEP state and reinstate a windfall for those with both 

covered and non-covered employment. Hence, repeal is not advised. 

However, a proportional or prorated form would improve fairness 

of the WEP while maintaining fairness and equal treatment. 

As of January 2017, SSA will have 35 years of employment history, including both covered and non-covered employment. Thus, 

we now have both the information and tools necessary to reform 

the WEP and move to a prorated formula. 

President Obama’s budget contains such a proposal and so does 

a similar bill introduced by Chairman Brady and Representative 

Neal. They are very, very similar. For workers whose entire careers 

are in covered earnings, the resulting Social Security benefit 

amount is the same. However, for those with non-covered earnings 

but with similar combined average annual lifetime earnings, now 

their covered earnings are receiving the same replacement rate as 

those whose entire careers are spent in covered employment. 

In other words, their replacement rate on covered earnings is 

now the same and treats both workers with identical lifetime earnings history equally, thus restoring some fairness to the system 

while still maintaining the original intent of WEP to avoid a, quote, 

unquote, windfall to those with non-covered earnings. 

The simplicity and fairness of the proposed new formula is that 

it would apply to all workers, those with both covered earnings 

only and those with both covered and non-covered earnings, making it easy for Social Security to administer and for beneficiaries 

to better plan for retirement. 

Additionally, the Social Security statement could provide accurate monthly benefit amounts to better enable people to plan their 

financial security in retirement. 

It is not often that a Social Security reform proposal comes forward that has bipartisan support and support from both Congress 

and the President. The original intent of the WEP and GPO still 

applies today. However, we now have the opportunity to get the 

formula right for the improvement of the Social Security program 

and its beneficiaries. 

Thank you again for your time and this opportunity to testify. I 

look forward to your questions. 

61 

[The prepared statement of Mr. Fichtner follows:] 


21290.045.eps

~~- MERCATUS CENTER 

-~~~ George Mason University 

ltklglng tl'lt 911> btr.tfft ltadtm.k ldetJ 1nd real10rkl prob&tms 

TESTIMONY 

RESTORING EQUITY AND FAIRNESS TO THE SOCIAL SECURITY 

WINDFALL ELIMINATION PROVISION (WEP) AND GOVERNMENT 

PENSION OFFSET (GPO) 

JASON J. FICHTNER, PhD 

---HefUMCftttttMGfotgo--

House Commlt1ee on Vim Jnd Mean\. SubCOMI'Mtet 01'1 SOoal Secunty 

HNt~ Soc~al Security and ~IC Stn'\WltS (Mul.nQ EQull Tfto)tnw!nl 

Moodl22, 2016 

Good~ ChainnanJohruoa.IW>ki.,M<mi><rB«..-ra.and m.milonoflh<subconuniu.._ Thank you lo< 

invitU,c ..... testify IOCby. 

My DaM b J2SOI'l Fichtner. and l"m 1 ttnior reshr'('b fellow at tbt: Mercatus Ctnttr at Georgr Mason Uoft"t'I"Si~ 

~I .-arch 6ocal and Konomic issu«. including So<w S«urity. I am alto an alliliac<d prol
ar 111 Jahns 

Hopkins Univers-iry. Cieorgetown Uni"t'Cr'li~ and Virginia T«:h. w~ I teach eourats in «ooonUa and publit 

policy. Previously 1 $eNed in 5even.l politionu.t tht Socia] ~urity Admininnt.ion (SSA). includingdt>putycommission~ of Social Security (actins) end chit( «onomist All opinion.4 I o:pms todly are my own and do not 

nectsstlrily reflec-t the views or my empk))'tt'S. 

l'd liketobegjn by thanlti:ngChairman Johnson and Ranking Member Becen-a ~r tht leadership )'OU provide this 

comminee-to ensure that important public poliocy i$$ues involvingSoc:ia_l Security set t.Mattenti,on anddtbatf ~ 

dtsotNt and also to ecasuN that ida.s tnd viewpoints from aD sides are aired in • col~l and resp«tful manner. 

I< is 0'\lly • privileco for,. 10 b< t.m. cnli(yingbofon you to><br. 

Mycnlimony r..,_ on cwoi:orios..._l'ln~ I willoxplain bow !h<C\In'ftl!·bw Windfall Eliminotloo l'nMsion 

(WEP)' is ovorl, complex and unfair. S«ond,l will dis<uss bow r<formi"' lh< Social S«uricy b<ntfit bmub 

1.. Tho Wi'ldfil EtmnattOn ~ (WEP) rcG~m Sooal Stocvtty benefit ~s lo btfltofJCM~H wtlcM wort tistorll'S lrdudt 

botJISooltSe<untY"'CO¥erodand~od~wrththe~e<l~tltlo~~~• 

Tho WEPreduccs the sharto ol J)tttc-ll«'mont wn,rqs 111M Soci.)l St-curity benefits rt'PIIct FOI' fOUO!'fy tl'lt llt'St SlO,OOO in aver~ 

f«IYIOielnforfl\MlOI'\OIIO~wltl'ltllt~ COI'Il«t 

~Wlller.101-550-91A6.twalofr~~ 

~C«fQfatGeofwt,._.,Urwetwy.:J.GI~81'fd..4tllfll:«~ V$1Wll20l 

lhr .. f/lftll!lfllfd .. t/Ws~--...,......dtdt/pt:Jt$lblfJI"'o/llttHM.IM.C....tJIGM\WHMwt~ 
62 


21290.046.eps

would improve the simplicity and fairness of the WEP, while still maintaining the original public policy purpose. 

Additionally, though most of my testimony focuses on the WEP, a related provision, the Government Pension 

Offset (GPO),' has similar complexity and fairness problems that should be addressed. 

From this discussion, I hope to leave you with the following takeaways: 

1) The original public policy intent of the WEP and the GPO is to ensure fair treatment between workers with earnings covered by Social Security and workers with earnings that are not covered by 

Social Security. It is important to maintain this fair treatment between covered and non-covered 

workers. Hence, a repeal of the WEP and the GPO would violate the principles of fairness and equity 

that these provisions were intended to protect. 

2) Unfortunately, given data limitations at the time the current WEP and GPO provisions were 

established in law, the WEP and the GPO create an overly complex structure rife with what economists call perverse incentives. This can sometimes result in higher replacement rates for some 

people with high lifetime combined earnings than those with low lifetime earnings. Further, the 

complexity and lack of transparency in the current WEP and GPO provisions can hinder people's 

ability to accurately plan for retirement and potentially cause undue hardship for retirees. 

3) Much good could come from a relatively straightforward change that would make the Social Security 

benefit formula a proportional, or prorated, benefit formula based on the replacement rate derived 

from the current method of determining the primary insurance amount (PIA) but applying it only 

to the years of covered earnings. This change would allow for the use of one benefit formula for all 

Social Security beneficiaries, would be simple to understand, and would be fairer than the current 

system, while maintaining the original intent of fairness and equity of the WEP and GPO provisions. 

ORIGINAL INTENT OF ENSURING FAIRNESS AND EQUITY BETWEEN COVERED AND 

NON-COVERED WORKERS 

Social Security retirement and disability benefits are funded via a payroll tax on covered earnings. The system is 

designed with a progressive benefit formula that provides a higher replacement rate for lower-income earners 

than for higher-income earners. The result is that monthly Social Security benefits represent a larger share of 

lifetime earnings for lower-income workers than higher-income workers. This does not mean that a lower-income 

worker's monthly benefit amount is higher in nominal dollars than a higher-income worker, but rather that the 

replacement rate is higher. For a simplified example, a lower-income worker whose final year of income before 

retirement was $25,000 and who receives $12,000 per year as a Social Security benefit ($1,000 per month) would 

have a replacement rate based on the final year of earnings of 48 percent ($12,000 I $25,000). Conversely, a higherincome earner whose final year of earnings was $100,000 and who receives $24,000 per year from Social Security 

($2,000 per month) would have a replacement rate of24 percent ($24,000 I $100,000). 

For workers with entire careers in covered en1ployment (employment subject to the Social Security payroll tax), 

lower lifetime wage earners receive a higher replacement rate than higher lifetime wage earners. But problems 

arise when workers have earnings from non-covered employment, such as earnings received through state and 

annual earnings (the first bend point of 90 percent in the benefit formula applies to the first $856 per month for 20l6, or $10,272), 

the WEP reduces the replacement rate from 90 percent to as low as 40 percent, depending on years of coverage under Socia! 

Security. The reduction cannot exceed 50 percent of the amount of the pension received from non·covered employment. For more 

information on the WEP, see Social Security Administration, "Windfall Elimination Provision," January 2016. 

2. A related provision to the WEP, the Government Pension Offset (GPO), reduces Social Security benefits paid to spouses or sur· 

vivors when the spouse or survivor earned a pension from a government job that was not covered by Social Security. The GPO reduc· 

tion is equal to two· thirds of the amount of the pension payment from non·covered government work. For more information on the 

GPO, see Social Security Administration, "Government Pension Offset," July 2015). 

MERCATUS CENTER AT GEORGE MASON UNIVERSITY 
63 


21290.047.eps

local governments in careers such as public school teachers, police officers, or firefighters. Though not without 

fault, the use of replacement rates is useful to illustrate how Social Security is a progressive system. The use of 

replacement rates, however, is not necessarily a good tool for measuring benefit or program adequacy.3 

The Social Security Act of1935 initially exempted state and local government employers from mandatory participation. This exemption was because of constitutional questions as to whether the federal government could 

impose a payroll tax on state and local governments. Some state and local governments wanted their employees 

covered by Social Security, while others did not. Presently, all SO states have agreements with the federal government to allow some state and local employees to be covered by Social Security. However, not all state and local 

public employees are currently covered. 

More than 5 million state and local workers in the United States do not pay Social Security taxes on the earnings 

from their state and local government employment.' This amounts to approximately 28 percent of all state and 

local government workers.5 If these workers have an entire career in state and local government that is not covered 

by Social Security, there is no problem with the WEP or the GPO. However, many of these state and local government employees still qualify for some Social Security benefits, either because they have employment history in 

both covered and non-covered employment, or because they work simultaneously in two or more jobs that include 

covered and non-covered employment. For example, a professor in the State of Texas or the Commonwealth of 

Massachusetts (two of the states whose public workers are not necessarily covered under Social Security') will 

spend the academic year teaching, but may spend summers working for extra income in covered employment 

outside the university. A professor's career may also span multiple universities with some of those years spent at a 

private university, such as Johns Hopkins, which is covered by Social Security. These employees could be affected 

by the WEP and receive Social Security benefits that are calculated in a way that results in an unfair benefit amount. 

About 1.6 million Social Security beneficiaries were affected by the WEP as of the end of 2014.' 

As explained by Brown and Weisbenner (2013): 

If Social Security benefits were calculated as a simple linear function of lifetime earnings, it would 

be possible to calculate the retirement benefit for a worker with partial coverage by simply applying 

the standard benefit formula only to those earnings covered by Social Security. However, the Social 

Security benefit formula was explicitly designed to be nonlinear in order to offer a higher replacement 

rate (i.e., a higher ratio of Social Security benefits to average indexed monthly earnings over one's 

lifetime) for individuals with lower earnings. For workers with earnings that are not covered by the 

Social Security system, using only covered earnings in the standard benefit formula would result in 

a higher replacement rate on these covered earnings than they would receive if all of their earnings 

were covered. In order to adjust for this, the Windfall Elimination Provision (WEP) was enacted 

as part of the 1983 Social Security Amendments. This provision is meant to downward-adjust the 

Social Security benefits of affected workers in order to eliminate the lfwindfall" that arises when, for 

example, an individual with high lifetime earnings (based on both covered and uncovered earnings) 

would appear as if he or she were a low earner when evaluated solely based on covered earnings.' 

3. Though a full discussion on replacement rates is outside the scope of this testimony, for more information, see Jason J. Fichtner, 

"Addressing the Real 'Retirement Crisis' Through Sustainable Social Security Reform" (Testimony before the Senate Committee on 

Finance, Subcommittee Social Security, Pensions, and Family Policy, Mercatus Center at George Mason University, Arlington. VA. May 

21. 2014). 3. 

4. Jeffrey R. Brown and Scott J. Weisbenner, "The Distributional Effects of the Social Security Windfall Elimination Provision," Journal 

of Pension Economics and Finance 12, no. 4 (2013): 415-34. 

5. "The Windfall Elimination Provision: It's Time to Correct the Math" (Position Paper, Socia! Security Advisory Board, Washington, 

DC, October 1, 2015) 

6. "Frequently Asked Questions: GPO WEB FAQ," Social Security Fairness, accessed March 16, 2016. 

7. Gary Sidor, "Social Security: The Windfall Elimination Provision (WEP)," Congressional Research Service, June 30, 2015. 

8. Brown and Weisbenner, "The Distributional Effects," 416. 

MERCATUS CENTER AT GEORGE MASON UNIVERSITY 3 
64 


21290.048.eps

In sum, while the WEP is intended to ensure that Social Security beneficiaries are treated fairly and that benefits 

are pro\~ded 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. 

The WEP mistakenly treats some high-income earners as if they were low-income earners. To see how this might 

come about, consider the following examples. 

Table 1. Example of a Stylized Social Security Benefit 

Average Annual Average Indexed 

Eamings Adjusted for Monthly Earnings PIA90% PIA32% PIA15% 

Wage Growth (AI ME) for 2016 Bend Point Bend Point Bend Point PIA Replacement Rate 

$24,000.00 $2,000.00 $770.40 $366.08 $0.00 $1,136.48 57% 

$36,000.00 $3,000.00 $770.40 $686.08 $0.00 $1,456.48 49% 

$100,000.00 $8,333.33 $770.40 $1,376.32 $476.45 $2,623.17 31% 

by1Spercer.c 

Table I shows that for workers who tum age 62 in 2016 with 35 years of covered employment and begin receiving Social Security retirement benefits at their full retirement age (FRA), they would receive a monthly benefit 

of $1,136 if their average annual lifetime earnings were $24,000 (a 57 percent replacement rate); $1,456 if their 

average annual lifetime earnings were $36,000 (a 49 percent replacement rate); or $2,623 if their average annual 

lifetime earnings were $100,000 (a 31 percent replacement rate). 

Now consider the same workers but who have 20 years of non-covered employment and 15 years of covered 

employment. Even if combined average annual lifetime earnings is the same, for the years in which they worked 

in non-covered employment, Social Security treats those years as $0 years for purposes of calculating the average 

indexed monthly earnings (AIME). For the worker with average adjusted annual income of $24,000 each year, 

20 of the 35 years are considered $0. Hence, the resulting average annual earning adjusted for wage growth is 

$10,285 ($24,000 x 15 / 35). Without the WEP adjustment, here in table 2 are the PIAs and replacement rates for 

these workers. 

Tabie 2. Example of a Stylized Social Security Benefit with 35 Years Employment: 15 Covered and 20 Non· 

Covered, No WEP Adjustment 

Average Annual Average Indexed 

Earnings Adjusted for Monthly Eamings PIA90% PIA3zt'/a PIA 15% 

Wage Growth I AI MEl for 2016 Bend Point Bend Point Bend Point PIA Hf:>_p_lacement Rate 

$10,285.71 $857.14 $770.40 $0.37 $0.00 $770.77 

$15,428.57 $1,285.71 $770.40 $137.51 $0.00 $907.91 

90% 

71% 

$42,857.14 $3,571.43 $770.40 $868.94 $0.00 $1,639.34 46% 

1: 

As can be seen, the $24,000 per year worker is viewed by Social Security as a lower wage $10,000 per year worker, 

and the non-WEP adjusted monthly benefit amount would be $771. While nominally Jess than the $1,136 that the 

$24,000 per year worker received under a full career of covered employment, the replacement rate for the worker 

with non-covered employment is now 90 percent as opposed to 57 percent. For the $100,000 per year worker, the 

replacement rate is now 46 percent as opposed to 31 percent. This worker now receives a "windfall" as the benefit 

replacement rate is higher than it would be relative to all earnings (covered and non-covered). 

MERCATUS CENTER AT GEORGE MASON UNIVERSITY 
65 


21290.049.eps

To correct for this potential "windfall:' the WEP adjusts the benefit formula. The first bend point is now reduced 

from 90 percent to as little as 40 percent! Using the same stylized workers as before, but now applying the WEP 

adjustment, here are the resulting PIAs and replacement rates in table 3. 

Table 3. Example of a Stylized Social Security Benefit with 35 Years Employment: 15 Covered and 20 NonCovered, with WEP Adjustment 

Average Annual Average Indexed 

Earnings Adjusted for Monthly Earnings PIA40% PIA32% PIA 15% 

Wage Growth (AI ME] for 2016 Bend Point Bend Point Bend Point PIA Re lacement Rate 

$10.285.71 $857.14 $342.40 $0.37 $0.00 $342.77 40% 

$15.428.57 $1,285.71 $342.40 5137.51 $0.00 $479.91 37% 

$42,857.14 $3,571.43 $342.40 $868.94 $0.00 $1,211.34 34% 

ote~ For l'OI6. the first S8S6 of AI ME is mufhDlicd by 90 oercent: AI ME bttwten S8S6 and SS,157. by 32 percent; and the remaining AIM E. by 15 percent. 

Source: Author calculations based on Scxi.il S«urhy Adtrllnistrition, MBentfit Formula BMd Points." accessed March 17. 2016. 

Now the resulting replacement rates are generally Jess and more in-line with comparable workers with similar 

annual average lifetime earnings but wiLh Lhei1· eulire 4.;areers in <.:uvt:rt:t.l employmt:nt. Tlu.: "windfall" has been 

eliminated. However, the WEP formula is complicated and hard to explain to beneficiaries.'• Further, the current Social Security Statement provides estimated monthly benefit amounts that are not adjusted for the WEP. 

While the Statement does include a note to all Statement recipients that they could be subject to the WEP and 

that their benefits may be reduced, the complexity of the program and the benefit formula result in beneficiaries 

likely first learning about the WEP only when they first receive a WEP-reduced monthly Social Security benefit 

check. For people relying on the Social Security Statement as a retirement planning tool, the current non-WEP 

adjusted information in the Statement could cause people to overestimate their financial readiness for retirement 

It is important to note at this point that eliminating the WEP will only return Social Security to its pre-WEP state 

and reinstate a windfall for those with both covered and non-covered employment. Hence, repeal is not advised. 

However, a "proportional" or prorated formula would improve fairness of the WEP while maintaining fairness 

and equal treatment. It would also be much easier for SSA to administer and explain to beneficiaries. 

UNINTENDED CONSEQUENCES 

Not only does the current WEP unequally treat beneficiaries with similar average annual lifetime earnings differently due to covered and non-covered employment, but the current WEP policy provides a perverse incentive 

for those in non-covered employment to seek secondary jobs in covered employment. 

The Social Security progressive benefit formula is intended to provide workers who spend their careers in low 

paying jobs with a monthly benefit amount that replaces a higher proportion of their earnings than the benefit 

that is provided to workers with higher lifetime earnings. However, as I've discussed in this testimony, the benefit 

formula does not differentiate between those who worked in low-paying jobs throughout their careers and other 

workers who appear to be lower-income workers solely because they worked many years in jobs not covered by 

Social Security but had some jobs that were in covered employment. 

This could provide a perverse incentive among workers in non-covered employment to seek some additional 

outside employment in jobs that are covered by Social Security for the sole purpose of gami11g the Social Security 

system. Doing so would provide these workers with a Social Security benefit check upon retirement, in addition 

9. For more information on the WEP. see Social Security Administration . .. Windfall Elimination Provision," January 2016. 

10. Brown and Weisoonner, "The Oistribotional Effects": Social Security Advisory Board, "The Windfall Elimination Provisioo: 

MERCATUS CENTER AT GEORGE MASON UNIVERSI TY 
66 


21290.050.eps

to the pension check earned via non-covered employment, with a higher replacement rate than would he due to 

a worker with only covered employment hut with a similar annual lifetime income. 

POLICY RECOMMENDATIONS AND CONCLUSION 

When the current formula for the WEP was established as part of the 1983 Amendments to the Social Security Act, 

the Social Security Administration lacked the administrative records to accurately capture non-covered employment history. Hence, a proportional or prorated WEP wasn't possible. However, as of January 2017, SSA will have 

35 years of employment history including both covered and non-covered employment. Thus, we now have both 

the information and the tools necessary to reform the WEP and move to a prorated formula. President Obama's FY 

2017 Budget11 contains just such a proposal, and a similar bill has been introduced in the House by Ways and Means 

Committee Chairman Kevin Brady (R-TX) and Rep. Richard Neal (D-MA)." These proposals are very similar, and 

both would slightly improve the solvency of the program, though the president's proposal also addresses the GPO 

and begins in 2027, whereas the House bill would begin applying the new benefit formula in 2017. 

To see how a uproportional" or prorated benefit formula would look, consider table 4 below which includes the 

same stylized workers used in the previous illustrations. 

Table 4. Example of a Stylized Social Security Benefit with 35 Years All Covered Employment with Proposed 

Prorated WEP Adjustment 

AverageAtlnual 

Earnings Adjusted Averagelr.~xed 

for Wage Growth MonthhtEarnlngs PIA90% PIA32% PIA15% PIA{AII Replacement Rate 

(AIIEamings {AIME for2016 Bend Point Bend Point Earnings) A!IEamlngs} 

$24,000.00 $2,000.00 $770.40 $366.08 $0.00 $1,136.48 57% 

$36,000.00 $3,000.00 $770.40 $686.08 $0.00 $1.456.48 49% 

$100.00000 $8,333.33 $770.40 $1,376.32 $47645 $2,623.17 31% 

E~~:;~m lecfa:S UzedSodaiSecuri BenefltW!th35Years'Em lc nt: 15Covered & 20 Non•CcveredWith Pro 

$24000.00 $2,000.00 $770.40 $366.08 $0.00 51.136.48 57% 

$36,000.00 $3,000.00 $770.40 $5136.08 $!100 $1,456-413 

$100 000.00 $8,3~3.33 $770.40 $1,376.32 $476.45 $2,623.17 31% 

AYerageArmual AYeragelndexed 

Earnings Adjusted MonthlyEarnlr~gs 

forWageGrowth {AIME)for2016 

CoveredEaml (CcveredEarni 

$24,(0000 $2,000.00 

$36,()(X).00 $3,000.00 

$100,00000 $8,353.33 

d Pro-Rated WEP Acfustment 

$10,285.71 $857.14 

$15,428.57 1,28571 

$42,857.14 $3,571.43 

(Replacement Rate 

for All Eam!ng~x 

AMIECoYered 

Eamln s 

$1,136.48 

$1,455.48 

$2,623.17 

$487.06 

$624.21 

$1,124.22 

Under the proposed new formula, the AIME is computed as it is currently but for all earnings, covered and noncovered combined. The resulting PIA is then determined. The replacement rate ofPIA divided by AIME is derived. 

Next, an AIME is computed for just the covered earnings. At this point the replacement rate is multiplied by the 

AIME for covered earnings only, resulting in the effective PIA. 

For workers whose entire careers are in covered earnings, the resulting PIA is the same. However, for those with 

non-covered earnings, but with similar combined average annual lifetime earnings, now their covered earnings 

receive the same replacement rate as those whose entire careers were spent in covered employment. In other 

words, the replacement rate on covered earnings is now the same and treats both workers with identical lifetime 

earnings history equally, thus restoring some fairness to the system while still maintaining the original intent of 

the WEP to avoid a "windfall" to those with non-covered earnings. 

The simplicity and fairness of the proposed new formula is that it would apply to all workers-those with 

both covered earnings only and those with both covered and non-covered earnings-making it easy for SSA to 

11. Social Security Administration Chief Actuary Stephen Goss to Office of Management and Budget Director Shaun Donovan, 

February 10, 2016, Social Security Administration, https://www.ssa.gov/oact/so!vency/. 

12. Equal Treatment of Public Servants Act of 2015. HR. 711. 114th Cong (2015). 

MERCATUS CENTER AT GEORGE MASON UNIVERSITY 
67 

f 

Chairman JOHNSON. Thank you, sir. 

Before I recognize Mr. Lee, I would like to recognize Dr. Boustany so he can enter a statement for the record. 

Mr. BOUSTANY. Thank you, Mr. Chairman. I appreciate it. 

I ask unanimous consent to enter into the record a statement regarding this very important issue from my home State of Louisiana. 


21290.051.eps
68 

Chairman JOHNSON. Without objection. 

[The information follows: The Honorable Charles Boustany Submission] 

f 


21290.052.eps
69 

Mr. BOUSTANY. Thank you. 

Chairman JOHNSON. Okay. Mr. Lee, I believe you are next in 

line. You are recognized for five minutes. 

STATEMENT OF TIM LEE, EXECUTIVE DIRECTOR, TEXAS 

RETIRED TEACHERS ASSOCIATION 

Mr. LEE. Thank you, Chairman Johnson, Mr. Larson, Mr. Neal, 

Members of the Subcommittee. 

I am Tim Lee. I am the Executive Director of the Texas Retired 

Teachers Association. I appreciate the opportunity to be here today 

to testify on behalf of TRTA’s over 80,000 members on the Windfall 

Elimination Provision and the Government Pension Offset. 

TRTA is the largest association for retired public school and 

higher education employees and now ranks number one in membership in the Nation. TRTA is part of a growing ad hoc coalition 

of public employee retiree associations, public employee organizations, and some of the nation’s largest public employee retirement 

systems who are working together to support the passage of fair 

and equitable WEP reform legislation. 

Some of TRTA’s closest partners, such as the Retired State and 

County Municipal Employees Association of Massachusetts and the 

Association of Texas Professional Educators, are here today in support of your efforts to pass WEP reform this session. 

I have spoken with many of the leaders of other organizations 

that could not be here today, and they also extend their appreciation to each of you for this hearing. 

We have already listened to testimony today about the origins of 

the WEP and the GPO, and this is good background information, 

but it does not really capture the sense of hardship these two provisions create for both retired and active workers. 

For private sector employee contemplating a career shift in public education, the impact is the future benefit loss felt after years 

in another field, and for those contemplating education as a career, 

from the beginning the provisions provide arguments against entering the profession at all. 

As a parent with four children in public schools, this is very concerning to me as I want education and other vital public service 

roles to be highly sought and rewarding for the best and most talented job seekers. 

And for our retirees, the consequences are very severe in that 

they lose dollars for their benefits every month. 

Setting aside our views regarding underlying arguments for both 

the WEP and the GPO, TRTA has always believed the congressional response to these arguments have been arbitrary and based 

on incomplete data and faulty reasoning. Like many organizations 

with similarly affected membership, TRTA has long supported legislation to fully repeal the WEP and the GPO. 

However, despite large numbers of bipartisan cosponsors, little 

has changed in almost 30 years these provisions have impacted 

public workers. We acknowledge that a full repeal is costly and denies any merit that may support the initial basis for their enactment. 

Over the years congressman Brady has graciously worked with 

our organization and others to find a fair and reasonable solution 

70 

to this growing problem. As early as 2004, Congressman Brady 

wrote, in part, ‘‘A teacher’s Social Security should be based on the 

same thing every American’s Social Security is based on: work history and contributions, not more and certainly nothing less.’’ 

Today H.R. 711, the Equal Treatment of Public Servants Act, is 

before you for your consideration. Replacing the current WEP calculation with a formula that takes into consideration the individual’s entire working career is an important step towards greater 

fairness in the system. While the increased benefit that will become available to those impacted does not fully restore the Social 

Security earnings lost under the current formula, the additional income will be significant for the poorest retirees in our ranks. 

In Texas, the vast majority of TRTA pensioners earn in very 

modest retirement benefits, and replacing and reforming the WEP 

is a need. Our retirees are in desperate need for fairness and for 

the maximum possible increase in Social Security benefits. 

In October of last year, the Social Security Advisory Board published a position paper on the WEP, acknowledging that when Congress established the WEP formula and the Social Security Administration lacked data on earnings in jobs not covered by Social Security that are necessary to make an exact benefit adjustment. 

Beginning in 2017, the Social Security Administration will have 

35 years of data on earnings from both covered and non-covered 

employment. According to the SSAB’s paper, the availability of this 

complete and complex data means that Congress can now apply the 

more accurate approach. This greater accuracy should implore Congress to repeal the arbitrary WEP formula and provide fairness to 

government workers by adopting H.R. 711. 

Even more recently, it is important to note the President’s fiscal 

year 2017 budget proposes to adjust Social Security benefits based 

on the extent to which workers have non-covered earnings. While 

we do appreciate the President’s proposal, we do not see a need to 

delay this important transition for ten years as his proposal suggests. 

It is critically important to note and acknowledge the need for 

the alternative approach based on actual earnings. I can assure 

members of this Committee that the thousands of retired public 

workers impacted by the current WEP formula would appreciate 

action now instead of waiting another decade in the future. 

After years of failed attempts to find a solution and underlining 

the inadequacies associated with the WEP, TRTA appreciates the 

support which we now find from Members of Congress, the SSAB, 

and the Obama Administration. We believe it is time for Congress 

to enact H.R. 711, The Equal Treatment for Public Servants Act. 

H.R. 711 will permanently repeal the current WEP and it will provide public servants, teachers, firefighters, police officers and other 

State and local employees equal treatment under the law on the 

benefits they have provided and reduce the WEP for current retirees as much as 33 percent. 

[The prepared statement of Mr. Lee follows:] 

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U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON WAYS AND MEANS 

Statement of Tim Lee, Executive Director 

Texas Retired Teachers Association, Austin, Texas 

Testimony Before the Subcommittee on Social Security 

Of the House Committee on Ways and Means 

"Social Security and Public Servants: Ensuring Equal Treatment" 

March 22, 2016 

Chairman Johnson, Ranking Member Becerra and distinguished members of the subcommittee. 

I am Tim Lee, the Executive Director of the Texas Retired Teachers Association (TRTA). I 

appreciate the opportunity to be here today to testify on behalf of TRTA's over 80,000 members 

on the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) - two 

provisions of the Social Security Act which negatively affect public retirees who were not 

covered by Social Security. 

As background, TRTA, which was founded in 1953, is the largest association for retired public 

school and higher education employees and now ranks number one in membership in the 

nation. TRTA has more than 80,000 members who continue to be involved in local public school 

education and in the well-being of their communities. Tn 2014, TRTA members contributed 

5,585,267 volunteer hours, a value of $130,695,248 given to Texas. Seventy-five percent of all 

Texas retired teachers are woman and 95% of all Texas public school employees are not covered 

by Social Security through their school district employer. 

Tn addition to speaking on behalf of TRT A, I'm proud to be part of a growing ad hoc coalition' 

of public employee retiree associations, public employee organizations, and some of the 

nation's largest public employee retirement systems who are working together to support the 

passage of fair and equitable \NEP reform legislation. Vv'hile we are all strong supporters of the 

Social Security system, we are troubled that benefits earned by many of our members are 

unfairly reduced based on the arbitrary provisions of WEP and GPO. 

1 1n addition to TRTA, the organizations that support H.R. 711 include: Association ofTexas Professional 

Educators, California Public Employees Retirement System, California Retired Teachers Association, Colorado 

School and Public Employees Retirement Association, Houston Firefighters' Relief and Retirement Fund, 

International Union of Police Associations, AFL-CIO, Illinois Retired Teachers Association, Louisiana Retired 

Teachers Association, Missouri Retired Teachers Association, National Active and Retired Federal Employees 

Association, National Association of Police Organizations, National Conference of State Social Security 

Administrators, Ohio Public Employees Retirement System, Retired State, County and Municipal Employees 

Association of Massachusetts, School Employees Retirement System of Ohio, School Employee Retirees of Ohio, 

State Teachers Retirement System of Ohio 
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21290.054.eps

ln order to put today's discussion in some context, allow me to take a moment to very briefly 

reflect on the origins of both the WEP and CPO 

The WEP, which was enacted in 1983, was based on recommendations of the bipartisan 

National Commission on Social Security- the so-called Greenspan Commission. The purpose 

was to remove an unintended advantage that the regular Social Security benefit formula 

provided to persons who also received pensions from non-Social Security-covered employment. 

"D1e National Com1nission is concerned about the relatic>ely large OASDI benefits tlwt can 

accrue to individuals who spend most of their working careers in non covered employment from 

which they derive pension rights, but who also become eligible for OASDI bmefits as a result of 

relatiPely short periods in caPered employment with other employers. Accordingly, the National 

Commission recommends that the method of computing benefits should be revised for persons 

who first become eligible for pensions from non-covered employment, after 1983, so as to 

eliminate "windfall" benefits. 

The result of such a work history is to produce OASDI benefits that contain "windfall" 

elements-- the benefits payable are relatively high compared to tl1e proportion of time spent and 

the OASDI taxes paid during caPered employment. D1is results from the weighted benefit 

formula, which treats these individuals in the same manner as if they were long-service, lowearnings workers. Specifically, the National Commission beliePes that these indiriduals should 

receil'e benefits whiclz are more nearly of a proportionate basis than the heavily-weigllted 

benefits now provided. "2 

According to Social Security data presented in a Congressional Research Service report 

published in June of 20153, about 1.6 million Social Security beneficiaries were affected by the 

WEP as of December 2014 

The GPO, which was originally enacted as part of the 1977 Social Security Amendments, was 

designed to treat public pensions as though they were Social Security benefits, thus instituting 

dual entitlement provisions. Spousal benefits were offset dollar for dollar beginning in 

December 1982. Women who were eligible for government pensions before December 1982 

were exempt for a five-year transition period. Men who were eligible for government pensions 

before 1982, however, were exempt from the offset only if their spouses had provided one half 

of their support. Congress amended the law in 1983, reducing the dollar for dollar reduction to 

a two-thirds offset. 

According to Social Security data presented in a Congressional Research Service report 

published in April20144, about 615,000 Social Security beneficiaries had spousal or widow(er)'s 

2 http:/ /www.ssa.gov/history/reports/gspanS.html 3 Social Security: The Windfall Elimination Provision (WEP), Congressional Research Service, Gary Sidor, 

Information Research Specialist, June 30, 2015 
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benefits reduced by GPO as of December 2013. According to the report, this number doesn't 

include those who were potentially eligible for spousa 1 or widow(er)' s benefits but were 

deferred from filing for them because of their expectation that CPO would eliminate their 

benefit. About 81% of all affected persons were women. 

Setting aside our views regarding the underlying arguments for both the WEP and the CPO, 

TRT A has always believed the congressional responses to these arguments have been arbitrary 

and based on incomplete data and faulty reasoning. 

For current retirees impacted by these provisions, it can mean hundreds of dollars a month lost 

in much-needed Social Security benefits. For the private sector employee contemplating a 

career shift into public education, the impact is the future benefit loss felt after years in another 

field. And, for those contemplating education as a career from the beginning, the provisions 

provide arguments against entering the profession at all. 

For decades now, members of TRTA and other organizations nationwide have suffered under 

the financial hardships imposed on public retirees by the Social Security system. Carefully 

constructed personal retirement plans have been destroyed because of the WEP and CPO. 

Despite improved educational efforts on the part of the Social Security Administration, public 

employee retirement systems, and organizations like ours, all too often, teachers and other 

affected school employees only find out about these penalties when they go to apply for their 

benefits. By then, it is too late to make alternative financial planning decisions, and public 

retirees are left to cope with what is often a greatly diminished retirement income. 

Like many organizations with a similarly affected membership, TRTA has long supported 

legislation to fully repeal the WEP and the CPO. However, despite large numbers of bipartisan 

co-sponsors, neither Democratic nor Republican majorities have made a substantial effort to 

repeal these provisions. We acknowledge that a full repeal is costly and denies any merit that 

may support the initial basis for their enactment. 

Nevertheless, we are deeply grateful to those Members of Congress who have supported our 

repeal efforts and we appreciate the fact that countless Members realize the impacts of these 

penalties are not vvhat were originally intended when they were enacted. 

Over the years, we have deeply appreciated the willingness of Congressman Kevin Brady (RTX) to work with our organization and others to find a fair and reasonable solution to this 

growing problem. As early as 2004, Congressman Brady wrote 5 in part: 

"Many retired and soon-to-be retired teachers have either worked a second career or held a 

second job during their teaching career, often because of low-paying teacher salaries. They know 

4 Social Security: The Government Pension Offset (GPO), Congressional Research Service, Gary Sidor, Information 

Research Specialist, April 23, 2014 5 The VOICE, 2"' Quarter Edition, The Voice is a quarterly publication mailed exclusively to TRTA members. 

3 
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21290.056.eps

firsthand the WEP is painful. Due to the antiquated WEP formula, they watch helplessly as 

their own Social Security benefits are reduced by as much as ($400) per month." ln Texas, 40% 

ofTRTA's members report being negatively impacted by the current unfair WEP fonnula. With 

an average monthly annuity of$1900, TRS Texas annuitants already struggle financially to 

meet today's growing costs. 

"A teacher's Social Security should be based on the same thing every Americans' Social 

Security is based on: work history and contributions. Notl1ing more and certainly nothing less." 

In 2014, working hand in hand with the Retired State, County and Municipal Employees 

Association of Massachusetts, we were pleased to see the introduction of the "Equal Treatment 

for Public Servants Act." This bipartisan bill, sponsored by Congressmen Kevin Brady (R-TX) 

and Richard Neal (D-MA), proposed to permanently repeal the current Windfall Elimination 

Provision and replace it with a new and fairer formula that treats public servants like the rest of 

American workers. In their Dear Colleague letter seeking cosponsors, they wrote: 

"There is nothing fairer, than equal treatment under the law. (My) bill guarantees public 

servants will receiz>e the Social Security they earned while they paid into tl1e fedeml program. 

Their Social Security amount will no longer be figured by an arbitrary WEP formula, but will 

be based on each worker's real-life Social Security contributions and work history, just like 

everyone else." 

Today, HR. 711 "The Equal Treatment of Public Servants Act" is before you for your 

consideration. 

The WEP, as currently designed, penalizes people who have dedicated their lives to public 

service, often at a personal financial sacrifice. Teaching is a rewarding career, but it is not 

lucrative. In order to support their families, teachers typically work in summer jobs and pay 

Social Security taxes. Many do so without realizing they will receive a reduced benefit because 

of the WEP. They understand they will not receive the maximum Social Security benefit 

because, frankly, they have not earned one. But they do believe they will be treated the same as 

everyone else who meets the minimum eligibility criteria of 40 quarters of covered Social 

Security employment. 

Another problem is somewhat unique to those employees who also earned low wages in 

uncovered positions. These employees are essentially getting hit twice- once in the form of a 

low pension and again when their Social Security benefit is reduced by the WEP. H.R. 711 

corrects this unintended consequence. 

Replacing the current WEP calculation with a formula that takes into consideration the 

individual's entire working career is an important step towards greater fairness in the system. 

While the increased benefit that will become available to those impacted does not fully restore 

Social Security earnings lost under the current formula, the additional income will be significant 

for the poorest retirees in our ranks. 

4 
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21290.057.eps

Additionally, many states experience severe teacher shortages. To meet increasing demands for 

qualified teachers, many school districts 1vill seek to recruit mid-career individuals from other 

professions, most of which are covered by Social Security. While these individuals may be 

willing to make salary sacrifices to pursue a second career in education, they would be 

unwilling or unable to accept further financial sacrifices that Social Security will impose upon 

them for their career choice. Reducing the impact of the WEP will also reduce this obstacle to 

teacher recruitment. 

Congressmen Brady and Neal, and their growing list of cosponsors, are not the only ones that 

have recently recognized the need to correct the fundamental unfairness associated with the 

WEP. 

In October of last year, the Social Security Advisory Board (SSAB) published a position paper 

entitled, "The Windfall Elimination Provision - It's Time to Correct the Math." The paper 

acknowledges that when Congress established the WEP formula the Social Security 

Administration lacked data on earnings in jobs not covered by Social Security that are necessary 

to make an exact benefit adjustment. The report also notes that "Although Congress intended 

to treat comparably workers with non-covered earnings and workers who worked their entire 

career in employment covered by Social Security, the formula is inexact."' 

Beginning in 2017, the Social Security Administration will have 35 years of data on earnings 

from both covered and non-covered employment. According to the SSAB' s paper, the 

availability of these data means that Congress can now apply the more accurate approach 

desnibed in the 1983 Greenspan C01m11ission report. 

Even more recently, it's important to note the President's Fiscal Year 2017 Budget, released on 

February 9, 2016 proposes to transition after ten years to an alternative approach, which would 

adjust Social Security benefits based on the extent to which workers have non-covered earnings. 

Aliliough ilie details regarding the President's proposal are not exactly clear to us and while we 

don't see a need to delay this important transition for 10 years as his proposal suggests, it is 

critically important to note the acknowledgement of the need for an alternative approach based 

on actual earnings. 

After years of failed attempts to find a solution to the underlying inequities associated with the 

WEP, TRTA appreciates the support which we now find from Members of Congress, the SSAB, 

and the Obama Administration. We believe it's time for Congress to enact H.R. 711, "The Equal 

Treatment of Public Servants Act." 

H. R. 711 will permanently repeal the current WEP and will provide public servants - teachers, 

fire fighters, police officers, and other state and local employees -equal treatment under the law 

on the benefits iliey have earned! 

6 The Windfall Elimination Provision- It's Time to Correct the Math, Social Security Advisory Board, October 1, 

2015 

5 
76 

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21290.058.eps

H. R 711 will reduce the WEP for current retirees by as much as 33%! Future retirees will see 

the WEP reduced as much as 50%! Any increase in our public service retirees' fixed incomes 

greatly bolsters their retirement security! 

H. R. 711 provides more than hope to current and future retirees. It provides an equitable 

solution to a long-standing and unfair Social Security issue! 

And, according to the Social Security Administration's Chief Actuary, H. R. 711 achieves all of 

these goals without negatively impacting the Social Security Trust Fund. 

Before I conclude, I'd like to suggest that we all must now work together to find a similar 

solution to the challenges and unfairness associated with the CPO. The SSAB has promised a 

separate paper which will analyze the GPO and will propose options to improve it. Similarly, 

President Obama' s budget supports a proposal for enhancing and modifying the approach 

currently taken to adjust spousal or widow(er)'s benefits. 

Although these proposals aren't nearly as developed as the WEP proposal embodied in H .R. 

711, they offer hope to TRTA members and present an opportunity for us to find relief for those 

adversely affected by its arbitrary formula. 

In conclusion, on behalf of TRTA's 80,000 members and millions of other public employees and 

retirees from every state in this nation, I appreciate the opportunity to be here today and I urge 

you to pass fair and equitable WEP reform during this Congress. 

Thank you. 

### 

6 
77 

Chairman JOHNSON. Thank you, sir. 

Mr. LEE. Thank you. 

Chairman JOHNSON. Ms. English, Please proceed. 

STATEMENT OF JEANNINE ENGLISH, PRESIDENT, AARP 

Ms. ENGLISH. Thank you. On behalf of our 38 million members 

throughout 50 States, the District of Columbia, Puerto Rico, and 

the U.S. Virgin Islands, including our National Retired Teachers 

Association members, and all Americans 50 and over, AARP thanks 

Chairman Johnson, Ranking Member Becerra, and members of the 

Social Security Subcommittee for the opportunity to testify today in 

support of The Equal Treatment of Public Servants Act. 

We are happy to join numerous other organizations representing 

retired educators, firefighters, law enforcement officers, Federal 

workers who support this bipartisan effort. Both H.R. 711 and a 

similar proposal included in President Obama’s fiscal year 2017 

budget request offer a resolution to the longstanding issue of calculating a fair Social Security benefit for workers employed by both 

the private sector and for employers who do not participate in Social Security. 

The Windfall Elimination Provision, or WEP, was intended to recover an unfair advantage that Social Security benefit formula provided to workers in dual careers. Without the WEP, some public 

sector employees who do not pay Social Security taxes would receive a higher replacement rate of their earnings than workers who 

paid Social Security taxes on all of their equivalent earnings. 

The one size fits all approach of the current system has several 

drawbacks. It cannot address the great diversity in the earnings of 

State and local workers. 

In addition, research has shown that the WEP can be regressive 

and disproportionately affects lower earners. For decades, efforts to 

design a fair and accurate method to calculate Social Security benefits of these workers with dual careers was hampered because 

there was no effective method for Social Security to accurately 

track all earnings for State or local government employment. 

Fortunately, more recent data records are making it possible to 

do more to easily track earnings from all employers. As a result, 

it is now possible to adopt and administer a fair solution. 

Under The Equal Treatment for Public Servants Act, the current 

WEP will be replaced by the Public Servants Fairness Formula, 

PSFF. The PSFF will first calculate Social Security benefits of a 

worker with public and private sector earnings as if all of those 

earnings were subject to Social Security taxes, using the same formula that applies to all workers. 

To ensure there is no windfall, the benefit will then be multiplied 

by the fraction of earnings on which the worker paid Social Security taxes. This new calculation will allow for benefits that accurately reflect the individual’s lifetime earnings of dual career workers, while recognizing that not all of those earnings were subject 

to Social Security taxes. 

President Obama has recently proposed a similar process to replace the WEP. We are encouraged by the President’s support for 

an approach that is generally consistent with H.R. 711. Millions of 

retired State and local workers, including many teachers, have reVerDate Sep 11 2014 08:28 Sep 05, 2017 Jkt 021290 PO 00000 Frm 00081 Fmt 6633 Sfmt 6602 I:\WAYS\IN\21290\21290.XXX 21290
78 

ceived a Social Security benefit that is excessively reduced because 

the current WEP formula fails to consider an individual’s specific 

work history. 

AARP’s founder, Dr. Ethel Percy Andrus, established the National Retired Teachers Association to serve the needs of retired 

educators. Today the NRTA is an important part of AARP’s history 

and our organization. We have listened to our members throughout 

the country and others affected by the WEP, and we believe that 

H.R. 711 is an opportunity to treat more fairly the 1.6 million 

workers affected by the WEP, including many teachers who belong 

to the NRTA. 

We applaud the committee members for working to advance a bipartisan solution to this issue. We are pleased that this effort 

builds on Congress’ work last year to achieve bipartisan solution to 

fund the Social Security Disability Insurance Program with reasonable anti-fraud protections. 

We are encouraged that the committee and this Congress can 

likewise reach agreement with the Administration to address the 

WEP this year. AARP stands ready to help on this and other proposals to strengthen and improve Social Security and protect the 

income security needs of America’s families. 

[The prepared statement of Ms. English follows:] 

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Real Possibilities 

STATEMENT FOR THE RECORD 

SUBMITTED TO THE 

HOUSE WAYS AND MEANS 

SOCIAL SECURITY SUBCOMMITTEE 

Social Security and Public Servants: 

Ensuring Equal Treatment 

March 22, 2016 

AARP 

601 E Street, N.W. 

WASHINGTON, D. C. 20049 

Submitted By 

Jeannine English 

President 

AARP 

For further information, contact: 

Cristina Martin Firvida 

(202) 434-6194 

Government Affairs 
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21290.060.eps

On behalf of our 38 million members, including our National Retired Teachers Association 

members, and all Americans age 50 and over, AARP thanks Chairman Johnson, Ranking Member 

Becerra and members of the Social Security Subcommittee for the opportunity to testify today on 

the Equal Treatment of Public Servants Act of 2015 (H .R. 711). AARP has members in all 50 States 

and the District of Columbia, Puerto Rico, and U.S. Virgin Islands, and is a nonpartisan, nonprofit, 

nationwide organization that helps people turn their goals and dreams into real possibilities, 

strengthens communities and fights for the issues that matter most to families such as healthcare, 

employment and income security, retirement planning, affordable utilities and protection from 

financial abuse. 

AARP is pleased to support the Equal Treatment for Public Servants Act, sponsored by Chairman 

Brady and Select Revenues Subcommittee Ranking Member Neal. We are happy to join numerous 

other organizations representing retired educators, firefighters, law enforcement officers and 

federal workers who support this bi-partisan effort. Both H.R. 711, and a similar proposal included 

in President Obama's Fiscal Year 2017 budget request, offer a resolution to the longstanding issue 

of calculating a fair Social Security benefit for workers with employment in both the private sector 

and certain state or local governments, or who started work with the federal government before 

1984. 

The Windfall Elimination Provision (or WEP) was intended to remove an unfair advantage that the 

Social Security benefit formula provided to workers who had earnings from work not covered by 

Social Security. This is because the Social Security benefit formula begins with a worker's average 

Social Security-covered earnings over a full career of 35 years. Zeros are entered for years in which 

a worker did not work in a Social Security-covered position and did not pay Social Security taxes on 

his or her earnings. When the Social Security Administration (SSA) averages a split-career worker's 

earnings over the full 35 years, a worker who has split time between covered and uncovered 

employment often appears to have been a lifetime "low earner." As such, this worker would gain 

from the progressive elements of the benefit formula by receiving a higher replacement rate of his 

or her earnings than the worker would receive if all the earnings had been subject to the Social 

Security payroll tax. 

In 1983, Congress noted the unfairness in permitting split career workers a higher replacement 

rate than workers who had identical earnings, but who had never worked for an employer who did 

not participate in Social Security. Congress labelled this outcome a "windfall" for workers who 

split their careers between government and Social Security-covered work, and created the WEP to 

eliminate it. Congress reached a compromise on a one-size-fits-all fix. Normally, Social Security's 

benefit formula applies three progressive wage factors to calculate a worker's benefit-- 90, 32 and 

15 percent. The 1983 law lowered the first factor (90 percent) to 40 percent. In addition, a 

worker's WEP reduction cannot exceed more than one half of the pension from the non-covered 

government work. Moreover, the WEP phases out for workers with 21-30 years of "substantial" 

Social Security-covered work. 
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21290.061.eps

The one-size-fits all approach of the current WEP formula has several drawbacks. It cannot 

address the great diversity in the earnings of state and local workers. Research has shown that the 

WEP can be regressive, disproportionately affecting lower earners. This is because the WEP reduction is 

limited to the first bracket of the benefit formula, which is the bracket involved in calculating most 

of the benefits payable to a low earner. In addition, low earners may be less likely than high 

earners to benefit from the provision that phases out the WEP after 30 years of "substantial" 

work, which means earnings of at least $22,050 in 2016. 

For decades, the challenge has been to design a fair and accurate method to calculate the Social 

Security benefit of these split career workers. Until recently, efforts to design a fairer system were 

hampered by the fact that there was no effective method for Social Security to accurately track all 

earnings from state or local government employment. Fortunately, more recent data records are 

making it possible to more easily track earnings from all employers, including state or local 

governments. As a result, it is now possible for Congress to adopt and the Social Security 

Administration to administer a fair solution. 

Under the Equal Treatment for Public Servants Act, the current WEP will be repealed and in its 

place the Public Servant Fairness Formula (PSF) will apply prospectively to those turning 62 after 

2016. Utilizing data matching now available to the Social Security Administration, the PSF will first 

calculate the Social Security benefits of a split career earner as if all of his or her earnings were 

subject to FICA taxes, using the same formula that applies to all other workers. To adjust this 

benefit so that a split career earner does not receive a windfall, the benefit calculated in this 

manner would then be multiplied by the proportion of the worker's earnings that were in fact 

subject to Social Security taxes. This new calculation will allow for benefits that accurately reflect 

the individual lifetime earnings of split career workers while recognizing that those earnings are 

not universally subject to Social Security taxes. 

Similarly, in the Fiscal Year 2017 Budget Request, President Obama proposed a comparable 

process to more fairly calculate Social Security benefits for individuals who are subject to the WEP. 

We are encouraged by the President's support for an approach that is consistent with H.R. 711. 

Both proposals provide a workable starting point for a bipartisan solution. 

Millions of retired state and local workers, including many teachers, have received a Social Security 

benefit that is excessively reduced because of a WEP formula that fails to consider an individual's 

specific work history. AARP's founder, Dr. Ethel Percy Andrus, established the National Retired 

Teachers Association (NRTA) to serve the needs of retired educators. Today, the NRTA is part of 

AARP's history and our organization. We have endeavored to listen to our members and others 

affected by WEP policy and to be sensitive to their call for fair receipt of both Social Security and 

government pensions. The Equal Treatment for Public Servants Act is an opportunity to more 

fairly treat the public servants affected by WEP, including the many teachers who belong to the 

NRTA. We believe the Brady-Neal compromise is a fair solution that will benefit the 1.6 million 

workers affected by the current WEP policy. 
82 

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21290.062.eps
83 

Thank you. 

Chairman JOHNSON. Thank you. I appreciate that testimony. 

And as is customary for each round of questions, I will limit my 

time to five minutes and ask my colleagues to also limit their time 

to five minutes. 

Dr. Fichtner, welcome again. 

Mr. FICHTNER. Thank you, sir. 

Chairman JOHNSON. It is not every day the President and the 

chairman of the Ways and Means Committee agree on something. 

Mr. FICHTNER. It sure is not. 

Chairman JOHNSON. And so when it comes to WEP, we are on 

the same page but with a few differences. So when does H.R. 711 

take effect? 

Mr. FICHTNER. H.R. 711 would take place starting in 2017, sir, 

where the President’s proposal would start ten years later in 2027. 

Chairman JOHNSON. Does the bill help only new beneficiaries 

or does it help current seniors as well? 

Mr. FICHTNER. The current bill offered by Mr. Brady and Mr. 

Neal helps current beneficiaries as well as future beneficiaries. It 

is equal treatment for equal beneficiaries. 

Chairman JOHNSON. You are saying both. 

Mr. FICHTNER. Both, yes, sir. 

Chairman JOHNSON. And what about the President’s proposal? 

When does the new benefit formula take effect? 

Mr. FICHTNER. Not until 2027. So it would delay it for ten 

years, and as my old boss, Commissioner Astrue said, justice delayed is justice denied. 

Chairman JOHNSON. Does the President’s proposal provide any 

relief for current retirees affected by the WEP? 

Mr. FICHTNER. Not for current retirees, no; just for future ones, 

sir. 

Chairman JOHNSON. Mr. Lee, it is good to see you again. 

In my opening statement I talked about Janice from Plano and 

her experience with the WEP. Her story is like that of so many 

Texans, and under Chairman Brady and Representative Neal’s bill, 

Janice’s benefits would increase. 

Unfortunately, the President has proposed to take his time when 

addressing WEP. Can you tell us why you feel it is important to 

provide relief to those currently affected by the WEP and not just 

new retirees? 

Mr. LEE. Mr. Johnson, it is also good to see you again, sir, and 

thank you for the invitation to come and present today. 

Chairman JOHNSON. We are glad to have you. 

Mr. LEE. Thank you so much. 

We have thousands of our retirees that are in desperate need for 

additional dollars in their monthly annuities and their Social Security benefits. I have so many retirees that have very modest retirement benefits, and so the work that can be done today to advance 

proposal that does not delay it for ten years and puts a little extra 

money in our retiree’s pockets will go a long way to help make ends 

meet for those folks. 

Chairman JOHNSON. Is there any reason why using the same 

benefit formula for everyone is not the fairest way to go? 

84 

Mr. LEE. Mr. Chairman, we believe in fairness. We think this 

has been the best proposal that has been brought forward in a 

number of years, and fairness is the right way to go. 

Chairman JOHNSON. Dr. Fichtner, some argue that since the 

WEP and GPO are unfair, the only fair thing to do is repeal them. 

What do you think? 

Mr. FICHTNER. I think that would actually be the opposite 

method. Repealing them would actually make things more unfair, 

sir than making things fair. 

Chairman JOHNSON. And, Mr. Goss, can you tell us how you 

think about repeal? How would that affect Social Security’s finances? 

Mr. GOSS. Well, I would agree with Dr. Fichtner to the extent 

that repealing the WEP and the GPO would then not take into account whatever the non-covered earnings that people have had in 

the past. So some approach does certainly make sense. 

Chairman JOHNSON. You know, this is a popular subject, and 

we have had a number of non-subcommittee members, non-committee members join us today, and we welcome you. 

Without objection we will follow our custom of allowing members 

of the Ways and Means Committee who are not Members of the 

Subcommittee to ask questions after the Members of the Subcommittee have completed their questioning. 

Other members may make submissions for the record which will 

remain open for two weeks. 

I recognize Mr. Larson. 

Mr. LARSON. Well, thank you again, Mr. Chairman, and I want 

to thank our witnesses as well. 

Mr. Goss, I would like to go back to your testimony, and I think 

it is important as well for the record, and I understand the philosophical notion and the fairness of making these adjustments with 

respect to both the WEP and the GPO, and I wonder though if you 

can explain to us as you were going through your diagrams who 

would be the losers in this. 

What happens here? That seems to be some of the concern that 

is raised by the NEA and others, and I was just trying for the 

record to better understand this. 

Mr. GOSS. Well, it is true, as several have mentioned, that there 

would be a lot of dare we say winners, that is, people who would 

be less strongly affected by the new proposal than what we have 

now. 

But there would, as in almost any change, there would be some 

people who would be affected somewhat more. Of the roughly 1.5 

million worker beneficiaries now affected if we were to be able to 

apply the new formula to them, about 16 percent or about a quarter million of those folks would be reduced by about $13 per month. 

That is not a strong change. This would be about an eight percent reduction in their benefit level. These are people who are currently affected, but because of the size of the pension that we know 

of, they are being affected relatively little. They would be affected 

only slightly more under the new formula approach. 

The much larger group that would be affected you might say negatively would be out of the 15 million people who are worker beneficiaries today, if we were to apply the new formula to them, who 

85 

have some non-covered earnings but are not reduced currently for 

the Windfall Elimination Provision, a large majority of them, 93 

percent, would have some very small reduction under the new formula. We estimate that that reduction would be on the order of $27 

per month, on average, which is only a two percent reduction ion 

the benefits for those individuals. 

Breaking that down into the people most affected versus least affected by applying the new formula to those who currently are not 

being reduced by the WEP, the group that would be the least affected would be affected by only $3 per month on average reduction, and the percentage reduction would round to zero percent. It 

would be less than half a percent reduction. 

The group of that 14 million that would be most affected would 

be affected by a reduction in their benefit of about $46 per month, 

which is only a $3 per month reduction for those individuals. 

So there would be some individuals obviously who are not affected by the WEP at all now with this broader application of the 

under the new proposal would be affected to the smaller extent. 

Mr. LARSON. But as Ms. Richardson pointed out, because of the 

progressivity within this that is why it is getting the favorable review from the panelists. 

What does an average Social Security recipient receive today? 

Mr. GOSS. On average Social Security recipients are getting on 

the order of $1,300. This is retired worker beneficiaries, around 

$1,300 per month. 

Mr. LARSON. And as I said earlier, we have not made an adjustment really to Social Security since 1983 when it was, I think, unwisely not indexed at the time, which places us in this horrible actuarial situation that we find ourselves in wondering about the solvency of the program. 

I think one of the mistakes that we make is to refer to this as 

a tax instead of an insurance premium. This is, after all, an insurance premium that is paid by both the employer and by the employee, but it is insurance nonetheless that the employee has paid 

for. 

And I hear this everywhere I go in my district, that this is the 

insurance I paid for, and I do not know of any insurance premium 

that has not risen since 1983 in any major category. So that when 

we look at these things, if we look at it going out, looking at a premium perspective and to make sure as they do in all insurances 

that they are actuarially sound, your advice on this is going to be 

tantamount. 

And I thank you for your testimony. 

Chairman JOHNSON. Thank you. 

Mr. Dold, you are recognized. 

Mr. DOLD. Thank you, Mr. Chairman. 

And I certainly want to thank all of you for coming today and 

for your testimony. 

And just to pick up where my good friend Mr. Larson was leaving off in terms of an insurance policy, one of the keys to an insurance policy is certainty. So, again, having that certainty is extremely important. 

86 

And we hear it each and every day. We hear it from businesses. 

We hear it from individuals. Planning and having certainty is absolutely critical. 

And so individuals who are planning for retirement rely on the 

statements that they receive from Social Security to have a sense 

of what the benefit is that they can expect going forward. However, 

those statements do not take into account the Windfall Elimination 

Provision or the Government Pension Offset. 

So people who are subject to the WEP or the GPO may not know 

how they will be affected until they actually come into retirement 

and they apply for their benefits, and it is not until then that they 

learn how much less they will receive on Social Security, whether 

it be that benefit that they were expecting. 

Not only is this unfair; it interferes with the ability of retirees 

who have worked in public service jobs, including educating our 

children, from being able to enjoy the retirement that I believe they 

so richly deserve. 

Now, some of the things that I have heard, and again, I am sure 

you can imagine we have heard a lot from constituents. One wrote 

in to me, Lucile, who is a teacher from Vernon Hills, and she 

taught in a Catholic school for many years and switched to the 

public school system after her husband passed away. She worked 

in the public school system for 17 years, and she wrote to let me 

know that she was trying to do her retirement planning when she 

learned that because of WEP, she will not receive any of her late 

husband’s Social Security benefits and hers will be reduced by twothirds. 

In addition, because she has only worked for 17 years in the public school system, she will not qualify for a full pension benefit. 

Robert, who is a former postal worker from Wheeling, learned 

that he would not receive his Social Security benefits for his covered employment because he received a pension from the Federal 

Government for his non-covered employment. 

Nick, a retired educator from Deerfield, wrote in to express the 

unfairness of the Windfall Elimination Provision, and he notes that 

he has paid into Social Security and deserves the benefits that he 

has earned, and that only Illinois and about 15 other States reduce 

Social Security benefits along those same lines. 

Each of these people, and again, there are thousands and thousands of others that have been negatively impacted, and I do believe that this is a bipartisan effort for us to be able to try to solve 

this problem. 

So, Mr. Lee, let me just first direct this. When teachers receive 

their Social Security statements or their statements if it is not Social Security, are their estimated benefits accurate? 

Mr. LEE. Congressman, I think you are exactly right in saying 

that the amount of monthly benefit they may receive may be accurate, but it does not reflect the impact of the Government Pension 

Offset or the Windfall Elimination Provision. 

In your first example, it sounded like that individual was going 

to be hit with a double whammy, both with Government Pension 

Offset and the Windfall Elimination Provision. 

So to the extent that they are accurate, yes, but they do not provide good financial accounting for the fact that the WEP will affect 

87 

them, and when they go to retire to collect the benefit, it is a very 

big surprise, and it does impact how they are able to make ends 

meet. 

Mr. DOLD. Dr. Fichtner, Ms. English, how important is it that 

those statements, regardless of where they are, are accurate? 

Mr. FICHTNER. Congressman, it is very important. For many 

people the Social Security statement that they get in the pension 

plan is the one time a year they sit down and try to figure out their 

adequacy for retirement planning. If those statements and the benefits estimate in those statements are wrong, we could be doing a 

lot of harm to people as they try to plan for a secure retirement. 

Mr. DOLD. Mr. Goss. 

I do not mean to cut you off, Ms. English, if you wanted to add 

in. 

Ms. ENGLISH. The only thing I wanted to add is that is absolutely right. We talk to our members all the time, and if they cannot plan for their Social Security, their pension, and their savings, 

they cannot plan for their future, and so knowing what they are 

going to have in Social Security is crucial. 

Mr. DOLD. Mr. Goss, let me just say, I understand you cannot 

be a clairvoyant, and I recognize that situations are happening you 

do not know that they may have had a different work time somewhere else. How can we try to avoid this? 

Mr. GOSS. Well, you make an extremely good point. Due to the 

complexity of the current approach where one would have to know 

the size of the pension and when a person was going to receive a 

pension based on non-covered employment, we simply do not have 

that information available. 

We do have more detail benefit calculators available on the WEP 

principally used by financial planners, not by citizens because of 

the complexity. 

There is no question but that this new approach would afford us 

in the Social Security statements the ability to take into account 

those years of non-covered earnings and give a much better estimate for individuals, especially if they indicate during the remainder of their career where they think they will be working. We can 

give a very good assessment. 

Mr. DOLD. And in my last one second, the legislation that we 

are proposing today would rectify this problem; is that correct? 

A nod I am seeing, Dr. Fichtner. 

Mr. FICHTNER. Yes, sir. 

Mr. DOLD. Okay. Thank you so much. 

Mr. Chairman, my time has expired. 

Chairman JOHNSON. Thank you. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Chairman. 

And thank you all for being here, 

My wife is a teacher back home in Pennsylvania and my daughter is a teacher. My wife taught elementary; my daughter in secondary. So we have approximately 35,000 Social Security beneficiaries that are all adversely affected by the WEP Program. 

Mr. Lee, you talked about this pretty clearly. The bulk of my life 

has been in the private sector, and one of the things is if you are 

going to attract the best people, you have got to have the best ways 

88 

of attracting them. Most of that is through a compensation package 

that makes sense, that allows them to get through their everyday 

life, and then allows them to get ready for the time that they retire. 

So looking at what we have today, and this is really one of those 

days where we all agree on the same thing, but to attract the best 

people, and I really do believe teachers are the key and education 

is the key for anybody getting from what level they are to the next 

level higher, and they can do it by themselves by preparing for a 

job that they want in the future that actually does allow them to 

sustain their lifestyle, family and children and take care of everybody. 

So if you can just talk a little bit more about when it comes to 

what we have to do to attract more teachers, to attract more people 

to go into that profession to make it seem to them, and I would just 

share this. My daughter was at Notre Dame, and she was in preprofession of science, and she was having trouble from the standpoint of it was not exactly what she wanted. She was a track girl. 

She ran cross-country in track. 

And I said to her—her name is Charlotte but I call her Charlie— 

I said, ‘‘Charlie, you know what? You love kids. You love competing. Why do you not go into education?’’ 

And she said, ‘‘I cannot make any money doing that, Dad. Why 

would I ever do that?’’ 

And I said, ‘‘It is not always going to be about money. It is going 

to be at the end of your life not how much you have in the bank 

but how many people you have actually touched and how many 

people you have helped.’’ 

And she said, ‘‘well, that is easy for you to say, but it is not going 

to be that way for me.’’ 

So, by the way, she did become a teacher, and she is also coaching cross-country and track, and she started a program called Girls 

in the Run, which really helped a lot of little girls who did not feel 

really good about themselves for whatever reason and started them 

off by walking around the track and talking about what do you 

have to do to fit in and how you have to compensate for people who 

say things about you that are not real nice, but at that age that 

kind of goes with the territory. 

But my point is to get people like my daughter Charlotte, to get 

Charlie to say, ‘‘Do you know what? I do not need to be—but I do 

have to have something that is sustainable.’’ 

That is a huge problem right now, is it not? Attracting the really 

top people to work with our kids, the most valuable asset we have 

going forward where our future is secured? 

How hard is it right now to bring those folks into the fold? 

Mr. LEE. Congressman, I appreciate that story and appreciate 

your wife’s services as a teacher, and certainly I can tell you are 

a proud father. 

I have a picture recently from one of my retirees who is 109 

years old, and he is receiving a benefit from the Teacher Retirement System in Texas. So is his son and so is his son’s son, and 

so it is a generational teaching family. 

And I think that we have to support our educators. Obviously 

teaching is one of the most difficult positions that you can go into 

89 

as a career. My own daughter also, who is going to be 13 next 

month, wants to be a teacher, and so I think immediately about the 

obstacles that she will face. 

I think one of the major obstacles that we can remove from that 

situation is creating a greater sense of transparency and helping 

somebody understand the value of not only the dollars they are receiving in their payroll today, but also the dollars they are putting 

away for their future retirement benefits through the State Teacher Retirement System, as well as into the Social Security system. 

That transparency will help them understand that the career of 

public education is not only helping the children today, but it will 

help those teachers when they retire in the future. 

So I would say greater transparency, and of course everything 

that we can do to encourage our teachers, good teachers, to stay in 

the profession, and looking at the other professions where people 

are coming into schools. In Texas we have Troops to Teachers, obviously lots of military folks coming into teaching, and I know if they 

look at provisions like the Windfall Elimination Provision and say, 

‘‘Look. If there is no reason, no benefit for me to go into teaching 

because I am going to be hurt because I do that financially in the 

future,’’ I think that is the wrong message that we need to be sending. 

So it is a big step forward today in looking at how can we treat 

people fairly and transparently in the future. 

Mr. KELLY. And, Chairman, thank you again for this hearing 

because it is about fairness, and I think that we champion these 

people. We want them to touch our children’s lives and we want 

to be part of that whole process, but then they look at it and say, 

‘‘But at the end of my time, when I retire, I am not being treated 

fairly. So you want me to come in and do all of that, you want me 

to give you my life, and you want me to give all of my talents and 

my passion, but I am not going to be treated fairly.’’ 

And I think that is the problem. You all touched on that, and I 

think that is the answer. 

So, Chairman, thank you so much for having this hearing today. 

Chairman JOHNSON. Thank you. 

Are you ready to question? You are recognized, Mr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

I have been on this Committee long enough to remember the 

Notch Babies. So I sort of look at these questions where you are 

making decisions here that are ten years out before they take effect, and I am asking myself: what are we setting up here? 

If I understand, Mr. Goss, one and a half million people or one 

and a quarter million will get an increase of something like 77 

bucks on average, and then there is the 15 million that are going 

to get cut. And it looks to me like this bill is one where nobody 

wanted to raise any money. They do not want to do anything about 

the money situation in Social Security. They just wanted to shift 

it from one bunch to another. 

So we have got the public employees, and I think this is a benefit 

for them they should have, but we are doing it at the expense of 

15 million people who do not know it is coming. They do not belong 

to an organization that lets them know; is that correct? 

90 

Mr. GOSS. The numbers that I was speaking about are really in 

reference to sort of what in the long run the implications would be. 

The 14 million people who are not currently receiving any reduction for WEP, if we were to be able to apply the new approach to 

them, there would be 14 million who would be affected somewhat 

by that, but to a very small extent. 

Mr. MCDERMOTT. What is the logic for that except for saving 

money, just cutting benefits from them? 

Mr. GOSS. Well, the logic would be really just the basic logic of 

the notion of reflecting the replacement rate or the level of benefit 

people should get from their Social Security covered earnings to 

have that be commensurate with the level of their overall earnings 

on the basis of our progressive formula. 

Really, I think the best way I could express the logic on that is 

for that portion of a person’s career when they were working in 

State and local or Federal Government employment and not paying 

them or their employers the 12.4 percent combined payroll tax rate, 

that they would not, in effect, be getting credit towards Social Security benefits and having a higher replacement rate on the basis 

of not counting those earnings. 

This new formula would look at those earnings in addition to 

their covered earnings and determine their overall level of earnings 

and their overall level of benefit replacement that would be deemed 

to be appropriate under our current formulas, and give them on 

their Social Security covered earnings no higher replacement than 

people would get who had had their whole career covered. 

Mr. MCDERMOTT. When the bill passed here in 1983 and they 

advanced the retirement age from 65 to 67, I am sure there were 

thousands, millions of people in this country who never thought 

that was going to ever affect them, and they did not even hear 

about it. They were not paying any attention to it. 

What kind of educational effort is there going to be for people to 

understand what their future benefits are? How do they sit down 

and plan their future? 

If they are 55 today, they are going to be 65 when this kicks in 

ten years from now or whatever. How are they going to know what 

is going to happen to them then? 

I mean, how will the ordinary citizen find out about this? 

Mr. GOSS. I would imagine that Mr. Lee would be in really a 

very, very positive position under this new formula for future beneficiaries to indicate to them that you can simply look, and we have 

in your Social Security statement. We do identify not only your covered earnings, but also your earnings that are not covered through 

the Social Security statement. 

Through a modification of that we could indicate to people on the 

basis of their covered and non-covered earnings what the implications of this new formula would be in a way that we really cannot 

with—— 

Mr. MCDERMOTT. I do not remember that. 

Mr. GOSS. That education would be very possible. 

Mr. MCDERMOTT. I do not remember the point at which I started getting announcements from Social Security about what my benefit was going to be. When does that start? 

91 

Does that start when you are 65? I got mine at 65. Does it start 

at 65 or 67 or whatever, or does it start ten years before where 

they tell you, ‘‘This is what your benefit is going to be’’? 

Mr. GOSS. The good news is even before that. We first start 

sending statements to people when they attain age 25, and I think 

our current practice now is to do it every five years thereafter until 

they reach something like 60, and then we do it even more often, 

perhaps every year at that point. So the notices are available for 

people either online or if they are not signed up, they receive those 

through the mail. 

Mr. MCDERMOTT. And it will tell them what their benefit cut 

would be from what they presently have or it will just tell them 

what the benefit is going to be? 

Mr. GOSS. Well, if we enact H.R. 711 or the equivalent through 

the President’s budget proposal, once that goes into effect for people who will be affected by the new formula, we will be in a position to modify the calculation shown in the Social Security statement and indicate to people what their benefit would be without 

and with, probably just with, the implications of this new formula 

change. 

Mr. MCDERMOTT. I will not be here in 2027. So I will not meet 

the next crop of Notch Babies, but I will bet you there is going to 

be somebody organizing these people and telling them. 

Thank you. I yield back the balance of my time. 

Chairman JOHNSON. Thank you for your question. 

Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman, for holding this hearing. I want to thank the members of the panel for their testimony. 

I would also like to thank Chairman Brady and Mr. Neal for 

their hard work on this issue and for working towards really a 

common sense solution to address the outdated and arbitrary formula. 

While WEP may impact every State, my State of Ohio has more 

than 120,000 people who will be subject to the Windfall Elimination Provision, trailing only behind the significantly larger 

States of California and Texas. This is due to the State having 

multiple pension funds that predate Social Security and whose 

members do not have income that contributes to Social Security. 

Mr. Chairman, I ask unanimous consent that a letter from the 

Ohio Public Employees Retirement System in support of H.R. 711 

be included in the record. 

Chairman JOHNSON. Without objection. 

[The information follows: The Honorable Jim Renacci Submission] 

92 


21290.063.eps

Ohio Public Employees Retirement System 

OPERS 

March 22, 2016 

The Honorable Sam Johnson 

Chairman, Subcommittee on Social Security 

House Committee on Ways and Means 

2304 Rayburn HOB 

Washington D.C. 20515 

Dear Chairman Johnson, 

I am writing on behalf of the Ohio Public Employees Retirement System (OPERS) to 

provide comments regarding the need for equal treatment of public servants, especially 

as it pertains to the application of the Social Security Act's Windfall Elimination 

Provision (WEP) and Government Pension Offset (GPO). 

Together, these two provisions present a significant challenge for our members who are 

eligible for both Social Security benefits and a public pension based on employment that 

was not covered by Social Security. These individuals will lose some or all of their 

Social Security benefit simply because they chose a career in public service and were 

eligible for a Social Security benefit based on their own service or the service of a 

spouse. 

The unfortunate fact of the matter is that many of Ohio's public servants will be 

impacted by the WEP and/or the GPO. This is because most public employment in 

Ohio is not covered by Social Security. Instead, Ohio's public servants contribute to 

one of five statewide public retirement systems, based on their occupation. Of these, 

OPERS is the largestin Ohio and the eleventh-largest public retirement system in the 

United States, with total fund assets approaching $86 billion and more than one million 

active, inactive and retired members. 

Even though OPERS makes every effort to educate its members regarding the impact 

of the WEP and GPO, many of them are surprised and frustrated to learn just how much 

their OPERS pension will affect the amount of their anticipated Social Security benefits. 

These individuals thought they were doing all the right things. They answered the call 

to public service and tried to plan for a secure retirement, only to discover that their 

plans were based on a commitment that is no longer valid. Further complicating 

matters is the fact that many of these affected individuals have little margin for error. 

The average annual OPERS pension is around $25,000. Depending on the amount of 

277 East Town Street Columbus, Ohio 43215-4642 1-800-222-7377 WoNW.opers.org 
93 


21290.064.eps

their personal savings (if any), the loss of a significant part of their Social Security 

benefit can leave a substantial hole in their retirement budget In this regard, the GPO 

is especially onerous, as it disproportionately impacts women, many of whom have 

spent most of their lives raising their families and may have worked outside the home 

for only a short period of time. 

The WEP and the GPO have been described as necessary to remove any "advantage 

or 'windfall' ... [that public servants in non-covered states] would otherwise receive as a 

result of the interaction between the Social Security benefit formula and the workers' 

relatively short careers in Social Security-covered employment"' For public servants in 

non-covered states however, it is clear that these provisions have shifted the balance 

too far in the opposite direction, to the point that individuals with prior Social Security 

service are now at a disadvantage if they choose a career in the public sector in certain 

states. 

The question then becomes how to effectively address these provisions in a way that is 

fair for all Social Security recipients. OPERS is currently in its 81'' year of providing 

retirement security to Ohio's public servants. We appreciate Social Security's important 

contributions toward ensuring that American workers have access to a secure 

retirement. In the not-too-distant past, a Social Security benefit was one part of secure 

retirement, along with pension benefits and personal savings. It is unfortunate that, with 

the decline of defined benefit pension plans in the modem workplace, many workers 

have been forced to rely more heavily on their Social Security benefits to make ends 

meet throughout their retirement Understanding that, we are not seeking a solution 

that will harm Social Security or impede its mission. 

In the same way, we urge the members of this Subcommittee to consider solutions that 

will not harm existing public retirement systems in non-covered states. Some observers 

have suggested that non-covered public servants could simply be folded into the Social 

Security System, thereby solving the WEPIGPO problem. This policy of "mandatory 

coverage" is far from a solution however, as it would devastate systems like OPERS. If 

contributions or employees are redirected from existing public retirement systems to 

Social Security, the results could be catastrophic. For example, if mandatory coverage 

was implemented in Ohio, OPERS-covered public employers might have to contribute 

an additional 6.2% (the current employer contribution under Social Security) of payroll 

on top of their current contributions to OPERS, which would significantly increase costs 

for Ohio's taxpayers. Alternatively, if the total employer contribution stayed the same, 

and the 6.2% was simply reallocated from OPERS to Social Security, the resulting loss 

of income would force OPERS to implement immediate and drastic benefit cuts. This is 

1 Alison M. Shelton. Congressional Research Service, Social Security: The Windfall Elimination 

Provision (WEP), January 29, 2010. 

277 East Town Street Columbus, Ohio 43215~4642 1-800-222-7377 www.opers.org 
94 

f 


21290.065.eps
95 

Mr. RENACCI. In my five years representing Northeast Ohio I 

have heard from countless constituents who have spent part of 

their career serving their community as public school teachers and 

police officers, firefighters or State employees who have been impacted by the Windfall Elimination Provision. Like many of my colleagues, the stories I hear from constituents have real impact on 

their lives and their planned retirement. 

While efforts have been made both by the State and Federal level 

to better educate individuals impacted by WEP, still many retirees 

do not realize that they will lose benefits due to WEP until their 

first benefit check. 

This was the unfortunate case of a constituent of mine named 

Thomas, who is currently retired in Medina, Ohio. Thomas worked 

many years starting as a teenager in a variety of jobs that paid 

into Social Security prior to joining the City of Cleveland Police 

Force where he served the community for 27 years. 

Throughout his time working in public law enforcement, he also 

worked as a private contractor paying into Social Security only to 

be told that he would receive reduced benefits due to WEP. 

I have also heard from Tina who lives in Brunswick, Ohio, who 

spent more than 20 years working in the private sector before 

being hired by the Brunswick City School District in 2008. She is 

planning to retire in the next five to seven years and is already 

preparing for an impact that the current WEP formula will have 

on her retirement. 

Under the President’s proposal, we have heard the Windfall 

Elimination Provision will not be fixed for ten years. That is an 

awful long time when we have the data to fix it starting next year 

in order to provide a solution for individuals like Tina and Thomas. 

Mr. Lee, can you give me any reason why we should wait ten 

years? 

Mr. LEE. No, sir. I think that you set that up very well. Those 

are problems that need to be addressed now. We have recognize the 

arbitrary nature of the current Windfall Elimination Provision formula. 

We know how to fix it today. We have had excellent testimony 

and the work that you have done and many members of this Committee have done and have made it available to present a reasonable solution. I think now is the time to do it. 

Mr. RENACCI. Thank you. 

Mr. Fichtner, often one of the reasons to wait would be implement a change, is to give people, you know, time to plan. However, 

since we know the Social Security statements are not accurate for 

those affected by WEP and GPO, how does this delay really help 

them? 

Mr. FICHTNER. The delay actually would not really help them. 

It is just giving them proper information to make the proper planning they need to do. 

And the other point, to follow on Mr. lee’s point and yours as 

well, is that if we delay making this change until 2027 instead of 

doing it in 2017, there are beneficiaries now who are being affected 

by the WEP that are getting a lower benefit than they would in 

a proportionate amount. 

96 

So we are basically delaying giving them the benefit that they 

deserve, and again, justice delayed is justice denied. 

Mr. RENACCI. Thank you. 

You know, this is a great opportunity where we can work together as a bipartisan group to get things accomplished. So I agree 

that we need to work together. As a cosponsor of H.R. 711, I again 

want to thank you, Mr. Chairman, for holding this hearing and for 

working towards this common sense solution. 

I yield back. 

Chairman JOHNSON. Thank you, sir. 

Mr. Smith, do you care to question? 

Mr. SMITH. Yes, just briefly. Thank you, Mr. Chairman. 

I am happy to be back on the Social Security Subcommittee. I 

know changes have been made along the way. We have got some 

work to do, and we have had young people filing in and out of the 

room. I hope that this might spark some interest in their financial 

futures, and as we work hopefully together to address the solvency 

of Social Security, this issue is one that I hope we can resolve here 

fairly quickly. 

I believe it is appropriate that we work to improve Social Security so we can ensure benefits are paid out accurately and reflect 

the need of beneficiaries as well. 

So I thank the Chairman for calling today’s hearing. 

One question, Ms. Richardson. Whether or not the WEP and 

GPO apply is based on if a person is also receiving a pension. What 

information does the Social Security Administration use to actually 

make the determination? 

And are you relying on beneficiaries to provide this information 

when they claim the benefit? 

Ms. RICHARDSON. Under the current law, yes, we are. We rely 

on self-reporting, and that is part of the challenge of administering 

the current law. 

Mr. SMITH. Okay. By fixing the WEP and GPO in the way the 

President proposes, would you need pension information for new 

beneficiaries once the policy goes into effect? 

Ms. RICHARDSON. We would need pension information for 

those current beneficiaries, but at the point in 2027, when the Administration’s proposal would take effect, we would use just the 

non-covered earnings data for newly eligible beneficiaries. 

So for any of those beneficiaries up to that point who will continue to receive benefits after that point in 2027, yes, we would 

continue to need their pension information. We need the details 

about when the pension starts, when it stops, and when the 

amount changes. 

Mr. SMITH. Okay. Thank you. 

Does anyone else wish to comment? 

[No response.] 

Mr. SMITH. If not, I yield back. Thank you. 

Chairman JOHNSON. Thank you. 

Mr. Rice, do you care to question? 

Ms. RICE. I yield, Mr. Chairman. 

Chairman JOHNSON. Thank you. 

Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. 

97 

I appreciate you holding this hearing today, and I want to thank 

Mr. Brady and Mr. Neal for their leadership. 

I am going to associate myself with Mr. Renacci’s comments. 

Being from Ohio, I, too, know the perils that many of my constituents face and have heard from many of them over the years that 

I have been in Congress, including my mother-in-law who is impacted by this Windfall Elimination Provision. 

Last fall I was contacted by a woman by the name of Liz Mackey. 

Ms. Mackey worked as a nurse for 18 years before an injury forced 

her out of that very noble profession, Mr. Chairman, and rather 

than retire on disability, she decided to pursue another career, put 

herself through school, became an employee in Franklin County 

Government in Columbus, and worked in a job that paid much 

lower than she did get paid as a nurse for 18 years. 

So as a result of that decision, Mr. Chairman, that decision to 

keep working instead of giving up, she will see her Social Security 

benefit greatly reduced by this WEP provision unless we fix it. 

And so she cannot wait another ten years. She needs this fixed 

now. 

Dr. Fichtner, in your testimony you discussed how using the proportional formula devised in this bill instead of WEP allows that 

same benefit formula to be used for all workers. Can you explain 

how that would be impacting someone like Ms. Mackey who had 

a job in the private sector at a higher scale and then went to public 

service work working for government in a Public Employee Retirement System at a lower scale? 

And now Ms. Mackey who may be choosing between taking a 

non-covered job in the future or retiring simply to keep a higher 

retirement benefit, the perverse incentive, if you will. 

Mr. FICHTNER. So, Congressman, there is a perverse incentive 

sometimes to try to seek additional employment and just for the 

sole purpose of getting years of coverage under Social Security 

when you have also non-covered employment. 

The benefit of going to a proportional formula is it is one formula 

that applies to everybody. So it is transparent. Under the current 

formula, the first bend point, as Chief Actuary Goss mentioned, 

changes. Instead of being 90 percent it could be lowered to as much 

as 40, but it scales down depending on years of coverage. 

So it is very confusing. It is not very transparent, and people 

cannot plan accurately. Going under the plan by Congressman 

Brady and Congressman Neal, that would make it one formula that 

would apply to everybody, and it would be proportional for those 

years that are non-covered earnings, which means you could have 

one formula for Social Security that could do a better job in the 

statement of telling people what their benefit would be, and it 

would no longer give a perverse incentive to game the system. 

Mr. TIBERI. Mr. Renacci brought this up with respect to police 

officers, but I know it was brought up that teachers and others face 

the same impact they have supplemental jobs, second jobs throughout their career paying into Social Security in their supplemental 

jobs that are paying into the Public Employee Retirement System 

in the primary job. 

98 

Mr. Lee, you brought up in your testimony how WEP can be particularly harmful to teachers in our State of Ohio. So does the approach taken in the new formula effectively stop that? 

Mr. LEE. Yes, sir. And, first of all, I want to say that many of 

my friends in Ohio speak very highly of the gentleman on this 

Committee and they appreciate your service. I know quite a few retired teachers from your State that are watching today and are 

very interested, and they have sent email expressing appreciation 

for your participation today. 

We look at this situation as a very unfair formula, a very arbitrary formula and confusing and needs to end with the work done 

for the folks here today and Mr. Brady and others, this formula has 

become fair, and if you ask educators what they value more than 

maybe anything else, it is fairness. They just want to be treated 

fairly under the law. 

In this current situation we do not believe it is fair. A person 

who is a high wage earner and perhaps administrator level position 

is going to be hit one way, and a person who is in a low wage position is going to be hit exactly the same, and so a person earning 

lower income needs to be treated differently based on their earnings than somebody who is maybe in a higher paid position. 

And so that is what the current formula is trying to fix, get rid 

of the arbitrary nature of the existing WEP and replace it with 

something that is fair based on their earnings over their career. 

Mr. TIBERI. Thank you. My time has expired. 

Mr. Chairman, I’m a proud sponsor of this legislation, and I want 

to thank you for your leadership. 

Chairman JOHNSON. God bless you. Thank you. 

Mr. Larson, you are recognized. 

Mr. LARSON. Thank you, Mr. Chairman. 

And what a great hearing this has been, and I want to thank the 

members that have joined us as well. 

And I want to go back to something that both you and Mr. 

Renacci said with respect of the ten-year gap and why this legislation that takes effect in 2017 comes under what Martin Luther 

King would call the fierce urgency of now. 

And so I commend this Committee that has been in a nonpartisan way grappling with this issue, and I think this bodes well 

for the overhaul and the work that still needs to be done on Social 

Security. 

Mr. Chairman, I commend you for always being fair and thoughtful and I hope that we in the not too distant future can have a 

hearing that focuses on the actuary soundness of this and bring our 

actuaries here and talk about in a nonpartisan way how we can 

come up with constructive solutions that make it, I think as Mr. 

Goss said, sustainably solvent for the whole program. 

I think that is what we are all interested in as members here 

who understand how vital a program that Social Security is to all 

Americans. 

Again, kudos to Mr. Brady and Mr. Neal, and thank you again, 

Mr. Chairman, for having this hearing. 

Chairman JOHNSON. Thank you. 

99 

And I want to thank all our witnesses for their testimonies 

today. Thank you also, the members that are still here. I appreciate your presence. 

It is clear that current law is not working, and we need to fix 

the WEP and GPO so that all workers are treated fairly, and the 

time to act is now. 

I look forward to working with all my colleagues on this important legislation. And with that, this Subcommittee stands adjourned. 

[Whereupon, at 11:30 a.m., the subcommittee was adjourned.] 

100 

[Member Questions:] 


21290.066.eps

w~~~v 

'0,7 1111111"-t 

1\il;:,T\\~ 

SOCIAL SECURITY 

Office of the Chief Actuary 

The Honorable Sam Johnson, Chairman 

Subcommittee on Social Security 

Committee on Ways and Means 

House of Representatives 

Washington, D.C. 20515 

Dear Chairman Johnson: 

April25, 2016 

On April II, I received your question related to the hearing of the subcommittee on March 22, 

2016 on "Social Security and Public Servants: Ensuring Equal Treatment" Thank you for this 

question and for the opportunity to engage on this topic at the hearing last month_ 

The question you raised is: 

How would the President's proposal to replace the Government Pension Offset (GPO) 

affect the benefits received by public servants? 

First, let me mention the letter sent to Office of Management and Budget Director Sean Donovan 

on February 10, 2016 where we provided analysis and estimates for the President's proposal to 

change the Windfall Elimination Provision (WEP) as well as the GPO that was included in the 

President's Fiscal Year 2017 Budget This letter is available at 

]illps:/ll:Y.lV...}Y"~__,_gQ__v/0_6f:Ifsolvenc_J{f__'QO l7fi_udgel 2Q__I_QQ_:UQJllii _This letter provided a brief 

but hopefully complete description of the changes intended at that time for the President's 

proposaL 

The President proposed to require State and local governments who have had employees (public 

servants) working in positions not covered under Social Security to rep01t to the Social Security 

Administration any payments made from a disability or retirement plan based on that noncovered employment The receipt of these reports would allow for more complete application of 

the WEP and GPO provisions in current law for individuals becoming eligible for Social 

Security monthly benefits before January 1, 2027_ We have estimated that based on this reporting 

application of the present law GPO provision will result in benefit reductions for approximately 

100,000 former public servants with monthly benefit reductions averaging $400 to $450_ Benefit 

reductions based on the pension data obtained would be applied for both past and future benefits 

for those affected_ 

The President's proposal further specified that for those individuals becoming eligible for Social 

Security monthly benefits after December 31, 2026, a new formula would be applied for the 

GPO_ The new GPO would be applied for all spouse and widow(er) beneficiaries who are age 62 

and older or entitled as a disabled worker, disabled widow, or disabled adult child, and have 

received eamings that were not covered under Social Security, as included in the Social Security 

SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 2l235-000l 
101 


21290.067.eps

Page 2 -The Honorable Sam Johnson 

earnings records. For such individuals, we would calculate a primary insurance amount (PTA) 

based on their Social Security covered earnings only, and another PIA (super PIA) based on 

treating all past earnings in SSA records as if they had been covered. The individual's auxiliary 

benefit would then be reduced by the difference, if any, between the super PIA and the PIA, 

multiplied by the appropriate age-reduction factor. 

To assess and illustrate the effects of the new GPO fonnula on public servants becoming eligible 

for Social Security benefits starting in 2027, we look at the effect the new fonnula would have 

on current beneficiaries in 2016, as if the new formula had been fully in effect for all past years, 

compared to the actual effect of the current GPO formula in that year. This comparison gives us 

a good sense of the ultimate effect the new GPO formula will have on the generations of 

beneficiaries becoming eligible in 2027 and later. 

Currently about 650,000 Social Security beneficiaries have their benefits reduced by the GPO. 

We estimate that 46 percent of these beneficiaries would have no change in their benefits using 

the new formula as their auxiliary benefit would still be completely offset. We estimate that 

about 37 percent would have a smaller offset under the new fonnula increasing their benefits by 

roughly $300 per month on average compared to current law. Finally, we estimate that about 18 

percent would have a larger offset reducing their monthly benefit by about $160 per month on 

average compared to current law. 

In addition, we estimate that there are currently over 6 million auxiliary beneficiaries who have 

some non-covered earnings in SSA records, but are not reduced by the GPO. Of this number we 

estimate that about 12 percent would have no change in their benefit with the application of the 

new formula because their non-covered earnings are minimal and would in fact not affect the 

computation of the super PTA. The remaining 88 percent would have their monthly Social 

Security auxiliary benefit reduced by about $56 on average, for an average reduction of about 4 

percent in their total monthly Social Security benefit. For the half of the roughly 6 million 

beneficiaries in this group reduced the least (including those with no reduction), their average 

reduction in monthly Social Security benefit would be about $10. For the half most reduced, the 

average reduction in their monthly benefit would average about $88. 

Please keep in mind that these illustrations of the effects of the new GPO formula reflect what 

the "matnre" effect of the new formnla would be on current beneficiaries assuming this formula 

had always been in efiect, as compared to the aetna! effects of the current law GPO on these 

beneficiaries. For the beneficiaries who would become eligible after December 31, 2016, the 

numbers affected would differ somewhat and the dollar reductions or increases in benefits will 

be larger reflecting the growth in benefit levels generally from 2016 levels. 

We hope this analysis will be helpful. Please let me know if we can be helpful in any other way. 

Sincerely, 

Stephen C. Goss 

Chief Actuary 
102 


21290.068.eps

Enclosure - Page 1 - The Honorable Sam Johnson 

point that 

ns:-1;:rruns:- this new data set that includes 

information 

Every year, employers and the Internal Revenue Service (IRS) send us information 

on the earnings of U.S. workers. We store this information and use it to calculate 

benefit amounts under the Old-Age, Survivors, and Disability Insurance (OASDI) 

program. 

Since 1978\ employers have sent us earnings information using IRS Form W-2, 

which includes information regarding earnings on which neither the worker nor his 

or her employer contributed the Social Security payroll tax ("non-covered 

earnings"). Although State and local entities were required to report non-covered 

earnings beginning in 1978, their compliance was generally inconsistent from 1978 

to 1981.2 As a result, our non-covered earnings information from that period 

contains some inconsistent or duplicative records. 

We calculate retirement benefits using a person's highest 35 years of earnings, 

indexed for inflation. When WEP was enacted in 1983, we had only five years of 

non-covered earnings data in our records. However, starting in 2017, we will have 

35 years of reliable non-covered earnings data in our records. The President's 

Budget for Fiscal Year 2017 recommends an effective date of 2027 for replacing 

WEP with a formula that considers both covered and non-covered earnings. By 

then, our non-covered earnings information would be more complete for people 

who worked longer than 35 years. 

We will waive recovery of an overpayment when a person is both without fault in 

causing it and recovery of that overpayment would either: 

a. defeat the purpose of the program involved; or 

1 The Social Security Financing Amendments of 1978 (P.L. 95-216) required employers to report earnings annually to Social Security. 

2 See Testimony of Martin H. Gerry before the House Ways and Means Subcommittee on Social Security, July 20,2004. 

https://www.ssa.gov/legislation/testimony_072004.html 
103 


21290.069.eps

Enclosure- Page 2- The Honorable Sam Johnson 

b. be against equity and good conscience; or, 

c. (for the Supplemental Security Income (SST) program only) 

impede efficient or effective administration of the program because 

of the small amount involved. 3 

What constitutes ':l{m/t" depends upon whether the facts show that the incorrect 

payment resulted from an incorrect statement made by the individual that he or she 

should have known was incorrect; failure to furnish information which he or she 

knew or should have known to be material; or acceptance of a payment which he 

or she either knew or could have been expected to know was incorrect4 We could, 

for example, find an individual who did not disclose that he or she was in receipt of 

a pension to be "atfault" and not approve his or her request for waiver. 

"Defeats the purpose" means that recovery of the overpayment would deprive a 

person of income or resources he or she needs to pay for ordinary and necessary 

living expenses, such as rent, mortgage, utilities, and medical expenses. 5 And, in 

general, recove1y is "against equity and good conscience" when a person changed 

his or her position for the worse or relinquished a valuable right because of 

reliance upon a notice that payment would be made or because of the incorrect 

payment itself. (i 

Whenever we determine that we have made an overpayment, we notify the person 

and inform him or her of the ways in which we will seek recovery, unless the 

overpayment is immediately repaid. That notice also instmcts the person to 

contact us promptly if he or she wishes to appeal the fact of the overpayment, 

request that we waive recovery or accept a lesser rate of withholding, or repay 

through installments.7 

1 42 U.S.C. § 404(b) and§ 1383(b)(l)(D); 4 20 CFR § 404.507 5 20 CFR § 404.508 and§ 416.553 6 20 CFR § 404.509 aml § 416.554 7 20 CFR § 404.502a 
104 

f 


21290.070.eps
105 

[Member Submissions for the Record follow:] 


21290.071.eps

C!rtmgrcnn of flp.) liluitdt §fnfrn 

Dusl,inghm, il(!L 20515 

The Honorable Kevin Brady 

Chairman 

House Committee on Ways & Means 

1102 Longworth House Office Building 

Washington, DC 20515 

The Honorable Sam Johnson 

Chairman 

Subcommittee on Social Security 

House Committee on Ways & Means 

II 02 Longworth House Office Building 

Washington, DC 20515 

March21,2016 

The Honorable Sander Levin 

Ranking Member 

House Committee on Ways & Means 

1106 Longworth House Office Building 

Washington, DC 20515 

The Honorable Xavier Becerra 

Ranking Member 

Subcommittee on Social Security 

House Committee on Ways & Means 

1106 Longworth House Office Building 

Washington, DC 20515 

Dear Chairmen Brady and Johnson and Ranking Members Levin and Becerra, 

Thank you for scheduling a hearing on Social Security provisions that affect certain public 

employees. As you know, we have introduced H.R. 973, the Social Security Fairness Act of 

2015. This legislation would eliminate the Windfall Elimination Provision (WEP) and the 

Government Pension Offset (GPO), two titles of the Social Security Act that unfairly reduce or 

in some cases eliminate Social Security benefits for millions of Americans who have devoted 

much of their careers to public service. 

The Windfall Elimination Provision (WEP) reduces the earned Social Security benefits of 

individuals who also receive a public pension from a job not covered by Social Security. For 

example, educators who do not earn Social Security while employed by public schools but who 

work part-time or during the summer in jobs covered by Social Security have reduced benefits 

even though they pay into the system just like everyone else. The WEP also affects people who 

move from a job in which they earn Social Security to a job, such as teaching, in which they do 

not. This can ultimately reduce benefits by as much as 40 percent. 

Similarly, the Government Pension Offset (GPO) reduces by two-thirds the benefit received by 

surviving spouses who also collect a government pension. Nine out often public employees 

affected by the GPO lose their entire spousal benefit, even though their spouse paid Social 

Security taxes for many years. 

Reductions to Social Security benefits hurt state and local governments' ability to recruit and 

retain public employees. The loss of earned Social Security benefits and survivor benefits means 

mid-career job changes from private to public employment can result in the employees paying a 

lifetime cost in reduced retirement benefits. 

F'i1.1NTED ON 1\ECYCLE.D PAPE8 
106 


21290.072.eps

Our legislation would fully repeal these inequitable provisions, and ensure that dedicated 

ftrefighters, police officers, teachers, and other public servants are not denied the benefits they 

worked hard to earn. H.R. 973 enjoys broad support from various groups, including but not 

limited to, the National Education Association, the National Fraternal Order of Police, tbe 

National Committee to Preserve Social Security and Medicare, the Senior Citizens League and 

the National Association of Letter Carriers. As of March 2151, H.R. 973 also has 137 bipartisan 

cosponsors. 

Again, we thank you for scheduling this important hearing and appreciate your attention to our 

legislation. 

Sincerely, 

Member of Congress 
107 

f 


21290.073.eps
108 

[Public Submissions for the Record follow:] 


21290.074.eps

We Make America Happen 

Laura Reyes 

Motto€ Horrell 

' 

Melvin Hug~e:S•· 

Ka~rynlybarger 

Robe1talynch 

Chrosmphe1 MoDe 

Ralph~lll-;_r. 

GaryMi1chell 

DougiasMoorejr 

HenryN•cholos 

RandyPerre~rJ 

s,evenQutckSr 

Jeone"eDWynn 

Statement for the Record 

by the 

American Federation of State, County and 

Municipal Employees (AFSCME) 

before the 

Subcommittee on Social Security, 

Committee on Ways and Means 

U.S. House of Representatives 

on 

Social Security and Public Servants: 

Ensuring Equal Treatment 

March 22, 2016 

T':L (202) 429-1000 F/'tX (202) 429-1293 TOO (202) 659-0446 WEB www.afscme.org 1625 L Streer. NW, Washmgton, DC 20036-5687 
109 


21290.075.eps

Statement for the Record 

by the 

American Federation of State, County and Municipal Employees (AFSCME) 

Before the 

Subcommittee on Social Security, Committee on Ways and Means 

U.S. House of Representatives 

on 

Social Security and Public Servants: Ensuring Equal Treatment 

March 22,2016 

The American Federation of State, County and Municipal Employees (AFSCME) 

submits this statement on behalf of our 1.6 million working and retiree members for the 

hearing held March 22,2016 on the Social Security provisions that affect certain public 

employees. 

AFSCME is a strong supporter of the Social Security system. We are troubled that 

the retirement income and Social Security benefits of many of our members and their 

families are unfairly reduced because of two amendments to Social Security, the 

Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). 

These provisions penalize ordinary public sector retirees who have worked hard and 

played by the rules. Congress must take action to eliminate the harmful 

consequences and serious inequities of these provisions by repealing both GPO and 

WEP. 

Government Pension Offset 

GPO is a federal law that has had a devastating effect on many Americans. It 

applies to nearly everyone receiving a public pension from work not covered by Social 

Security. Nationwide, roughly 27% (or more than one in four) state and local government 

employees are not covered by Social Security. Public employers in these states operate 

their own pension plans for their employees. The city, county, state and/or federal 

employees who are not covered by Social Security are found in all 50 states. The 

concentration of these impacted workers varies from state to state. In II states, over half 

of the public employees are not covered by Social Security. These states include Alaska, 

California, Colorado, Connecticut, Illinois, Louisiana, Maine, Massachusetts, Nevada, 

Ohio and Texas. Further, the percentage of employees ineligible for Social Security in 

Ohio, Maine, and Louisiana exceeds 75%. In Ohio, 97% of state and local employees are 

ineligible for Social Security. 

If the public pensioner is also eligible for a Social Security spouse or widow's 

benefit, this law requires that this benefit must be cut by an amount equal to two-thirds of 

the public pension. For the great majority, the GPO fully eliminates the earned Social 

Security spousal or widow( er) benefit. The remainder experience a dramatic benefit 

reduction. As of the end of2013, the GPO reduced or eliminated all ofthe Social 

Security spousal or widow( er) benefit for over 614,000 retired federal, state and local 

government employees. In California, some 91,550 beneficiaries lost all or some of their 

spousal or widow(er) benefit because of the GPO; in Connecticut, 8, 196; Florida, 24,77 l; 

in Illinois, 43,723; in Ohio, 86,019; in Oregon, 4,351; in Pennsylvania,7,906; in South 
110 


21290.076.eps

-2-

Carolina, 4,564; in Texas, 71,145; in Washington, 5,922. Disproportionately (81%) 

women lost their spousal or widow(er) benefit because of the GPO. 

Thousands more will be affected in the future. The GPO affects low-wage 

workers, pm1icularly women. AFSCME often hears the panicked concerns about the 

GPO from our retirees. Most come from retirees with modest pensions, particularly those 

retired from relatively low paying occupations, such as school custodians, nurses' aides 

and clerical workers. Many of these employees retire after a full-length career, but may 

have worked only a 30-hour week. Others may have had less than a full career- say 15 

or 20 years following child rearing or divorce. Most of those adversely affected are 

women who began their careers expecting to retire with both a public pension and a 

Social Security spousal benefit. It is a frightful shock when they realize that they will not 

receive a much-needed portion of their expected retirement income. 

According to current law, retirees cannot receive a Social Security benefit based 

on their own work record and receive a full spouse or widow's benefit. Rather, they can 

only collect the larger of the two. This is commonly refened to as the "dual entitlement" 

rule. For the purpose of the GPO, Congress made a determination in 1983 to arbitrarily 

equate two-thirds of a public pension (earned from work not covered by Social Security) 

with a Social Security earned benefit. The GPO essentially applies the dual entitlement 

rule to this portion of the pension and equates the remaining one-third portion of the 

public pension to a private pension benefit. 

However, the situations really are not comparable, making the GPO formula 

capricious. Our experience bears witness to flawed reasoning underlying the GPO. It 

ignores the generally large contributions made to public pensions by both employers and 

their employees. In jurisdictions that don't participate in Social Security, the average 

total contribution to a public pension can amount to 21% of pay or more, compared to a 

much lower total of only 12.4% under Social Security. For example, in Ohio, school 

district employers contribute 14% of payroll to the pension and the workers' share of 

contributions is 10% of their paycheck. The total of these contributions- 24%- is nearly 

double the combined employer-employee contribution rate of 12.4% under Social 

Security. 

This dispm·ity in the level of contributions toward guaranteed retirement benefits 

is impm1ant. Generally, private pension plans are financed solely by employers but public 

pensioners typically put in more than half of the total pension contribution. Most private 

pensioners only pay into Social Security, yet they can receive a full pension AND a full 

Social Security benefit, with no offset of any kind. In effect, public pensioners are 

penalized for their contribution to their own retirement. 

Taxation during retirement represents another example of unfair and unequal 

treatment under the GPO. A public retiree's entire pension is subject to federal income 

tax- including the part that is deemed equivalent to Social Security. Most Social 

Security benefits, however, are tax-free. So, the public retiree is effectively hit twiceonce with taxes and again with the GPO. It is simply not right. 

When Congress tirst enacted GPO, Congress thought many public retirees were 

getting multiple government pensions, leading to higher incomes in retirement than they 

had while working. The truth is very few AFSCME retirees fit this description. 
111 


21290.077.eps

-3-

Here are two examples of retirees hit by the GPO. They could not be confused 

with so-called "double and triple dippers." 

Mary retired in 1993 after working for almost 28 years with the Sandusky, Ohio 

schools. In 2007, when she was 75, her School Employee Retirement System of Ohio 

(SERS) pension was $688 a month and she received a spousal benefit from Social 

Security of $122 after the offset. After her then Medicare Part B premium of $96.40 was 

deducted from her Social Security benefit, she was left with a monthly check of$25.60. 

That results in a total of$713.60 for her monthly income. In 2006, Mary received a costof-living adjustment (COLA) of $14 to her SERS pension, yet with the GPO that increase 

was cut back to zero. The result was no cost-of-living increase for Mary. Further, she 

reported each of these miniscule COLAs or she would have been subject to a penalty 

from Social Security. 

By reducing Mary's survivor benefit the GPO is harming the financially 

dependent spouse. Clearly, Congress did not have Mary, or others like her, in mind when 

it passed GPO. 

Annette became an AFSCME retiree member in 2003 when she retired from her 

job as a clerical worker employed by the City of Los Angeles and became a pensioner in 

the Los Angeles City Employees Retirement System. She had never heard of the GPO 

and thought she would be able to collect a Social Security widow's benefit based on the 

work record of her deceased husband. However, she had a rude awakening. She found 

out that applying the GPO's two-thirds offset to her modest $1 ,300 pension would 

eliminate her Social Security widow's benefit of$812 a month. The reduction was hard 

for her to understand. She knew that, as a city employee, she had contributed the same 

percent of earnings into her pension as a private-sector worker contributes to Social 

Security. She knew that most private sector workers contribute nothing to their pension 

funds; their employers finance them. In addition, she knew that her own employer had 

made a substantial contribution to her pension- putting in as much as 16 and a half 

percent of payroll in any given year. She also knew that if she had never worked a day, 

she would be entitled to a full widow's benefit from Social Security. It seemed so unfair. 

Annette's financial situation turned worse when she learned that she would not 

only lose the Social Security widows' benefits her husband earned, but would also be 

financially hit by a second Social Security offset known as the Windfall Elimination 

Provision. 

Windfall Elimination Provision 

Like the GPO, the WEP also affects individuals receiving public pensions from 

work not covered by Social Security. When the public pensioner also worked in a Social 

Security-covered job for at least a decade, the WEP creates a public pension offset that 

can greatly reduce that person's eamed Social Security benefit. The maximum reduction 

in 2016 is generally$ 428.00 a month. 1 

1 For impacted public retirees if their retirement benefits start after full retirement age or their oncovered pension starts later than your eligibility year, the WEP reduction may be greater than this 

maximum. 
112 


21290.078.eps

-4-

In 2014, the WEP affected some 1.6 million Social Security beneficiaries who are 

retired federal, state and local government employees. The WEP impacts retired 

workers' Social Security benefits as well as Social Security benefits to provide a 

modicum income security for disabled workers, spouses and dependent children. In 

California, some 220,783 beneficiaries saw their Social Security benefits reduced because 

of the WEP; in Connecticut, 16,667; Florida, 90,015; in Illinois, 85,723; in Ohio, 

120,859; in Oregon, 15, 752; in Pennsylvania, 35,084; in South Carolina, 17,348; in 

Texas, 148,925; in Washington, 29,949. The majority (61 %) of retired workers who lose 

part of their Social Security benefit because of the WEP are men. 

The WEP considers part of a retiree's public pension (from non-covered 

employment) as equivalent to their earned Social Security benefit. By law, Social 

Security does not allow retirees to collect two full Socials Security benefits. So, instead 

of Social Security's normal benefit formula, WEP retirees' benefits are calculated using a 

modified fonnula. 

Theoretically, Congress created the WEP as a way to distinguish between lowwage workers and those who only appear to have had low-wage careers. The second 

category comprises workers who qualify for good pensions from primary jobs in the 

public sector that pay them well but do not cover them under Social Security; these 

workers also have secondaryjobs in the private sector, at low wages or short hours, but 

with Social Security coverage. The problem comes when the Social Security benefit 

formula is applied to their covered earnings, which makes them appear to be low-wage 

earners. That matters in figuring benefits because Social Security's benefit fonnula is 

weighted in favor ofthose who had low earnings throughout their work lives. 

Congressional supporters of WEP believe that public employees with secondary 

jobs are getting an unfair advantage from the weighted Social Security benefit formula, 

which was designed to give low-wage workers a decent income upon retirement. This is a 

faulty assumption. In reality, the Social Security Administration (SSA) does not 

determine what a public employee has earned in total wages. The WEP modified formula 

assumes all these workers are high earners or low earners. This forces SSA to treat all 

workers receiving both a public pension and Social Security benefits as high earners 

indiscriminate! y. 

In fact, public employees and retirees who take second jobs are most likely to do 

so because they have always been low-wage earners and receive low public pensions. 

Many of them are exactly the people that the normal Social Security benefit formula is 

designed to protect and help. In addition, the WEP modified formula causes a 

proportionally larger cut in benefits for workers with lower average monthly earnings and 

monthly benefit amounts. This occurs because the percentage factor in the lowest bracket 

of monthly earnings is the largest percentage cut. These deeper cuts to lower-wage 

workers creates a very arbitrary penalty that is especially unfair because these workers 

pay the same percentage in payroll contributions on their Social Security-covered 

earnings as all others. Why should they be penalized by this unfair statutory provision~ 

Conclusion 

AFSCME calls upon Congress to eliminate the harmful consequences and serious 

inequities of these provisions by repealing both GPO and WEP. Both GPO and WEP are 
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-5-

problematic and based on similar faulty assumptions. Both GPO and WEP warrant 

remedy and repeal. If the Subcommittee considers approaches that may establish 

measures that fall short of full repeal, we urge that any such changes serve as an interim 

redress on a path towards full repeal of both GPO and WEP. Bills have been introduced 

that both repeal and reform GOP and WEP. Rep. Davis' (R-IL) bill H.R. 973 would 

repeal both, Chairman Brady's (R-TX) bill H.R. 711 reforms WEP; and Rep Smith's (OW A) bill H.R. 4728, would expand the exception to WEP. 

Modifying the complicated and confusing existing WEP formula will likely 

advantage some retirees than the current WEP formula and disadvantage other retirees. 

Any proposed changes to the current WEP formula and provision must include a 

thorough and public analysis of how the proposal affects current and future retirees. 

Proposals should not aggravate the existing inequities ofWEP and GPO by visiting them 

on more retirees and their survivors. 

Lastly, we do not support mandatory Social Security coverage in the public 

sector. Mandated coverage would negatively affect the financing of many state and local 

government plans and would adversely affect the retirement security of hundreds of 

thousands of public sector workers. This would be true even if the mandated coverage 

applies only to future employees. Addressing the injustice and fundamental flaws in GPO 

and WEP makes far more sense. 

We look forward to working with the Subcommittee to rectify these arbitrary and 

unwarranted penalties to active and retired public sector workers. 
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To the Honorable Members of the House Committee on Ways and Means: 

This letter pertains to H.R. 711, the Equal Treatment of Public Servants Act of2015. I am 

a 57-year old Finance professor who, since the age of21, has been completely out of the labor 

force for only one year (graduate school), and who did not pay into Social Security for a further 

nine years because I was employed by a state university in Illinois where the employees were not 

allowed to participate in Social Security. Nevertheless, by the time I am eligible to receive Social 

Security in 2020 I will likely have paid into the system for 31 years, and during most of those 

years I have contributed the maximum possible amount in payroll tax because my covered 

earnings exceeded the maximum taxable amount. Under current law (because I will have 30+ 

years of substantial covered earnings) I will not be subject to the Windfall Elimination Provision 

of Social Security. Given the low likelihood that I will get the Illinois pension I am owed due to 

the severely underfunded status of the pension systems and the financial difficulties the state 

faces, I was counting on at least receiving the Social Security benefits I have been promised 

under current law to ensure a moderately comfortable retirement. Imagine my dismay, 

therefore, when upon close examination of H.R. 711 in conjunction with my earnings 

record, I determined that it would REDUCE my Social Security benefit by approximately 

12 percent, even though I am less than five years away from being benefit eligible! 

I provide my covered and non-covered earnings record, and details of my calculations, 

below. I am very knowledgeable about how Social Security benefits in general are determined 

and how the current Windfall Elimination Provision works, but I am less adept at reading arcane 

legislative language. While I believe that I have interpreted the provisions ofH.R. 711 correctly, 

I apologize if any of my interpretations below are incorrect. In addition, the analysis below as it 

pertains to my own situation requires me to forecast the Social Security Average Wage Index 

series for the years 20 I 5 to 2018 - this series is used to construct index factors for each 

individual to compute Average Indexed Monthly Earnings (AIME's) and to detennine the bend 

points in the Social Security benefit formula that will apply to someone like myself who will 

become benefit eligible in 2020. I assume the Average Wage Index, which was last published for 

2014, will increase 2.25% in 2015 and 2.60% in each of the years 2016-2018. I also assume I 

will earn the maximum taxable amount in covered earnings in the years 2016-2020. 
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Earnings History and Indexation 

Wage Indexing Indexed Indexed 

Factor 55 Earnings 55 Earnings All earnings All Earnings 

1980 4.1011 7,200 29,528 7,200 29,528 

1981 3.7260 0 0 0 0 

1982 3.5316 23,393 82,615 23,393 82,615 

1983 3.3676 24,996 84,175 24,996 84,175 

1984 3.1806 28,908 91,944 28,908 91,944 

1985 3.0506 33,150 101,128 33,150 101,128 

1986 2.9627 35,934 106,461 35,934 106,461 

1987 2.7851 38,292 106,645 38,292 106,645 

1988 2.6543 41,310 109,650 41,310 109,650 

1989 2.5532 46,744 119,349 46,744 119,349 

1990 2.4405 32,730 79,878 51,300 125,198 

1991 2.3528 0 0 53,400 125,641 

1992 2.2375 0 0 55,500 124,183 

1993 2.2185 0 0 57,600 127,783 

1994 2.1605 0 0 60,600 130,925 

1995 2.0772 0 0 61,200 127,125 

1996 1.9804 6,169 12,217 62,700 124,169 

1997 1.8712 0 0 65,400 122,375 

1998 1. 7781 0 0 68,400 121,623 

1999 1.6843 0 0 72,600 122,277 

2000 1.5960 0 0 76,200 121,615 

2001 1.5588 37,428 58,343 80,400 125,328 

2002 1.5433 84,900 131,029 84,900 131,029 

2003 1.5065 87,000 131,066 87,000 131,066 

2004 1.4396 87,900 126,539 87,900 126,539 

2005 1.3888 90,000 124,989 90,000 124,989 

2006 1.3277 94,200 125,073 94,200 125,073 

2007 1.2701 97,500 123,835 97,500 123,835 

2008 1.2415 102,000 126,637 102,000 126,637 

2009 1.2605 106,800 134,626 106,800 134,626 

2010 1.2314 106,800 131,518 106,800 131,518 

2011 1.1940 106,800 127,522 106,800 127,522 

2012 1.1579 110,000 127,366 110,000 127,366 

2013 1.1433 113,700 129,989 113,700 129,989 

2014 1.1041 117,000 129,176 117,000 129,176 

2015 1.0799 118,500 127,971 118,500 127,971 

2016 1.0526 118,500 124,731 118,500 124,731 

2017 1.0259 125,400 128,654 125,400 128,654 

2018 1.0000 128,657 128,657 128,657 128,657 

2019 1.0000 131,998 131,998 131,998 131,998 

2020 1.0000 135,422 135,422 135,422 135,422 

Note: in each year, for both covered SS earnings and all earnings, I include only up to the 

maximum taxable amount under Social Security. 

2 
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Benefit Computation Under Cunent Law: 

The sum of my high 35 years of indexed SS earnings is $3,428,730, and my Average Indexed 

Monthly Earnings thus equals $3,428,730/420 ~ $8,163.64. If the SS Average Wage Index 

evolves as I have assumed, the bend points in the benefit formula will be $945 and $5,693 for 

someone who becomes eligible for benefits in 2020. Because I will have 30 years of substantial 

covered earnings, I will not be subject to the Windfall Elimination Provision under cunent law, 

and my Primary Insurance Amount (PIA) will be computed as follows: 

PIA~ (0.90 X 945) + 0.32 X (5,693- 945) + 0 15 X (8,163.64- 5,693) ~ $2,740.46 

Benefit Computation Under H.R. 711: 

As I understand it, the bill provides that the PIA will be determined as per the following formula: 

[

AIME determined from covered earnings] PIA = xPIA using all earnings AIME determined from all earnings 

I assume the intent of the bill is that both the numerator and denominator in the above formula 

will be calculated only using earnings up to the maximum taxable amount under Social Security 

each year, and that only the high 35 years of indexed earnings will be used in both the numerator 

and denominator. However, these are not clearly spelled out in the legislative language, and if 

my interpretation is wrong then the impact on my benefit will be even more extreme than what I 

calculate below. 

My AIME dete1mined from covered earnings will be $8,163.64 as calculated in the section 

above. My high 35 years for all indexed earnings would include the years 1986-2020 and total 

$4,387,144, so my AIME determined from all earnings would be $4,387,144/420 ~ $10,445.58. 

The PIA using this higher AIME would be (0.90 x 945) + 0.32 x (5,693- 945) + 0.15 x 

(10,445.58- 5,693) ~ $3,082.75. Thus my final PIA using the formula above will be: 

[ 

8,163.64] PIA = 55 X3,082.75 = $2,409.29 10,44 . 8 

This reduction in my PIA of $331.17 if H.R. 711 is adopted represents a 12.08 percent 

diminishment. 

I should note that the actual dollar amount of my Social Security benefit will be determined 

jointly by my PIA and the age at which I claim - I will only receive my full PIA if I wait until 

full retirement age (66 years and 8 months in my case) to claim. However, the percentage 

reduction applied to my PIA for claiming early will not change as a result of H.R. 711; 

consequently the diminishment of my benefit in percentage te1ms would be the same regardless 

of when I claim benefits based on the above earnings record, but the diminishment in dollar 

terms would be lower if I claim before full retirement age. It is also the case that both PIA's 

above are in current dollars and not adjusted for future inflation. 

3 
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21290.083.eps

I recognize that due to my relatively high income I am unlikely to have the sympathy of 

many members of the committee- although I will note that I grew up lower middle class at best, 

did not inherit any money from my parents or other relatives, did not marry into money, and 

achieved what I have in life solely through my own talent, hard work and detennination_ I offer 

my own circumstances merely as a detailed case study of what l believe are the unintended 

consequences of this legislation_ l have done quite a bit of analysis and I believe that my 

situation is far from unique_ I sincerely believe this legislation will inflict great harm on tens, 

perhaps hundreds of thousands of individuals who, like me, have paid into Social Security for a 

long time while having relatively brief periods of non-covered employment, but unlike me 

earned much lower salaries during their careers_ For example, a prototypical lower middle 

income person who began working (like me) in 1980, had one year of no earnings, I 0 years of 

non-covered employment, and earned one-half of the Social Security average wage in his/her 

first 5 years of work and the average wage in subsequent years, and became eligible for benefits 

in 2020, would suffer a 7.21 percent PIA diminishment under this legislation by my calculations_ 

A middle-to-upper-middle income individual in similar circumstances who earned the average 

wage in his/her first 5 years of work and twice the average wage thereafter would suffer a 12.83 

percent PIA diminishment 

I believe that this legislation, as currently structured, does two things_ First, it 

dramatically hurts individuals of all income classifications who have had long careers with 

substantial earnings under Social Security and only short stints in non-covered employment The 

main reason for this is that, contrary to current law, people who have paid substantial sums into 

Social Security for 30 or more years will no longer be exempt from the Windfall Elimination 

Provision (WEP)_ A second issue is that (unlike myself) many folks who have only briefly 

worked in non-covered employment will not have done so for enough years to qualify for a 

pension based on that employment, or will receive only very low pensions_ Under current law, 

these individuals are protected because the WEP reduction cannot be more than one-half of any 

pension received based on non-covered employment However, there is currently no such 

protection in H_R_ 711 and a great many individuals who will not even be eligible to receive noncovered pensions will have their Social Security benefits reduced if this legislation is signed into 

law_ I strongly urge the sponsors of this legislation to correct these flaws, i_e_ to restore the 

exemption from the WEP for those with 30 or more years of substantial earnings in covered 

4 
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21290.084.eps

employment and the protections contained in current law for those who are receiving zero or low 

pensions based on non-covered employment. It must be acknowledged, however, that fixing 

these injustices would reduce the revenues generated from diminishing the Social Security 

benefits of unfortunate folks like me to provide windfalls for others (see below)_ 

The second thing this legislation does, that is obvious upon reflection, is to collectively 

increase Social Security benefits for those already eligible to draw benefits at the expense of 

those, like myself, who are not yet eligible but may be only a few years away from eligibility and 

are too old to make compensating adjustments. Why is this the case? Because for people who are 

eligible to claim in 2016 or in prior years (born in 1954 or earlier), the Windfall Elimination 

Provision under H_R_ 711 will be calculated two ways, according to current law and according to 

some variant of the new system, and affected individuals will receive the higher of the two 

calculations. Thus, clearly, no one who is currently receiving benefits and is subject to the 

Windfall Elimination Provision will see his/her benefit reduced, but some of these folks will 

receive increases based on the new formula and their individual circumstances. Thus, as a group, 

current eligibles will see their benefits increase. If the bill is truly revenue-neutral, then the laws 

of mathematics imply that those who are not yet eligible must collectively have their benefits 

reduced to make up for the shortfall, so it stands to reason that among those individuals born in 

1955 or later years the number of people like myself who will be negatively affected by H.R. 711 

will exceed the number who are positively affected. From a public policy perspective, I simply 

cannot comprehend why it is desirable to collectively increase the benefits of those born in 1954 

and earlier, at the expense of those born in 1955 and later, when the former group (who enjoyed 

lower payroll tax rates early in their careers and have a lower full retirement age) is already 

getting a better deal under Social Security. In what way is it fair or just to take money away from 

the generational have-nots in order to give even more to the generational haves? 

In summary, I believe that H.R. 711, at least in its current form, is deeply flawed and will 

do great harm to many individuals such as myself who were born in 1955 and later years, had 

only short stints of non-covered employment and who are already receiving a raw deal under 

Social Security compared to previous generations. I strongly urge the Committee to either 

modify the flaws in the bill that I discuss in detail above, or to reject the bill outright and leave 

well-enough alone. The Windfall Elimination Provision in its current form has been settled law 

5 
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for over 30 years; indeed, I was aware of it in 1990 when I took a job without Social Security 

coverage and I have structured my career in covered and non-covered employment in such a way 

that I would not be unduly harmed by this provision. To change the rules of the game now,just a 

few short years before I am eligible to claim Social Security and too old to recover from the blow 

that this legislation inflicts on me, is just plain wrong. 

6 
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21290.086.eps

Association of Texas 

Professional Educators' 

ATPE Supports the Equal Treatment of Public Servants Act 

ATPE has a long-standing position supporting the repeal of the Windfall Elimination Provision 

(WEP), a provision in Social Security law that can reduce retirement benefits for public 

educators eligible for a pension through publicly subsidized agencies. ATPE believes this 

provision contributes to the shortage of certified teachers in Texas. This provision is especially 

detrimental to efforts designed to attract private-sector professionals to the education profession, 

as these individuals typically have a significant number of years vested in the Social Security 

system. ATPE believes that repealing and/or reforming this arbitrary reduction of benefits would 

be an effective way to attract new teachers to the profession and retain experienced educators 

who may be considering leaving the profession. 

A TPE understands the initial purpose of the WEP and that repealing it completely would carry a 

significant cost. However, this provision is causing major unrest and low morale within the 

education community. The arbitrary fonnula used by WEP contributes to an overall negative 

view of the teaching profession, which further impacts recruitment and retention of quality 

educators in our public schools, especially second-career employees from the private sector. We 

urge you to provide relief to Texas school districts and employees by addressing this issue during 

this Congress. Please join ATPE in supporting the Equal Treatment of Public Servants Act (H.R. 

711). 

ATPE opposes mandating Social Security coverage for all Texas public school employees as a 

means to address this issue due to the possible damage it would cause to the Teacher Retirement 

System (TRS). Additional payroll taxes needed to support statewide Social Security would 

inevitably reduce the state's contributions to TRS, thus compromising the system's stability and 

ultimately reducing benefits for retired educators. 
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21290.087.eps

The more than I 00,000 members of ATPE urge passage of H.R. 711, and any action that would 

reduce the punitive federal Social Security laws that hann Texas educators. 
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Barbara G. Willis 

Columbia, MO 

Dear Committee Members, 

April 4, 2016 

I am reaching my retirement age in a couple of months but found out that Social Security is not going to 

be there for me because I am a former federal employee. I also found out that I am penalized on my 

personal earnings due to not working enough years and then penalized if I claim as a divorced spouse 

because I did work and will have a small pension from my federal employment. So it seems that 

according to current law, I am not going to get the help I need in retirement because I both didn't work 

and did work. 

I did not choose to not work enough years. I did choose to raise a wonderful child with a disability. My 

ex-husband abandoned us and did not help with medical bills and failed to provide child support for 

many years. The medical bills were in the hundreds of thousands every year so my co-pays even while I 

had insurance were in the tens of thousands every year. It was not a situation where a medical 

emergency forced me into bankruptcy because the bills never stopped and continue to this day. 

Why is social security very important to me as I get older and become unable to work? Because the laws 

also punished me for needing help for my child by taking every single dime I had put away for 

retirement before I could get the help needed. In other words, the law slapped me down from my 

careful planning for old age, then social security slapped me down for caring for my special needs child, 

and then came back to slap me down one more time because I had worked an qualified for a pension 

from federal employment. 

Please correct this problem. It is a horrible thing to hope that I die before I can no longer work to 

support myself. But that is the situation as it is today. I do not have extended family who can care for me 

as I age. For the very small amount I could have received under the social security rules that I worked 

under for my whole life will be the difference of being homeless and destitute or at least being able to 

have a roof over my head and food on the table. I should not be punished for having worked, for having 

not worked enough, or for loving my child. 

Sincerely, 

Barbara G. Willis 
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Dear Chairman Kevin Brady 

WHEREAS, After 1976, Anchorage Firefighter were not allowed to 

participate 

in the Federal Social Security System; along with others because THE 

MUNICIPALITY OF ANCHORAGE, ALASKA opted out of Social Security to 

save some 

money. All of my quarters were paid into Social Security before I became a 

Anchorage Firefighter. Along comes WEP, & now because of WEP I only 

receive 

40% of my Social Security .That is a big hit, when you are on a fixed 

pension! It is like being penalized for working for the city. But a bigger 

travesty is when I die, My wife will then only receive 40% of her Social 

Security. How is that fair, or just, or legal! She had NOTHING to do with 

working for the City of Anchorage. Yet she will be penalized, because I 

worked there. 

Please just think for a moment if one of your retirement benefits that you 

worked for was cut, you did not receive what Social Security told you were 

to receive how would you feel. Or how would your family feel when you are 

gone. 

Thank you, & please help, we worked hard for these benefits that we were 

promised. 

D K Bohac 
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April 5, 2016 

The Califomia Retired Teachers Association (CalRTA) has approximately 44,000 members and represents the 

260,000 retirees in the California State Teachers' Retirement System (CaiSTRS). Both current and future 

CaiSTRS retirees are penalized by the Social Security benefit reductions caused by the spousal offset and the 

Windfall Elimination Provision (WEP). 

California has a significant teacher shortage; we \Vill need more than 120,000 ne\v teachers in the next decade. 

Recruiting and retaining these new educators, hmvever, will be difficult because the WEP penalizes individuals 

who have changed, or \viii change, careers to enter teaching. 

Approximately 39% of California's teachers enter CaiSTRS on or after age 35. These individuals lose Soc-ial 

Security retirement benefits because of the WEP. The WEP hurts California's ability recruit new teachers for 

mathematics, science, technology, and engineering classes. These new teachers. who may haYe been In Social 

Security prior to teaching, will lose their earned Social Security retirement benefits if they transfer to California 

public schools. The \VEP significantly reduces the ability to encourage individuals who are in private industly to 

leave and bring their skills and knowledge to Califomia's classrooms. 

The WEP also hurts veterans who have paid into Social Security and are recruited into teaching as a second 

profession. In California, the WEP can have the effect of harming veterans. 

One justification for the WEP is that there is no harm because the affected individuals will have their other, nonSocial Security pension. That is not accurate; there is harm. The California teacher retirement pension primarily 

is based on length of service and average salaty. Second-career teachers do not earn a significant number service 

years; second-career teachers start at the bottom of the salary schedule and in 10 to 15 years they are only at the 

middle of the salary schedule. Fewer years of service, lower salaries, and smaller pensions is not a justification 

for the WEP. 

H.R. 711 recognizes the current WEP is discriminatory and hurts California's ability to attract qualified teachers 

and some public employees in every state; H.R. 711 repeals the WEP. The legislation creates a more equitable 

calculation of earnings to recognize that every affected person has a different Social Security and non-Social 

Security earnings hist01y. The current WEP is a one-size fits all penalty. The H.R. 711 new program is more 

nuanced and ensures equitable treatment based on the emnings history. H.R. 711 also includes current retirees to 

provide them the same equity provisions as future retirees. 

For all of these reasons, CaiRTA supports H.R. 711 's repeal of the WEP and establishment of a more equitable 

earnings history-based calculation. 

Thank you for your consideration of this written testimony. 

California Retired Teachers Association 

800 Howe Ave., Ste. 370 • Sacramento, CA 95825 • 916-923-2200 • www.calrta.org 
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21290.091.eps

HARRY KElLEY 

CHAIR OF THE TEACHERS' RETIREMENT BOARD 

OF THE 

CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM 

HEARING ON 

BEFORE 

THE SUBCOMMITTEE ON SOCIAL SECURITY OF 

THE COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

March 22, 2016 

SUBMITTED FOR THE HEARING RECORD 
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21290.092.eps

Introduction 

Thank you for providing this opportunity to express the views of the California State Teachers' 

Retirement System regarding the assurance of equal treatment of public servants as it relates to 

Social Security. Because CalSTRS members do not participate in Social Security for their public 

education service, but often have earned Social Security benefits from other employment, 

existing federal policies have a significant impact on the educators of California's children. 

CalSTRS provides retirement, disability and survivor benefits to almost 900,000 active and 

retired public school teachers and their beneficiaries. California public school teachers are the 

largest single group of state and local government employees in the counhy who do not 

participate in the Social Security system. 

Established by state law in 1913, CaiSTRS began operation 22 years before Social Security was 

created. At the time Social Security was established, California's teachers and all other state and 

local government workers were barred by Federal law from participating in Social Security. 

Through sound management over more than a centlny, CalSTRS has developed into the largest 

educator-only pension fund in the world, and second largest public pension system in the United 

States with over $184 billion in assets. CalSTRS pays more than $12 billion a year in benefits to 

more than 280,000 retired and disabled public school teachers and their beneficiaries. The State 

of California has prefunded its future retirement liabilities. 

Harsh Impact of Current Federal Law on Retired Teachers with Modest Incomes 

CaiSTRS members do not pay the Social Security payroll tax on their earnings from CaiSTRScovered service, and therefore are not entitled to Social Security benefits for such service. 

Nonetheless, many CalSTRS members have earned and become eligible for Social Security 

benefits from other employment. When they receive their CalSTRS pensions, these teachers' 

Social Security benefits are reduced by the Windfall Elimination Provision (WEP) formula. 

The Teachers' Retirement Board, which governs CaiSTRS, has previously expressed its strong 

concerns about the significant adverse impact the WEP has on public education in California. 

Many California educators have complained that the WEP unfairly reduces the Social Security 

benefits that they have earned from other employment. In addition, the WEP adversely affects 

California's ability to recruit teachers into second careers ftom other professions as well as 

teachers from other states. Accordingly, the board has consistently supported California 

legislative resolutions requesting the President and U.S. Congress enact legislation that removes 

the burdensome effects of the WEP, and submitted statements to the U.S. Senate and the U.S. 

House of Representatives in2007 and 2008, respectively, with our analysis of the issue and 

alternatives to the current offset. 

Absent full repeal of the WEP, the board supports efforts to eliminate the inequities, arbitrary 

effects, and particularly the harsh impact on lower and moderate income retirees that result from 

its application. The WEP formula is arbitrary because there is little orno correlation between the 

offset formula and the public pension that triggers application ofthe offset. 

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21290.093.eps

WEP Hinders Efforts to Attract Qualified Teachers 

The WEP creates an impediment to people who might otherwise want to become public school 

teachers in California, and hinder efforts by school districts to attract new talent to the California 

classroom. California is experiencing a significant teacher shmiage, and the existence of the 

WEP hinders efforts to address that shortage. Although many enter the teaching profession at the 

beginning oftheir career, many others choose to become teachers as a second career, often after 

lengthy work in the private sector covered by Social Security. Still others may move to 

California after beginning their careers as educators in a state in which their earnings are covered 

by Social Security. In fact, 25 percent of those teachers receiving their initial California teacher 

credential in 2013-14 completed their teacher preparation program in another state. Ca!STRS is 

vety concerned that the WEP may cause people to decide not to become public school teachers 

in California because their Social Security benefits will be substantially adversely affected by 

their public school service. California would be better able to recruit and retain educators ifthese 

professionals did not face reductions in their future Social Security benefits. 

Impact ofWEP in Detail 

While the intent of the WEP was to eliminate "windfall" benefits, often the actual effect is to 

reduce even modest Social Security benefits, which threatens the financial security of many state 

and local retirees. For example, many teachers earn Social Security coverage because of parttime jobs they had during their high school and college years or by working in private 

employment during the snmmer months after they became teachers. Such jobs will result in 

modest Social Security benefits, but these workers will be subject to the same WEP reduction as 

workers who receive much higher Social Security benefits. The reverse is also true. Workers 

who receive relatively modest public pensions see their Social Security benefits reduced under 

the WEP at the same rate as workers who receive more substantial public pensions. 

Following are examples showing the benefits that are payable under two scenarios, including 

before and after the application of the WEP. The two workers' benefits change based on the 

years they worked in covered and non-covered employment, rather than their total number of 

years worked or their salaries. To ensure that it is the impact of the covered and non-covered 

employment pattern that is being gauged, not years of service or salary, we assume each of the 

two individuals retires at age 62 with a total of 30 years of employment, some in the private 

sector and some in the public sector, and annual wage increases equal to Social Security's 

national Average Wage Index over the course of their careers. 

- 3-
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21290.094.eps

Impact ofWEP Depending on Employment Pattern 

John Diane 

Years of Employment Covered Under Public System 20 10 

Monthly Public Pension $ 1,942 $971 

Years of Employment Covered Under Social Security 10 20 

Monthly Social Security Benefit Prior to WEP $ 718 $ 1,053 

Monthly Social Security Benefit after WEP Applied $ 387 $722 

Monthly Combined Benefits $2,329 $ 1,693 

WEPimpact $331 $331 

When the WEP is applied, the worker's Social Security benefit is reduced by the same maximum 

dollar amount regardless of the number of years of covered employment unless the worker has 

21 or more years that were covered. (With covered years between 21 and 29, benefits are 

reduced on a sliding scale when the WEP is applied.) Each educator's monthly Social Security 

benefits are reduced by $331 (adjusted from the full retirement age offset of $428) with the 

application of the WEP. 

Even though John and Diane have the same combined years of service and the same earnings 

patterns, Diane's combined benefits are $636 lower than John's combined benefits. This occurs 

because under the WEP, no allowance is made for additional years of covered employment until 

the worker has 21 or more years that are covered under Social Security. 

In the example, both educators had the same earnings patterns throughout their careers. 

However, the same maximum WEP offset would apply to any individual of the same retirement 

age, including one with relatively low lifetime earnings who earns a much smaller combined 

benefit. 

H.R. 711 

Absent full repeal of the WEP, the board supports efforts to eliminate the inequities, arbitrary 

effects, and particularly harsh impact on lower income retirees. Accordingly, the board 

appreciates the bipartisan efforts of Ways and Means Chairman Brady and Rep. Richard Neal 

(D-MA) to address the inequitable impacts of the WEP. 

H.R. 711, the Equal Treatment of Public Servants Act of2015, provides an alternative 

calculation of the WEP with a formula based on actual work history for individuals turning age 

62 after 2016. Under this bill, Social Security benefits would be calculated as if all the worker's 

earnings were subject to Social Security taxes (using the standard benefit formula). This amount 

would then be multiplied by the percent of earnings covered by Social Security. This ensures 

Social Security benefits are based only on Social Security wages. As a result, a person with I 0 

years of Social Security-covered employment would be less affected by the offset than would a 

person with 20 years of covered employment, and the Social Security benefit of a person with 

lower average monthly earnings would be reduced less than a similarly situated individual with 

higher lifetime earnings. Each of these measures is a positive step toward addressing the 

inequities of the current formula. In the earlier example, John's combined benefit under the H.R . 

. 4. 
129 


21290.095.eps

711 calculation would be $2,404, a reduction of$256, and Diane's combined benefit would be 

$1 ,895, a reduction of $129. The lower reduction in Diane's benefit retlects the fact that she had 

a shorter career not covered by Social Security than did John. 

H.R. 711 is a significant improvement over the current WEP, and calculates the Social Security 

benefits for those who receive a CalSTRS benefit on a more equitable basis. There is one aspect 

of the proposal that concerns the Teachers' Retirement Board. Currently, the WEP applies only 

to those people who are eligible to receive a pension from noncovered employment, such as from 

CaiSTRS. Under H.R. 711, a person's Social Security benefit would be reduced if the person had 

noncovered employment, even if the person never received a pension from noncovered 

employment. This could occur if the person worked a few years as a California public school 

teacher, and then left the profession. If the person worked for less than the five full years 

necessary for vesting, that fonner educator would never be eligible for a CalSTRS benefit, but 

her Social Security benefit would be reduced. As of June 30,2015, there were almost 150,000 

CaiSTRS members no longer working in CaiSTRS-covered service who did not work long 

enough to qualify for a future CaiSTRS retirement benefit and their Social Security benefit 

would be reduced by some amount. (This compares to the 250,000 members currently receiving 

benefits from CaiSTRS.) We recognize that applying this formula to individuals who will never 

receive a pension helps offset the cost of increased Social Security benefits that would be paid 

concurrently to those subject to the current WEP, but wanted to alert the Committee to the 

impact on this population. 

Conclusion 

Iffull repeal of the WEP offset proves too costly, CaiSTRS believes that modifications would 

be appropriate steps to ameliorate the harsh adverse effects on retirees with relatively modest 

benefits that arise from the current arbitrary forrnula. Accordingly, CaiSTRS appreciates the 

leadership that Chairman Brady, Rep. Neal, Rep. Becen·a, and members of California's 

delegation have provided to address the issues associated with the WEP. CalSTRS looks 

forward to working with the Ways and Means Committee as the Committee continues its 

important work to address the current inequities of the WEP. 
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21290.096.eps

Dear Representatives, 

I would like to take this opportunity to thank you for looking into this matter 

as it is very important to the American people. I receive Social Security 

and with the penalty I lose approximately $200 per month. To some, $200 

may not seem like much, but to many it can help to pay a few 

bills. Please help and thank you for your time and effort in this matter. 

Sincerely yours, 

Carmine L. Rumo 
131 


21290.098.eps

Carol S. Tyler 
132 


21290.099.eps

Apri/2, 2016 

Representative Sam Johnson, Chairman 

House Ways and Ivfeans 

Social Security Sub-Committee 

U.S. Hause of Representatives 

Washington, D.C. 

RE: Comment on March22, 2016, Hearing on H.R. 711, 

"Social Security and Public Servants: Ensurlng Equal Treatment" 

Dear J1Iembers of the Committee: 

I am writing on behalf of the Committee far Social Security Fairness, a nation-wide group of 

public servants, mostly retired, who have been or will be qtfected by the Social Security 

QfJsets, the Windfall Elimination Provision cmd the Government Pensior1 Offset. 

We believe that the current Windfall Elimination Provision .formula is arbitrary, punitive, 

and that it results in unequal treatment of retired Americans. Oar public pensions have been 

contributed to and are taxed differently than are Social Security earnings. We believe that 

only a complete repeal of this qffset would provide a Sl!tficient remedy. A great many qf us, 

however, are pleased that you are considering a formula that would re.sult in a greater 

return in investment for the contributions that we have made to Social Security over the 

years. 

Your own Congressional Research Service report-Social Security: The Windfall Elimination 

Provision (WEP), datedApri/16, 2014 (the most current)-illuminates two of the issues that 

we find most egregious: 

1) The current lVEP causes a higher reduction ofbene,fitsfor low-income 

retirees. We have members who are school bus drivers in Louisiana. Why are we cutting the 

paid Social Secw·ity benefits for these workm·s? One of our members, a California teacher·, 

earned .'f;6oo a month in Social Security benefits working for a city child care center, later, 

after transferring to the local school district, she earned $900 a month in a teacher 
133 


21290.100.eps

retirement pension. Because of the WEP, her Social Security benefits were cut in haff. Instead 

of receiving a total of$1,{)00 a month, she is getting only $1,200. 

How would H.R. 711 mitigate thiB problem? How does H.R. 711 protect low-income workers? 

2) Because qfthe qften temporary, low-pay, or part-time nature of the employment of women 

in this society, women have been less likely to be affected by the provision of the 

l'VEP that eliminates the penalty .for people with 30 years o.f"substantial" 

earnings. As part qf this provision. the WEP penalty is reduced for people with more than 

20 years qf "substantial" earnings and is reduced by 5% every additional year until it is 

eliminated at 30 years of substantial earnings. 

In a Social Security Fairness survey we conducted last year, out of the more than 2J200 

pe,.sons ajfected by the WEP who answered our question, 8o% of them stated that they were 

NOT aware qf this provision. Because qf'this failure, they had no opportunity to reduce the 

effect of the WEP by working longer in a Social Security-paying job before they retired. 

How does H.R. 711 affect people who have both a short non-covered public employment and a 

short Social Secw·ity covered work history? 

The lack of clear and accessible communication about both of the Social 

Security penalties has been one of the most outrageous aspects of the Social 

Security offsets. The Social Security Administration has failed to adequately wam 

recipients ahead of time that they would not be getting the amount in retirement benefits that 

their statements said they would. Public employers were required by Congress only at the 

beginniny <?f 2005 to notify their newly-hired employees that they would be affected by the 

<![fsets. Not knowing about the qffsets has caused harsh.flnancial problems for l'etirees. 

The Committee for Social Security Fairness, in our 2015 survey mentioned above, obtained 

survey responses from more than 3,250 persons affected by one or both the Government 

Pension Qff..c;et and the ~'Vine{{ all Elimination P1·ovision. Responses came from every state and 
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21290.101.eps

from afewforeign countries. Only 5% of these retirees had known about the offsets when 

they began work for their public agency. Nearly 30% only learned that their Social Security 

retirement benefits would be cut from the amount that their statements said they would be 

earning when they walked into the Social Secvrity o.ffice to claim their ben~fits. 

This failure to notify public servants that they woiLld not be getting the retirement benefits 

that the Social Security Administration said they would has distorted many retirement plans. 

Of those affected by the WEP, 35% reported themselves to be 65 years old or older and still 

working. Eighteen percent said they had not been able to afford necessary health or dental 

services. Nearly 3% had taken public assistance. 

"~lore than half of those affected by the WEP said they would have planned differently for 

retirement, including planning to work longer. Twenty percent said they woiLld never have 

worked for a government agency. More than soo teachers said they would have .fiJrgone 

those summer jobs they took in order to make up their· Social Security quarters. Since, 

apparently, lawyers don't have any idea about these offsets, and public workers haven't 

known, ?"AJ reported having gotten a bad legal settlement. An example: one woman said that 

she had had to give her husband 40% of her teacher pension in a divorce settlement, but when 

she retired, became of the Government Pension Offset, she could not get any of her expected 

Social Security spousal benefit. The GPO usually eliminates.ALL Social Sewrity retirement 

benefits for those affected. 

How will H.R. 711 compensate these 1'etired public W(wkers for the failiLre of the Social 

Security Administration to give them accumte information about their earned benefits? A 

slight improvement in their monthly Social Security benefits because of H.R. 711 would he 

welcome, but it wo11ld make a only a small dent in the tens of thousands of dollars that have 

been unf'airly withheld from these deser·ving, mostl11low and middle income, p11blic servants. 

We thank you for considering these issues and realizing that the WEP and GPO result in a 

process of means-testing middle and low-income Americans in a way that no other persons 

with d(fferentfonns of income are qffected. Our public employees are pHnishedfirst by not 
135 


21290.102.eps

earning Social Security benefits while they are working for public agencies. and then they m·e 

punished again by having the Social Security ben<;fits they have ab·eady earned in other work 

cut back when they retire. 

Sincerely, 

Bonnie Cediel 

The Committee for Social Security Fairness 

P.O. Box 7486 

Berkeley CA 94707 

Tel: 510 524 7412 

Fax: Please call ahead 
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21290.103.eps

The WEP and the GOP do not effect only high income earners, Teachers and 

Public Safety officials. There are clerical, laborers, librarians, secretaries and 

many other lower paying positions that will be unfairly effected by this 

unfair reduction in Social Security pensions. 

Please support HR 711 and pass this bill 

CMMAT 

Assistant Treasurer 

Town of North Attleboro, MA 

508-699-0114 

Fax: 508-699-0133 

Please be advised that the Massachusetts Secretary of State considers e-mail to be a public record, 

and ther~fore subject to the Massachusetts Public Records Law, M.G.L. c. 66 § 10. 
137 


21290.104.eps

March 28, 2016 

Dear Committee Members: 

I am writing on behalf of myself and my husband Gary, a retired Denver Public 

Schools teacher. Gary retired in July 2014 after 25 years of service. Prior to his 

teaching career, he spent 20 years in the private sector. He receives a monthly 

pension from the school district, with approximately 27% of the gross amount 

withheld for health insurance for him and myself. This includes a subsidy from his 

former employer. Unfortunately the health-exchange program is not a viable option 

for us, as we make "too much money" for a subsidy. 

After federal income taxes are deducted, we receive approximately 57% of the gross 

amount of Gary's monthly pension payment. 

He is 66 years old and began collecting Social Security in late 2015. With the 

"windfall" deduction, his status as a teacher, and the Medicare Part B deduction, our 

bottom line is less than 50% of the full Social Security payment quoted by a 

representative from SSA. 

I am still working and, like my husband, I spent about half my career in the private 

sector and the other half in the public sector (though I am not a teacher). I expect 

and understand why there is a deduction for people who didn't work all their lives 

in jobs that paid into the Social Security system. However, I do object to the further 

financially punitive measures imposed on certain public servants. 

If the committee intends to create a bill that would remove these measures so as to 

foster equal treatment for public servants, I would submit my family as a prime 

example of why this should be done. This is the actual reality of retired teachers, 

rather than the well-perpetuated myth that they are lazy bureaucrats taking up 

oxygen until they can draw on a cushy retirement. 

Thank you for bringing this matter to the forefront. !look forward to the passage of 

a bill that would address this inequity. 

Sincerely, 

Faith B. Gregor 

Denver, Colorado 
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21290.105.eps

I am submitting my comments for myself and as a member of Retired 

State Employees Association at 9412 Common Street, Suite 7 in Baton 

Rouge, LA< 70809. The phone number is 225-930-0961 and Fax is 225-

930-0964. 

Both the Windfall Elimination Provision and the Government Pension 

Offset affect myself and many people that I know. My Social Security 

benefit is cut in half because I receive a state retirement benefit. I have 

worked in the private sector fulfilling all requirements in paying into 

Social Security. When I chose to serve in local and state government 

because of my desire to serve my community, I have been 

penalized. This is definitely unjust treatment for those who want to be 

of service to the public. I am, therefore, in support of HR 711 which will 

help to correct a law which hurts those of modest means. 

I sincerely hope that The Government Pension Offset be eliminated or 

corrected since it unfairly harms unjustifiably spouses who receive little 

to none of their deceased spouse1s Social Security survivors benefits. I 

do not understand how a law could have been passed in the United 

Stated Congress that harms so many public servants in this country. 

I am very grateful that the Ways and Means Committee is addressing 

these laws and hopefully will result in a just outcome. 

Sincerely, 

Gayle Joseph 
139 


21290.106.eps

Dear Representatives of The American People: 

PLEASE URGENTLY consider REPEALING the Windfall Elimination 

Provision (WEP) and the Government Pension Offset (GPO) by 

passing H.R. 973 the Social Security Fairness Act of 2015, 

sponsored by Republican Representative Rodney Davis. 

J1tt~/www._congress.go~UJ/114th-congre_lli!:Jous~: 

!?illl973/te>!! 

H.R. 973 has been STUCK in the HOUSE COMMITTEE OF WAYS and 

MEANS for too many months as Retirees, whom have been 

counting on receiving their F U L L SOCIAL SECURITY benefits for 

their retirement planning, suffer with short financing from month 

to month, and going into debt. 

Please UNDO the INJUSTICE and WRONG ACTIONS that has 

been committed towards those who have built and protected OUR 

AMERICA. They should NOT take second place to our Veterans. 

Many of America's Retired FIRST RESPONDERS, TEACHERS, 

FEDERAL EMPLOYEES, and other Government Employees, whom 

have contributed towards the SECURITY of our great United States 

with their lives, to keep America SAFE and FREE, has been SHORTCHANGED and ROBBED of receiving their FULLY PAID RETIREMENT 

BENEFITS in Social Security Retirement Benefits. 

I do NOT support H.R. 711, sponsored by Texas Representative 

Kevin Brady, which is just an ADJUSTMENT to the formula, from 

what I understand, and which will take way too 

long for America's retired First Responder, Educators, and other 

Government Employees to receive their rightly earned FULL 

retirement benefits. 
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21290.107.eps

The 100% REPEAL of WEP and GPO has been promised for 

DECADES, and has been a bi-partisan issue, in agreement, for 

repeal. 

WHAT HAPPENED? 

For myself, I am SERIOUSLY CONSIDERING the CANCELATION 

of my LONG-TERM-CARE INSURANCE POLICY, which I 

have $40,000 of my money tied up into, money I will NEVER see if 

I do cancel that policy. 

I do NOT wish to use Government Assistance Programs. 

Sincerely, 

Hazel Higa 

cc: Hillary Clinton for America 
141 


21290.108.eps

April4, 2016 

To Members of the Ways & Means Committee: 

I am writing to express my concerns about the abject unfairness of the Windfall Elimination 

Provision(WEP) of the Social Security Law. I am 64 years of age and retired this past year due to 

heart problems that interfered with my job performance as a speech/language pathologist in 

the Boston Public Schools. I began working in 1967 at the age of 16 and have paid into Social 

Security every year up until I became employed as a public school speech therapist in 1995. 

After working in that field for twenty years, I now receive a modest pension that will not 

increase substantially for the remainder of my life. 

It was my misfortune to earn very little during my younger years, when I worked low skilled 

jobs. Given the current formula for the WEP, I had "substantial earnings" for only eight years, 

thus making my social security payout subject to the WEP reduction. My expected social 

security benefit, if taken at age 66, will be cut in half($434 per month as opposed to $842 

without the WEP penalty). How can this be considered fair? I had worked and paid into SS for 

all of my working life before I took a public sector job. I made very little money during that time 

but I did follow the laws and paid my share into the system. Now I am told that, because I did 

not have "substantial earnings," I will be penalized financially for the rest of my days because I 

now have a WINDFALL: a public sector pension. I would hardly call my pension a windfall, 

though don't misunderstand: I am tremendously grateful for my retirement package. Yet, to be 

penalized by the substantial reduction in 55 benefits that I paid into over the years seems 

draconian and grossly unfair. This insult is made worse by the fact that my 55 fact sheet fails to 

mention the impact of WEP on my SS benefit, giving me the impression that I will receive twice 

as much as I actually will when collecting at age 66. 

Please change the formula or, better yet, abolish the WEP provision. The current formula 

punishes me for not making enough money when I was younger. This is not how the United 

States of America should be treating the citizens who have worked here all their lives and 

contributed in good faith. 

Sincerely, 
142 


21290.109.eps

March 23, 2016 

The Honorable Sherrod Brown 

United States Senate 

713 Hart Senate Office Building 

Washington, DC 20510-3505 

Dear Senator Brown: 

RE: Support H.R. 711 and Repeal the WEP 

As you know, the Windfall Elimination Provision (WEP) reduces 

Social Security benefits earned by Ohio's public employees who 

worked in private sector jobs. 

As a public employee who has dedicated my life to public service, 

I urge you to support H.R. 711 introduced on Feb. 4, 2015, by 

Reps. Kevin Brady (R-TX) and Richard Neal (D-MA). 

This important bipartisan bill: 

- Repeals the WEP and replaces it with a proportional formula 

based on each worker's real-life Social Security contributions and 

work history 

- Guarantees that Ohio's public servants will be treated like the 

rest of American workers, receiving the benefits they earned while 

they paid into Social Security 

-Does not shorten the solvency of the Social Security trust fund 

I hope I can count on you to step up for Ohio's public employee 

retirees and co-sponsor this legislation. 
143 


21290.110.eps

Thank you. 

Sincerely, 

Jan Rozboril 
144 


21290.111.eps

House Ways and Means Committee 

AprilS, 2016 

To whom it may concern, 

I write in support of the Equal Treatment of Public Servants Act of 2015, H.R. 711, which has been 

proposed by Reps. Brady and Neal. 

I am in a group of people hit the hardest by the carelessly written Windfall Elimination Provision. I went 

into teaching at the age of 40, have worked in a combination of public and private schools, and needed 

to be quite resourceful during the recession of '08. My state pension will not be large (certainly not 

enough to live on) and I am concerned about income in retirement. Additionally, I know people already 

over 70 who cannot afford to retire. 

I am grateful for your consideration of this bill. Please recommend it to the full House and if possible, 

extend even more protection to those of us already over 60 and with the lowest incomes. 

Once again I thank you for drafting and considering this bill. 

Sincerely, 

June Melchior 

Oakland, California 

jamelchior@yahoo.com 
145 


21290.112.eps

My wife worked enough quarters on low wages to qualify for Social Security. 

When we first started a family, we decided it was more cost effective for 

her to leave her job and be a stay at home mother for a few years. Day care 

costs were almost as much as she was making. When she re-entered the job 

force it was as a secretary in the state school system (MA). She just 

retired with 12 years of service. Her retirement income is under $10,000 a 

year. Her Social Security at 62 years of age before W.E.P., will only be 

around $10,000/yr. After W.E.P., her Social Security will be around 

$6,000/yr. How would anyone be able to survive on this income? The W.E.P. 

Is totally unfair to individuals in this situation. She would either have to 

work until she died, or go on welfare. She put in to the system and should 

not be punished. 

Keith Buckhout 

413-527-1089 

Sent from my iPad 
146 


21290.113.eps

April4, 2016 

Representative Sam Johnson, Chair 

Social Security Subcommittee 

Ways and Means Committee 

House of Representatives 

Washington, D.C. 

RE: Hearing on HB 711, Equal Treatment of Public Servants Act of 2015 

Dear Representative Johnson: 

I am writing on behalf of myself and my immediate family. I retired about two years ago from state 

government employment where I worked in transportation. I worked for the state of Alaska for less 

than half of my total working years. I worked within the Social Security system in the 1970's, 1980's and 

early 1990's. I joined state government for the most recent 18 years of work. I am glad that HB711 

reduces the unfair deduction in social security benefits for people like me, but it doesn't go far enough. I 

ask that you revise HB 711 so that it repeals entirely the Windfall Elimination Provision (WEP). It is 

unfair to reduce my social security benefit that was fairly earned in the years that I worked outside of 

government. I should receive 100% of the benefit, just as my annual social security statements show I 

would. It was very frustrating to learn, as I approached retirement age, that I would not receive my 

social security benefit in its entirety. Please revise HB711 to completely eliminate the WEP. 

Sincerely, 

Kristine Benson 

Juneau, Alaska 

cc: Representative Young 

Senator Murkowski 

Senator Sullivan 
147 


21290.114.eps

JAMES 

HIGG1NBOTHAM 

President, Acaoia 

DR. HUGH CRAFT 

Pw5ideni·E!sc' 

St. Bern<~rd 

Lf.f. MEYER, SR 

Vice-President 

Assumpt!on 

RUSS WiSE 

!mmf1diatc Past 

the Baptist 

DIRECTORS 

PEGGY SEELEY 

St. T<immany 

G!::ORGE i\!ASSAR 

St. James 

PATR!Cl.A RUSSO 

Ascem;ion 

Vf'RETA LEE 

East Baton Rouge 

DONALD DEES 

J.:fferson Davis 

DOUGLA5 

lACOMBE 

Acadia 

JERRY HICKS 

Ouacn1ta 

DOR.OiHY BRO~VN 

Fmnt..lin 

GLENWOOD 

BULLARD 

Bossler 

FRANKIE 

MITCHELL 

Webstlf'r 

JAM2S KELLY 

'fens.as 

MEL VlN LODGE 

ib~rvllle 

RCS2 DOMlNGUEZ 

Tangipahoa 

MEMORANDUM 

TO: 

FR: 

DATE: 

RE: 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON WAYS AND MEANS 

HONORABLE CHAIRMAN KEVIN BRADY 

HOUSE WAYS AND MEANS SOCIAL SECURITY SUBCOMMITTEE 

HONORABLE CHAIRMAN SAM JOHNSON 

LOUISIANA SCHOOL BOARDS ASSOCIATION 

Scott M. Richard, LSBA Executive Director 

March 18,2016 

HEARING -TUESDAY, MARCH 22,2016 

"Social Security and Public Servants: Ensuring Equal Treatment" 

LSBA Submission of Written Comments 

The purpose of this correspondence is to provide you with written comments for the 

abovementioned hearing of the House Ways and Means Social Security Subcommittee scheduled 

for Tuesday, March 26, 2016. 

On behalf of the six hundred forty-three locally elected school board members that comprise our 

membership from the sixty-nine school boards in the state of Louisiana, the Louisiana School 

Boards Association respectfully requests favorable action in regards to H.R. 711, the "Social 

Security and Public Servants: Ensuring Equal Treatment" legislation. 

Many public employees, current and retired, associated with local school system employment in 

Louisiana are negatively impacted by the current provisions in place. It is our hope that a fairer 

formula that treats teachers and other school system public employees/retirees is established as a 

result of this legislation. The current impact of the Social Security Windfall Elimination Provision 

(WEP) and the Government Pension Offset (GPO) is detrimental to current and former school system 

employees. 

Please find enclosed in this correspondence House Concurrent Resolution Number 12 filed in the 

current 2016 Regular Session of the Louisiana Legislature requesting that the United States 

Congress consider eliminating WEP and GPO provisions for Louisiana's citizens. This resolution 

has been approved and communicated to the United States Congress repeatedly over the past 

several years. 

We appreciate your most serious consideration regarding this request. Please include this 

correspondence as an official submission of written comments relative to this matter. Please do not 

hesitate to contact me directly for additional information. 

SR 

7912 SUMMA .AVENUE· BATON ROUGE, LA 70FJ09 TELEPHONE (225i 769-31!!1 ·FAX 

(225) 769-6108 .WEBSITE: l/',1.\1\'\I'!.LS§l'l"fQ.M 
148 


21290.115.eps

2016 Regular Session 

HOUSE CONCURRENT RESOLUTION NO. 12 BY 

REPRESENTATIVE FRANKLIN 

A CONCURRENT RESOLUTION 

2 To memorialize the United States Congress to take such actions as are necessa1y to review 

and consider eliminating provisions of federal law which reduce Social Security 

4 benefits for those receiving pension benefits from federal, state, or local government 

retirement or pension systems, plans, or funds_ 

6 WHEREAS, the Congress of the United States of America has enacted both the 

7 Government Pension Offset (GPO), reducing the spousal and survivor Social Security 

8 benefit, and the Windfall Elimination Provision (WEP), reducing the earned Social Security 

9 benefits payable to any person who also receives a public pension benefit; and 

I 0 WHEREAS, the GPO negatively affects a spouse or survivor receiving a federal, 

II state, or local government retirement or pension benefit who would also be entitled to a 

12 Social Security benefit earned by a spouse; and 

13 WHEREAS, the GPO formula reduces the spousal or survivor Social Security benefit 

14 by two-thirds of the amount of the federal, state, or local govemment retirement or pension 

15 benefit received by the spouse or survivor, in many cases completely eliminating the Social 

16 Security benefit even though their spouses paid Social Secmity taxes for manyyears; and 

1 7 WHEREAS, the GPO has a harsh effect on lnmdreds of thousands of citizens and 

18 undermines the original purpose of the Social Security dependent/survivor benefit; and 

19 WHEREAS, according to recent Social Security Administration figures, more than 

20 half a million individuals nationally are affected by the GPO; and 
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21290.116.eps

WHEREAS, the WEP applies to those persons who have earned federal, state, or 

2 local government retirement or pension benefits, in addition to working in employment 

covered under Social Security and paying into the Social Security system; and 

4 WHEREAS, the WEP reduces the earned Social Security benefit using an averaged 

5 indexed monthly earnings formula and may reduce Social Security benefits for affected 

6 persons by as much as one-half of the retirement benefit earned as a public servant in 

7 employment not covered under Social Security; and 

8 WHEREAS, the WEP causes hardworking individuals to lose a significant portion 

9 ofthe Social Secmity benefits that they earn themselves; and 

1 0 WHEREAS, according to recent Social Security Administration t1gures, more than 

11 one and a half million individuals nationally are affected by the WEP; and 

12 WHEREAS, in ce11ain circumstances both the WEP and GPO can be applied to a 

13 qualifYing survivor's benefit, each independently reducing the available benefit and in 

14 combination eliminating a large portion of the total Social Security benefit available to the 

15 survivor; and 

16 WHEREAS, because of the calculation characteristics ofthe GPO and the WEP, they 

17 have a disproportionately negative effect on employees working in lower-wage government 

18 jobs, like policemen, firefighters, teachers, and state employees; and 

19 WHEREAS, Louisiana is making eve1y effort to improve the quality of 1 ife of its 

20 citizens and to encourage them to live here lifelong, yet the current GPO and WEP 

21 provisions compromise their quality of life; and 

22 WHEREAS, the number of people affected by GPO and WEP is growing every day 

23 as more and more people reach retirement age; and 

24 WHEREAS, individuals drastically affected by the GPO or WEP may have no 

choice 

25 but to return to work after retirement in order to make ends meet, but the earnings 

26 accumulated during this return to work can further reduce the Social Secmity benefits the 

27 individual is entitled to; and 

28 WHEREAS, the GPO and WEP are established in federal law, and repeal of the GPO 

29 and the WEP can only be enacted by congress. 
150 


21290.117.eps

THEREFORE, BElT RESOLVED that the Legislature of Louisiana does hereby 

2 memorialize the United States Congress to take such actions as are necessmyto review the 

Govemment Pension Offset and the Windfall Elimination Provision Social Security benefit 

4 reductions and to consider eliminating or reducing them. 

BE IT FURTHER RESOLVED that a copy of this Resolution be n·ansmitted to the 

6 presiding officers of the Senate and the House of Representatives of the C Ollb'fess of the 

7 United States of America and to each member of the Louisiana congressional delegation. 

DIGEST 

The digest printed below was prepared by House Legislative Services. It constitutes no part of the legislative 

instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law or proof or indicia 

of legislative intent. [R.S. l:l3(B) and24:177(E)] 

HCR 12 Original 2016 Regular Session Franklin 

Memorializes congress to review and eliminate the provisions of federal law which reduce Social Security 

benefits for persons receiving pensions from federal, state, or local governmental retirement systems. 
151 


21290.118.eps

HCR12 by Representative A,B. Franklin 

SOCIAL SECURITY SYS: Memorializes congress to consider eliminating the Windfall 

Elimination Provision (WEP) and the Government Pension Offset (GPO) Social Security benefit 

reductions 

Current Status: Pending House Retirement 

Digest HCR12 Orlglnal 

A.B. Franklin (primary) 

Journal 

Date Chamber Page Action ilislo(y 

03115 . ··H 3 Read. by Uti~. underthe rules, referred to the Committee on Retirement 

03/14 H 102 Read by title. Lies over under the rules. 

2016 Regular Legislative Session Hyperlink: 
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To Whom It May Concern: 

I would greatly appreciate your consideration of H.R. 711. I currently am an 

employee for a public school, but I previously worked in the private sector 

where I paid into social security. I feel it only fair that I am entitled to my 

full social security benefits- just like everyone else. The Windfall Elimination 

Provision (WEP) needs to be eliminated. 

I ask you to please support H.R. 711. This is the only fair solution for people 

who have both private sector and state and local government service. 

lynn S. Goughnour 

Department of & learning 

PARMA CITY SCHOOL DISTRICT 

PH: 440-885-8316 

FAX: 440-885-8755 
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MAINE ASSOCIATION OF RETIREES 

AprilS, 2016 

Dear Representative Kevin Brady, Chairman House Ways 

& Means Committee 

Representative Sam Johnson, Chairman, Sub-Committee on 

Social Security 

Members of the House Ways and Means Committee and the 

Social Security Sub-Committee: 

Re: 3H.R. 711, Social Security and Public Servants, Ensuring Equal 

Treatment2 

On behalf of the Maine Association of Retirees and our over 14,000 public 

service retirees1 membership, I am submitting for your consideration the 

following comments: 

The State of Maine has thousands of public service retirees who are affected 

by the Social Security Administration1

s Offset and Windfall provisions. 

MAR and our membership greatly appreciate the hearings which you 

recently held on H.R. 711. Too many retirees have been adversely affected 

by the Social Security provisions even though they contributed to Social 

Security and have attained the necessary quarters to receive S.S. benefits. 

This is unfair and has greatly impacted the quality of life of too many senior 

citizens here in Maine and elsewhere across the nation. 

Just last week, I delivered nearly 100 written comments from Members of 

the Maine Association of Retirees to United States Senator Susan Collin1s 

office describing how the Social Security Off-set and Windfall provisions 

have forced some retirees to abandon their homes and to make daily 

decisions between purchasing food or medicines. It is unfair and unjust that 
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these retirees are being denied Social Security benefits which they have 

earned. 

Among the greatest injustices is when a spouse, who is covered by Social 

Security dies, and the normal survivor benefits are denied to the widow. 

In Maine, public service employers including the State of Maine and the 

Maine Public Employees Retirement System have done little to inform 

employees during the hiring process and during their working years about 

the possible effects of the Off-set and Windfall provisions. While the Maine 

Association of Retirees has limited access to working employees, we have 

tried to educate public service employees so as to help them prepare for 

their retirement years. 

Thank you Congressman Brady, Congressman Johnson, Members of the 

House Ways and Means Subcommittee on Social Security, and the many 

sponsors of H.R. 711 including Maine1

s Congresswoman Chellie Pingree and 

Congressman Bruce Poliquin for bringing this most important issue forward 

and for the Public Hearing on March 22, 2016. 

Sincerely, 

Joe Pietroski 

Legislative & Financial Manager 

Maine Association of Retirees 

280 Maine Avenue 

Farmingdale, Maine 04344 

Phone:207-582-1960 

Toll-free: 1-800-535-6555 

Cell: 207-240-3652 

FAX: 1-207-582-4764 

Web: }!:IWw.maineretirees.org 
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lRietroski@_maineretirees,org 

cc: Congresswoman Chellie Pingree 

Congressman Bruce Poliquin 

Senator Susan Collins 

Senator Angus King 
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AARP Friends, 

I was in total disbelief upon learning of this. Thank you for reading it. Your 

assistance is greatly appreciated. 

Repeal WEP /GPO 

I am a current 33-year Texas schoolteacher looking to retire in a few years. 

Eighteen (18) of my years were served in districts where I paid fully into social 

security. The government/WEP says I can only receive 40% per year ($4,008 at 

age 62) of the monies I've paid in and am eligible for ($10,020 at age 62). I 

recently read a national newspaper article revealing that a Cuban immigrant, 

who has never lived or worked in our great country, can come to the United 

States, live with a child, and is thus eligible to receive $700 per month from 

social security. NOW THAT'S RIDICULOUS! This article went on to state that two 

(2) of these cases involved immigrants living in households with yearly earnings of 

$100,000-plus. And I'm merely asking for the money---my money---that I paid 

into the system ... no more, no less. This is not only absurd but un-American! That 

$6,000 per year that the government/WEP is stealing from me will amount to big 

money over the course of my retirement. Plus, it would certainly help to add to 

my piddly teacher retirement. 

Also, why are some states affected (15-18 I believe) while others are not? 

have next-door neighbors who are retired Oklahoma schoolteachers that receive 

ALL of their social security monies in addition to their teacher pensions. Shouldn't 

all workers who paid into social security receive those monies they simply are 

eligible for? Keeping money from me that I paid into the system---money meant 

to supplement my retirement income---makes absolutely no sense. It's flat out 

wrong! 

Can you help me and the other 1.5 million affected by this? Will you help 

me? If not, please direct me to someone who can. Thank you very much. 

Marty G. Nichols 

Sherman, Texas 
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STATEMENT FOR THE RECORD 

U.S. HOUSE OF REPRESENTATIVES 

Committee On Ways And Means 

Subcommittee On Social Security 

Statement of Frank Valeri, President 

Shawn Duhamel, Legislative Director 

Retired State County and Municipal Employees 

Association of Massachusetts 

"Social Security and Public Servants: Ensuring Equal Treatment" 

March 22, 2016 

On behalf of our 62,000 members, all of whom are retired Massachusetts public 

employees, the Retired State Country and Municipal Employees Association of 

Massachusetts (Mass Retirees) thanks Chairman Johnson and the members of the 

Social Security Subcommittee for the opportunity to offer our testimony on H.R. 

711: Equal Treatment of Public Servants Act of 2015. 

We offer our full support for H.R 711 with the goal of restoring fairness and equity 

to Social Security for those retirees currently impacted by the Windfall Elimination 

Provision (WEP), as well as all future public retirees working outside of the Social 

Security system. In addition, we would like our testimony to also draw attention to 

those current and future public retirees who fall victim to the Government Pension 

Offset (GPO)- many of whom are lower income retirees and predominately women. 

For the past several years, Mass Retirees has worked closely with Chairman Kevin 

Brady and Ways and Means Senior Member Richard Neal in the bi-partisan 

development of what is now known as H.R. 711. We owe our full thanks and 

gratitude to both Chairman Brady and Mr. Neal for their commitment to resolving 

this inequity in the law. 

We are also proud to join with our colleagues in Texas and Ohio as part of a growing 

national coalition of retired public employee organizations and active employee 

unions committed to resolving the issues ofWEP and GPO. Together we have 

arrived at what we believe to be a fair and equitable compromise to address the 

WEP, while we continue to search for a solution to the GPO. 

Having one of the oldest public pension systems in the nation, Massachusetts was 

originally excluded from participation in Social Security at its creation in 1935. 

Decades later, when public employees were allowed to participate in Social Security, 

the Commonwealth and its political subdivisions had well established contributory 

retirement systems and entrance into Social Security would have created a 

substantial hardship for both taxpayers and plan participants alike. 
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Since 1968, Mass Retirees has been the lead advocate for Massachusetts Public 

Retirees. Our involvement with the issues ofWEP and GPO began in 1983, when 

Congress enacted WEP and amended GPO (first enacted in 1977) in an attempt to 

equalize Social Security benefits for covered vs. non-covered service. At that time, 

Social Security did not possess the data or the technology necessary to accurately 

compute benefits. 

Over the past thirty-three years the severity of the WEP has been increasingly felt by 

a growing number of our members. At present, approximately 40% of our 

membership is impacted by the WEP. Many have lost a sizeable portion of their 

anticipated Social Security benefit. 

For a lower income retiree, the loss of hundreds of dollars per month in vital 

retirement income brings about a severe financial hardship for the retiree and their 

family. In many instances, such a loss in unrecoverable income forces increasingly 

tough life choices. 

We also believe that the inherent arbitrary nature of the WEP is unfair. This 

unfairness serves to undermine faith in not only Social Security, but also in the 

federal government to make good on promises made to American workers who paid 

into Social Security. The vast majority our members also worked in jobs outside of 

the public pension system, which were covered by Social Security. 

While the nature of how our members achieve their Social Security quarters varies, 

we know that many work a second job paying into Social Security in order to receive 

a retirement benefit. A good number of retirees have consistently paid at or beyond 

substantial earnings and made contributions into the system through their covered 

service. 

The accurate accounting of a worker's lifetime contribution to Social Security will 

achieve an equitable outcome, whereby all American workers receive Social 

Security benefits that are based on their actual service rather than arbitrary 

estimates. 

Further, H.R. 711 places the same standards on all public as well as private sector 

retirees. Everyone is treated equally under the law. 

Beyond the obvious impact of the WEP on retiree income, we continue to witness a 

subtle but growing impact on the ability of public employers to recruit and retain a 

qualified workforce. For instance, in Massachusetts it has become increasingly 

difficult to recruit new employees for technical or management level positions that 

have traditionally drawn upon experienced private sector employees. The impact of 

the WEP and subsequent loss of retirement income is a detriment to entering a 

public sector career. 
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In addition, we are losing an increasing number of government employees as they 

near their pension vesting date of 1 0-years. While somewhat anecdotal, the WEP is 

known as a main underlying reason for severing public service prior to vesting. The 

passage of H.R. 711 will remove the prospect of an arbitrary loss of Social Security 

benefits from any consideration of whether to accept or remain in a public sector 

job. 

While the number of organizations in support of H.R. 711 continues to grow, there 

are some who argue the bill does not go far enough in adjusting the Social Security 

benefits of current retirees. Others express concerns of the changes proposed in the 

bill, in its current form, make to the so-called "thirty-year" rule. 

First, let's look at the adjustment of Social Security benefits of those retirees 

currently impacted by the WEP. While our Association has a long history of 

advocating for a full repeal of both WEP and GPO, we now believe that doing so is 

not only unachievable, but also would create a situation of new inequality. Chiefly, a 

full repeal ofWEP would provide public retirees with non-covered service outside 

of Social Security with an artificial increase in Social Security benefits beyond what 

they earned. While our members do not deserve less than they earned, none are 

advocating for more than they deserve. We now understand that a full repeal ofthe 

WEP would create an unfair system, whereby some would receive more than they 

earned. 

A principal aspect of the bipartisan approach to achieving WEP relief is the accepted 

requirement that any proposal must be cost neutral in terms of its impact on Social 

Security. When the rationale behind H.R. 711 and the adjustment ofthe current 

WEP'd benefit was first devised, it was based on savings analysis available at that 

time, which allowed for adjustments up to 33%. 

As the Social Security Administration and the Committee continue to evaluate the 

financial ramifications of H.R. 711, we respectfully ask that every consideration be 

given to increasing the maximum adjustable rate for current retirees to a higher 

level, if additional savings are realized. 

As to the second criticism, it is also our hope that an equitable solution be reached 

to accommodate those who might be negatively impacted ifthe "thirty-year" rule 

were to be eliminated. We believe it to be unfair to abruptly change the rules on 

those active employees or retirees not yet eligible for Social Security benefits. As 

stated above, many non-covered public employees simultaneously work a second 

job, making substantial contributions to Social Security with the full intention of 

achieving 30+ years of service under Social Security with substantial earnings. 

This practice is especially true amongst our nation's fire fighters. Many of our 

members, who are retired fire fighters, worked a second job under Social Security 

with the full knowledge that by making substantial earnings for such thirty plus 

years of covered service they would be exempt from the provisions of the WEP. 
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Again, we believe it inherently unfair and unintended for current workers to be 

negatively impacted by a loss of the "thirty-year" WEP exclusion. 

While not addressed within H.R. 711, we commend the Committee, as well as 

Chairman Brady and Mr. Neal, for the continued efforts to achieve relief from the 

GPO. As is the case with the current WEP law, GPO provides an arbitrary reduction 

in Social Security benefits through the use of an outdated methodology. We believe 

that a better fair way is achievable. 

Public retirees, most harmed by the GPO, tend to be career public servants whose 

purchasing power significantly dwindles as they age. The current 2/3 formula used 

by the GPO eliminated most, if not all of one's potential spousal benefit. 

Retired teachers are a prime example. Due to the school calendar and teaching 

schedule, most teachers have little to no opportunity for outside employment and 

Social Security participation. Thus, many do not qualify for a Social Security benefit 

of their own. This proves especially difficult when dealing with the loss of a spouse 

and the financial implications that accompany that loss. 

Further, the current GPO law also continually offsets pension COLAs by 2/3. In 

practice this results in nearly a dollar-for-dollar reduction in Social Security benefits 

for each dollar in a COLA This especially affects the lower paid public retiree, who 

is significantly harmed by the existing GPO reduction. Understandably this practice 

not only adds further frustration to the impact of the GPO, but also places SSA with 

an unfortunate administrative burden. 

We ask that the Committee consider eliminating the GPO's COLA offset as part of 

H.R. 711. It is our understanding that given the arbitrary nature ofthe COLA for 

many public retirees, there is no cost to SSA in eliminating further COLA offsets. This 

small change would go along way toward bringing about fairness and equity for 

those impacted by the GPO. 

Another point to consider when examining the impact of the GPO is the fact that 

many of the retirees hardest hit by the loss of Social Security benefits do in fact 

qualify for Medicare A & B. Since 1986, all public employees have contributed to 

Medicare- regardless of their eligibility for Social Security. Medicare Part B 

premiums are billed quarterly and directly to those retirees enrolled in Medicare, 

but not receiving a Social Security benefit. As direct payers, they face the possibility 

of a substantial premium change, which they in fact did this year. For our members 

who were hit with this increase, it added insult to injury. 

In closing, we again commend Chairman Johnson and the Subcommittee for 

providing a public forum to spotlight this critical issue for so many public retirees 

and the balanced approach toward addressing it, as offered by H.R. 711. As always, 

we remain available to answer any questions by the Committee and its staff. 
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I retired in January 2009, with 29 years and 4 months total Federal service, and am receiving a 

CSRS annuity. I paid the required deposits for both my active duty military (Army) service and a 

temporary GS position, in order to receive my full annuity. Since I spent the bulk of my career 

as a GS-07 and GS-11, my annuity is less than $40K per year. 

My concern is that I worked in the 'public sector' before and after my military and civilian service, 

as well as during my 26-year career tenure with the Department of Defense. The Social 

Security Administration (SSA) statement that I received indicated that I had earned enough 

credits to receive a full SSA pension. However, it also notified me that I will not get my full 

pension because my CSRS pension causes me to fall under the mandates of the Windfall 

Elimination Provision (WEP). 

Because I was a divorced single parent, I was unable to begin contributing to the Thrift Savings 

Plan (TSP) until my youngest child was in high school. I cut back my expenditures to increase 

my contributions for the last few years, trying to catch up, but the 2008 stock market slide wiped 

out quite a bit. After retiring, I rolled over what was left of my TSP funds into a self-directed 

traditional IRA with a brokerage firm. 

After retiring, I started a small service business, but suspended it because of medical problems. 

Although my health had been a factor in deciding to retire at 60, I did not anticipate needing 

surgery that limited my ability to work. After I recovered, I was able to work part time for a while, 

but again medical issues intervened. 

I have contacted my elected officials in the past, and will continue to do so, in the hopes that the 

WEP and the Government Pension Offset (GPO) are repealed. I only want to receive the entire 

pension that I earned and am rightfully entitled to. When I turned 65, Medicare premiums were 

deducted from the little SS I was receiving. I am currently receiving only $140 per month net 

from SS. I am also unable to draw against my ex-husband's SS because of the Government 

Pension Offset. 
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Representative Sam Johnson, Chairman 

House Ways and Means 

Social Security Sub-Committee 

U.S. House of Representatives 

Washington, D.C. 

RE: Comment on March 22, 2016, Hearing on H.R. 711, 3Social Security and Public Servants: Ensuring Equal Treatment> 

Dear Members of the Committee: 

Please Repeal WEP/GPO 

HR 711 REPEAL WEP/GPO 

Also see S 1651 and HR 973 

I started working at age 16 after my father died of a heart attack. I worked 

30 years in factory jobs in Ohio (now considered the rust belt). I paid into 

SS out of every pay check. Toward the end of that 30 years, company cutbacks and closings became very common and that kind of work was NOT 

STABLE (even if you could get it as an older worker). I took a very low 

paying county position; working in a school for special needs children. I 

worked for another ten years. If I had known that work in a public position, 

would have eliminated All of my Social Security disability and 70% of my 

Social Security retirement, I would have taken ANY other type of work. 

My disability earnings from the school position is less than $600.00 a 

month. This tiny amount eliminates $1055.00 monthly income I should be 

getting from SSD, and will reduce my SS retirement to about $350.00 a 

month. When I took this position I wasn't told about WEP/GPO or its 

consequences. I wasn't given a choice to continue paying into SS. Even if I 

found work that I could do now, this same scenario would prevail. I can 

never work long enough to overcome that 1 0 years of public service. 

I worked all my life so I could support myself and family. Now me and 

millions of other public servants (including military personnel) may have to 

depend on the charity of our children. It is degrading to us and our kids 

don't deserve that burden. 
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Repeal of WEP/GPO IS NEVER brought up for discussion by our 

candidates, congress or media. 

Is that because it is a provision that only affects people in 15 states? This is 

a law that eliminates benefits paid into a FEDERAL program SS, but only 

eliminates these benefits in 15 states. WHY IS THAT ALLOWED TO 

CONTINUE? It is wrong and our President, and Congress need to 

completely repeal it now. 

Now I hear that a non inclusive plan, non retroactive repeal is being 

considered. That is ridiculous we have been suffering long enough in the 

absence and earned our benefits. End it and pay all of us going forward. 

Don't cut us out. Billions of dollars have been saved/withheld since Ronald 

Reagan signed this into law. AGAIN WE PAID OUR REQUIRED TAXES 

AND EARNED THE BENEFITS. You have do this correctly, and completely 

because it will be considered fixed and impossible to improve further in the 

future. 

This was a sneaky attack on seniors. We were not informed how it would 

affect our financial security that we worked for, all of our lives. 

Please know the "Substantial Earnings" clause is a blatantly under-handed 

tactic and unequal standard to further delete deserving worker's their just 

benefits. 

This law eliminated 30 yrs. of Social Security benefits I earned. I worked 

30 yrs. in private industry then 10 yrs. in a low paying public job where I 

earned a minimal retirement benefit. This caused my SSD to be reduced to 

$0. And my SSR will be cut to the bone. I worked paid for and earned both 

retirements public and private I should be able to collect both. 

This letter is to urge our congress to repeal WEP/GPO (windfall elimination 

provision) and (government pension offset) and protect Social Security. 

Both of these laws are unfair to workers and place an undue burden on 

them and their families. 

The congress adopted two provisions in the Regan era WEP and GPO. 

Congress enacted the WEP in the belief that one should not receive a 

Social Security benefit as a low-wage earner plus receive a government 

pension from non-SS-covered employment. They considered this a 

windfall or double-dipping. 
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SSA uses a formula for computing SS benefits that provide individuals with 

low average lifetime wages a proportionally higher rate of return on their 

contributions to SS than individuals with relatively high average lifetime 

wages. Those who have spent most of their careers in non-SS-covered 

employment with a state or local government and a minimal amount of time 

in SS-covered employment will appear to SSA as lower-paid workers. Thus 

the erroneous notion of a windfall or double-dipping for all. 

The problem is it doesn't account for the reverse, a worker that worked 

mostly in SS-covered employment. In that instance the worker is 

adversely and unfairly hurt by losing all or most of the SS benefit they paid 

taxes for and earned. It doesn't matter how small the public retirement is 

or how low the wages were, the earned public retirement causes 

WEP/GPO to apply. Both positions required certain payments into their 

systems to earn the benefits provided, therefore neither was a windfall or 

double-dipping. BOTH retirements were earned and paid for with the 

required payroll taxes or payments. 

GPO is a provision that penalizes individuals who apply for Social Security 

spousal or survivor benefits, if they themselves worked for a stale or local 

government in non-SS-covered employment and are entitled to a 

government pension from that employment. Once they receive that 

pension, their earned Social Security spousal or survivor benefits will be 

reduced by two thirds of their non-SS-covered pension. 

GPO is unfair because it undermines the original intent of the 

dependent/survivor benefit which was to provide additional income to help 

financially dependent spouses once the breadwinner retires, is disabled or 

dies. GPO greatly reduces the dependent/survivor benefit and hurts those 

very people. Of those penalized 80% are women that have spent most of 

their lifetime raising their families. 

The WEP penalizes workers that have had two jobs; one job paid the 

required SS taxes and entitled them to SS benefits, and a second job that 

paid into a separate retirement system and entitled them to a pension 

separate from SS. This pension was earned separately and differently from 

Social Security yet it is used to reduce the amount of the earned Social 

Security benefit. II doesn't differentiate for workers that worked most of 

their careers in private companies as opposed to those that worked most of 

their careers in public work. If you get a pension no matter how small you 
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lose SS benefits. All who pay full Social Security taxes should receive full 

Social Security benefits. 

In fact when Social Security began, the Federal Government published an 

informational pamphlet that stated the following: Social Security is the 

largest source of income for most elderly Americans today, but SS was 

never intended to be your only source of income when you retire. You will 

also need other savings, investments, PENSIONS, or retirement accounts. 

Why then are workers being penalized because they have earned another 

pension? This is exactly what we are supposed to do! It is blatantly unfair! 

If the pension was earned in private industry as opposed to public work 

there is no penalty. Also unfair! 

The WEP affects workers that apply for their own Social Security benefits. 

If you do not have 30 yrs. Of 3SUBSTANTIAL2 income per year in Social 

Security covered work you can lose all of your earned SS benefit. If you do 

have 30 years a complex formula can reduce your benefit significantly. 

In my case only 21 yrs. of my 30 yrs. SS covered work counted and it 

reduced my benefit for Social Security disability from $1055.monthly to $0. 

In fact in 2014 a worker affected by WEP had to earn $21,750. annually for 

that year to be counted as 3

SUBST ANTIAL 2 and count as a credit year 

toward the SS benefit payout. A worker not affected by WEP needs to earn 

only $4,880. annually to get a year of credit toward Social Security. That is 

a huge difference and discriminatory standard. 

The "Substantial Earnings" requirement allows the higher paid worker to 

qualify for SS benefits and excludes the lower wage earner. The exact 

opposite of the laws intent. 

I was also never given the opportunity to choose between systems. I would 

have chosen to continue to pay into SS since I had already paid into that 

system for 30 years. If I had known that my Social Security would be in 

jeopardy because the low paying Teachers Aide position for special needs 

students I took could cause WEP to apply and eliminate my SS benefit, I 

would have never taken that job. I and millions of other people were not 

notified about how extremely detrimental this would be. 

This type of policy will keep good people from choosing public service as a 
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second career. Our communities and families will suffer for it. Seniors will 

lose the dignity of being able to support themselves as they intended to do. 

Families already stressed to the limit will have to take on the extra burden. 

Not all seniors have family available to take care of them. What will happen 

to them? 

These provisions are currently affecting 1.4 million Americans. The 

provisions are not applied uniformly in all 50 states. It takes congress to 

repeal these provisions. 

These provisions need to be repealed for the many reasons sited in this 

letter and for others to many to mention. They have not served their 

intended purpose and have only undermined public servants ie (teachers, 

firefighters, mail carriers etc.)and seniors, disabled persons, 

widows/widowers, dependent children, and low wage workers. They hurt 

communities and families. 

Please Congress completely repeal WEP/GPO immediately. You have had 

long enough to know the harm it causes and that it is based on erroneous 

pretenses. 

Sincerely, 

Maxine Entingh. in Ohio 

937.773.9513 
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Dear Rep. Brady, 

I wish to add my support to the Equal Treatment of Public Servants 

Act of 2015. I began working at the age of 16 and until the age of 47 I 

continued to work in the private sector and contributing to Social 

Security. While working full time I completed a teaching degree and in 

1995 secured a position teaching at a state supported community 

college. 

As my options for retirement approach, I feel it only fair that my 31 

years contributing to the Social Security system be recognized and 

that I am will be able to collect a fair benefit for my years in the 

system. I support your initiative of H.R. 711. 

Sincerely, 

Michele G. Miller, PhD, CMA (AAMA) 
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I have worked for 14 years in a job contributing to Social Security 

before I began working for the Parma City School District as a cleaner. I 

feel the Windfall Elimination Provision (WEP) is unfair and I fully 

support a proportional calculation of Social Security benefits, like the 

one proposed in H.R. 711, the Equal Treatment of Public Servants Act. 

The already low wages I earn is barely enough. Upon my retirement, 

looming near, I cannot afford to forfeit my Social Security benefits I 

have earned because of my SERS pension. 

Thank you for holding this hearing and for considering a proportional 

calculation that will help me receive the much needed Social Security 

benefits I have earned while work in the private sector. 

Regards, 

Nada Kubat 

Parma City School District 

(216) 447-0923 
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National Association of WasUngta:·~. DC 20001-2i 44 

202.39,1.4695 

WlNW.:i<~.lc.org Letter 

April 5, 2016 

The Honorable Kevin Brady 

Chairman 

House Committee on Ways and Means 

1102 Longworth House Office Building 

Washington, D.C. 20515 

The Honorable Sam Johnson 

Chairman 

House Comm1ttee on Ways and Means, 

Subcommittee on Social Security 

1102 Longworth House Office Building 

Washington, D.C. 20515 

The Honorable Sandy Levin 

Ranking Member 

House Committee on Ways and Means 

1106 Longworth House Office Building 

Washington, D.C. 20515 

The Honorable Xavier Becerra 

Ranking Member 

House Committee on Ways and Means, 

Subcommittee on Social Security 

1106 Longworth House Office Building 

Washington, D.C. 20515 

Dear Chairmen Brady and Johnson and Ranking Members Levin and Becerra: 

Letter carriers serve ln every community throughout the United States, often with long histories 

of other public service, includlng f1ghtlng for our country. Every day we make sure the 

Constitutionally-mandated Postal Service continues to remain an innovative, affordable service 

for the millions of Americans and small businesses who rely on it. On behalf of over 277,000 of 

these letter carriers, who are active and retired members of the National Association of Letter 

Carriers (NALC), 1 write to express my appreciation tor the Committee's recent hearing on 

"Social Security and Public Servants: Ensuring Equal Treatment." 

NALC is pleased that the Committee is exploring potential action with regards to the Windfall 

Elimination Provision (WEP) and hopes that the Committee will give equal consideration to 

addressing the Government Pension Offset (GPO) as well. NALC supports full repeal of both 

provisions of the Social Security law in order to protect dedicated postal and federal employees 

from the unfair financial impacts of both provisions. 

Tens of thousands of retired letter carriers are already being harmed by these provisions. Indeed, 

approximately 85 percent of the NALC's 75,000 retired letter carriers are covered by Civil 

Service Retirement System (CSRS), and 90% of them have been adversely affected by 

reductions in their Social Security benefits as a result of these provisions. 
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June 7, 2016 

Page 2 

And the number of adversely affected letter carriers will only continue to grow. Currently, nearly 

36,000 active letter carriers remain are covered by CSRS and will be subject to the Social 

Security benefit reductions mandated by the WEP and GPO provisions. 

Windfall Elimination Provision 

Federal and postal employees covered under CSRS are subject to a 7.0 percent contribution 

toward their CSRS retirement annuities, and because they do not pay the 6.2 percent Social 

Security payroll tax, they do not earn Social Security benefits based on their time as an employee 

of the federal government. However, the Social Security benefits they earn during their time in 

non-government jobs are subject to reductions from the WEP provision, which can reduce their 

retirement incomes by as much as $413 a month. 

But the WEP does not just affect employees covered by CSRS. It can also harm employees 

covered by the Federal Employees' Retirement System (FERS) because many of them also 

receive a public pension from a job not covered by Social Security. 

Government Pension Offset 

The Government Pension Offset (GPO) reduces or eliminates the Social Security spousal and 

survivor benefits ofCSRS mmuitants. These benefits were eamed by their spouses in jobs 

covered by Social Security for which the spouses paid full OASDT payroll taxes. Under the GPO 

rule, for example, if a person worked for the federal government and was not covered by Social 

Security (as is the case with CSRS-covered service) any Social Security benefit for which the 

person is eligible as a spouse, widow, or widower would be limited to the amount that exceeds 

two-thirds of his or her government pension. This unfair provision frequently eliminates Social 

Security spousal and survivor benefits altogether. 

Conclusion 

Although we strongly believe the WEP provision should be repealed altogether, the NALC 

supports passage ofthe "Equal Treatment ofPnblic Servants Act of2015" (H.R. 711) as a first 

step. However, we do not believe it alone adequately addresses the devastating impacts of the 

unfair Social Security benefits formnla, as applied to federal employees. Rather than simply 

altering the WEP fmmula, the NALC nrges the committee to repeal both the WEP and GPO 

provisions entirely to prevent the Social Security benefits of annuitants- who have paid their fair 

share through their years of public service- from being dramatically reduced or eliminated. 

NALC fnlly snpports the Social Secnrity Fairness Act (H.R. 973), introduced by Reps. Rodney 

Davis (IL-13) and Adatn Schiff ( CA -28), as the mechanism to best addresses the devastating 

financial impacts many federal employees currently face. Rather than altering the formula that 

unfairly reduces the Social Secnrity benefits of annuitants, H.R. 973 wonld repeal both 

provisions and ensme tl1at all federal employees have their Social Secmity benefits calculated in 

the same way as other American workers. 
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June 7, 2016 

Page 3 

We must ensure that those who have given so much to our country have a sound retirement by 

repealing the WEP and GPO provisions of the Social Security law. Thank you for your work on 

this matter. We hope that in the future you will strive to help ensure all those who have dedicated 

their lives to public service receive the same retirement security as all other Americans. 

Sincerely, 

Fredric V. Rolando 

President 
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lJ. S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON WAYS AND MEANS 

Subcommittee on Social Security 

Statement of 

William J. Johnson on behalf of the 

National Association of Police Organizations 

"Social Security and Public Servants: Ensuring Equal Treatment" 

March 22, 2016 

Chairman Johnson, Ranking Member Becerra and distinguished members of the Subcommittee, 

my name is William Johnson and I am the Executive Director of the National Association of 

Police Organizations (NAPO). I am submitting this statement today on behalf of NAPO, 

representing over 241,000 active and retired law enforcement officers throughout the United 

States. NAPO is a coalition of police unions and associations from across the nation, which was 

organized for the purpose of advancing the interests of America's law enforcement officers 

through legislative advocacy, political action and education. 

1 would like to take this opportunity to make you aware of the adverse affect the Government 

Pension Offset (GPO) and the Windfall Elimination Provision (WEP) have on public safety 

officers and their families who are outside of the Social Security system because of professional 

need. 

Since 1935, state and local government employees have been deliberately excluded by Congress 

from mandatory participation in Social Security for two reasons: a Constitutional concern over 

whether the federal government could impose a tax on state governments; and because many 

state and local employees were already protected by public pension plans. Today, there are 

about 6.5 million such employees in the state and local workforce - including 76 percent of 

public safety officers. 

As public safety officers often retire under job related disability, many state and local 

governments have opted to keep their employees in adequate pre-existing pension systems. 

While intended to be a "leveling" response, the GPO and WEP disproportionately hann our 

nation's public safety officers, who due to their profession, are not covered by Social Security. 

The GPO reduces public employees' Social Security spousal or survivor benefit by two-thirds of 

their public pension. This has a detrimental effect on a law enforcement oftlcer's retirement. If 

a spouse who paid into Social Security dies, the smviving public safety officer would normally 

be eligible for half of the deceased's benefit. However, if the surviving law enforcement officer 

had not been paying into Social Security while working, the GPO requires that this amount be 

offset by two-thirds of the survivor's pension, eliminating most or all of the payment. If these 

officers had not chosen to serve their communities, they would receive the full allotment of the 

spouse's benefit. 
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In addition to the GPO, public safety employees are also adversely affected by the WEP. 

Although most law enforcement officers retire after a specific length of service, usually while in 

their early to mid fifties, many look for new opportunities. Many take jobs in Social Security 

covered positions in the private sector that allow them to put their skills and experience to good 

use. Yet, when they retire from a non-Social Security paying job and move to one that does pay 

into Social Security, they are penalized by WEP. Instead of receiving their rightfully earned 

Social Security retirement benefit, their pension heavily offsets it, thus vastly reducing the 

amount they receive. 

The WEP causes hard-working public safety officers to lose the benefits they earned themselves, 

thus punishing those who selflessly serve and protect our communities. The GPO and WEP 

unfairly penalize officers for choosing a public service profession that mandates early retirement 

by taking away hard-earned, and much needed benefits. 

This issue is more than a retirement issue; it is a public safety issue. Not only do the GPO and 

WEP impact individual public safety officers and their families, they impact the public safety 

profession. The GPO and WEP discourage talented people from entering or staying in the public 

safety profession. Individuals who worked in other careers are less likely to want to become 

police officers or firefighters if doing so will mean a loss of earned Social Security benefits. 

Additionally, non-Social Security states are finding it difficult to attract quality law enforcement 

officers as more people learn about the GPO and WEP. 

While NAPO continues to advocate for full repeal of the GPO and WEP, we understand there are 

significant fiscal challenges associated with this effort. We have therefore worked closely with 

other public sector organizations to find common ground on a meaningful WEP refmm proposal. 

This collaboration, together with the leadership of both Chairman Kevin Brady and 

Congressman Richard Neal, has resulted in H.R. 711, the Equal Treatment of Public Servants 

Actof2015. 

H.R. 711 would repeal the WEP, replacing it with a new Social Security benefit formula 

designed to more accmately account for years a public employee paid into Social Security versus 

the years paid into a public pension system in a non-Social Security covered position. As a result 

of this change, the Social Security actuary has projected that the majority of current retirees 

impacted by WEP would see roughly one-third of their benefit restored. Those becoming 

eligible for Social Security after January I, 2017 would have their benefit calculated under the 

new formula, thus receiving a benefit that more accurately reflects their actual participation in 

Social Security. 

The approach taken in H.R. 711 is not only fair, but also provides a workable solution to a 

problem the public sector has been struggling with for over thirty years. 

I would like to make one further point on this issue. NAPO believes that in solving the problems 

with the GPO and WEP, mandatory Social Security for the public sector should in no way be on 

the table for discussion. Mandating Social Security coverage for state and local employees will 

have a devastating effect on state and local retirement systems. State and local pension plans are 

uniquely suited to meet the needs of the public sector workforce. It is especially worth noting, 
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for instance, that mandatory Social Security coverage for state and local employees will 

disproportionately harm our uniformed public safety officers. 79 percent of police and 

firefighter disabilities are partial disabilities that do not prohibit the individual from taking a less 

physically demanding job. Public pensions typically award partial benefits to the partially 

disabled, while Social Security provides benefits only when the individual becomes totally 

tmemployable. Additionally, as I have mentioned before, public pension plans allow public 

safety officers to retire prior to 62, the earliest possible retirement age under Social Security. 

Mandatmy Social Security coverage for govemment employees will also have a devastating 

effect on state and local budgets. Even if limited to new hires, the estimated cost to public 

employers for the first 5 years of mandatmy coverage is $25 billion. This unfunded federal 

mandate would primarily be bome by state and local taxpayers in a number of major states in 

which NAPO has large constituencies - California, Texas, Massachusetts, Ohio, Illinois, 

Louisiana, Connecticut, Alaska, Nevada, and Missouri - as well as local governments in all 50 

states. 

Simply stated, mandatory coverage would negatively affect the financing of many state and local 

government pension plans and would adversely affect the retirement security of hnndreds of 

thousands of public safety officers. NAPO believes that repealing or reforming the GPO and 

WEP makes much more sense. 

The loss of income caused by the GPO and WEP is a financial strain on law enforcement officers 

and their families; a strain that those who spent their careers on the front lines protecting our 

nation's communities do not need. By significantly scaling back and reducing retirement 

pensions for law enforcement officers - as GPO and WEP do - officers and their families are 

provided much less protection against financial difficulties. This is no way to honor those who 

chose to serve our nation and its communities 

We look forward to working with the Committee to remedy the arbitrary and unwarranted 

penalties faced by retired law enforcement officers and their families. 

Thank you for yom time and consideration of this important issue. 
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Thank you Chairman Johnson and members of the subcommittee. I am Clara McCullar, 

retired Postmaster of Michie, Tennessee, and current president of the National 

Association of Postmasters-Retired. I appreciate the opportunity to share the views of my 

parent organization, the National Association of Postmasters of the United States 

(NAPUS), as well as its retiree affiliate regarding legislation to modify the Windfall 

Elimination Provision (WEP). NAPUS is comprised of more than 23,000 active and 

retired Postmasters. 

NAPUS commends Chairman Brady on introducing H.R. 711, the "Equal Treatment of 

Public Servants Act." We also applaud the bill's 64 current cosponsors. H.R. 711 is a 

positive step in addressing the genuine needs of retired Postmasters and other retired 

public employees. As members of this subcommittee knows, the WEP unfairly and 

arbitrarily reduces the earned Social Security benefits of retired and disabled workers 

who receive annuities from employment not covered by Social Security. This cohort 

group includes many retired and some soon-to-be retired Postmasters. Postmasters who 

have Social Security-covered employment contribute into Social Security just like 

private-sector employees; therefore, they should not be treated differently and financially 

penalized for their public service. 

I would like to note for the record that NAP US continues to advocate for the passage of 

legislation to lessen the punitive affect that the Government Pension Offset (GPO) has on 

the surviving spouses of many Social Security recipients. For this reason, NAPUS also 

supports H.R. 973, legislation to repeal the GPO and the WEP. This bill was introduced 

by Rep. Rodney Davis. 

Under the WEP, Postmasters who have retired under the Civil Service Retirement System 

(CSRS) lose almost two-thirds of their earned Social Security benefit. This is simply not 

fair. In 1983, Congress enacted the WEP during a legislative frenzy to "save" Social 

Security. The misguided intent of the provision was to eliminate an illusionary windfall 

for public employees not covered by Social Security, yet who also worked in positions 

under which they earned enough credits to qualify for Social Security. The offset is 
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21290.143.eps

arbitrary, regressive and financially debilitating. The WEP victimizes many retired 

Postmasters who managed small post offices for which their salary history renders them 

ripe for financial distress without their full-earned benefits though the combination of 

CSRS and Social Security annuities. 

Obviously, repeal of the WEP is the ideal alternative. Nonetheless, H.R. 711 is a positive 

and meaningful step forward. The measure divides WEP-impacted retirees into two 

distinct groups: those who have turned or will tum 62 prior to 2017, and future retirees 

who will tum 62 after 2017. For those in the former group, under the bill, the WEP 

penalty would be reduced by an unspecified percentage, not to exceed 50 percent. (Of 

course, NAPUS would have preferred the application to be retroactive for those who have 

already financially suffered from the WEP.) For future retirees in the latter group, the 

WEP formula would be revised to make it more equitable. NAPUS believes that this 

legislation would aid low and middle-income government retirees. In sum, the measure 

would replace the current arbitrary WEP offset with a better, more rational, mechanism to 

alleviate the impact that the WEP has on former public employees. 

While H.R. 711 does not remedy completely how the Social Security law discriminates 

against public-employed retirees, the legislation strives to lessen the financial distress 

they suffer. Therefore, NAP US urges the Subcommittee to report favorably the Equal 

Treatment of Public Servants Act, and for those House of Representatives to pass it. 

Thank you. 
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STATEMENTFORTHERECORD 

BY 

RICHARD G. THISSEN 

NATIONAL PRESIDENT 

NATIONAL ACTIVE AND RETIRED FEDERAL EMPLOYEES 

ASSOCIATION (NARFE) 

BEFORE THE 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMt'\11TTEE ON SOCIAL SECURITY 

HEARING TITLED: "SOCIAL SECURITY AND PUBLIC SERVANTS: 

ENSURING EQUAL TREATMENT" 

MARCH 22, 2016 
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Chaim1an Johnson, Ranking Member Becerra, and Subcommittee members: 

On behalf of the five million federal workers and annuitants represented by the National Active 

and Retired Federal Employees Association (NARFE), I appreciate the opportunity to express 

NARFE's views regarding two provisions- the Windfall Elimination Provision (WEP) and the 

Govemment Pension Offset (GPO)- that apply arbitrary reductions to the Social Security 

benefits paid to many public servants, including federal retirees who also receive a govemment 

pension. 

These unfair provisions cost more than two million retirees thousands of dollars each year in 

Social Security benefits, solely as a result oftheir government employment. They serve as a 

thankless reminder that our nation continues to undervalue public service. They should both be 

repealed. 

While NARFE supports full repeal ofthe two provisions through passage ofH.R. 973 and S. 

1651 (identical bills titled the Social Security Fairness Act of2015), introduced by Rep. Rodney 

Davis, R-IL, and Sen. Sherrod Brown, D-OH, respectively, NARFE also supports incremental 

improvements through reform legislation. Notably, NARFE supports H.R. 711, the Equal 

Treatment of Public Servants Act of2015, introduced by Rep. Kevin Brady, R-TX. 

The Windfall Elimination Provision (WEP) 

The WEP unfairly deprives dedicated public servants ofthe full Social Security benefits earned 

through the contributions they paid into the system. They are denied these benefits solely 

because they also worked outside of Social Security-covered employment in government service. 

The WEP penalty often comes as a mde awakening, as the actual benefits received fail to meet 

the expectations created by the estimates provided by Social Security. All told, it has cost public 

servants hundreds of millions of dollars of Social Security benefits that they rightfully earned. 

NARFE supports full repeal ofWEP, but also supports the refom1 effmi represented by H.R. 

711. 

Whom It Affects 

The WEP applies to federal retirees who began their federal employment prior to 1983 and were 

covered by the Civil Service Retirement System (CSRS). Under CSRS, federal employees pay a 

7 percent payroll contribution toward their CSRS retirement annuities. They do not pay the 6.2 

percent payroll tax toward Social Security and, therefore, do not earn any Social Security 

benefits based on their federal work. The WEP does not apply to federal employees covered by 

the Federal Employees Retirement System (FERS), as these federal employees pay the 6.2 

percent payroll tax in addition to their FERS retirement contributions and, therefore, earn Social 

Security benefits based on their pay. 

The WEP also applies to state and local government retirees who did not pay Social Security 

payroll taxes in connection with their government employment, similar to CSRS. It does not 

apply to those who paid Social Secmity payroll taxes in connection with their government 

employment, similar to FERS. 
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As of December 2014, the WEP affected 1,623,795 beneficiaries, including 1,506,792 retired 

workers, 16,613 disabled workers, and 100,390 spouses and childrenl 

How II Operates 

Normally, Social Security benefits are calculated using a progressive formula in which an 

individual's average indexed monthly eamings (AIME) are multiplied by three progressive 

factors- 90 percent, 32 percent and 15 percent- at ditferent levels of ATME, resulting in a 

primary insurance amount (PIA)- the basic monthly benefit In 2015, the first $826 of AIME is 

multiplied by 90 percent, then added to ATME over $826 and through $4,980, multiplied by 32 

percent, then added to AIME over $4,980, multiplied by 15 percent. 

Under WEP, the 90 percent factor is reduced to as low as 40 percent. For 2015, this would result 

in a monthly benefit that is $413 lower than under the regular benefit fonnula. This is an unfair 

reduction that causes a proportionally larger reduction in benefits for workers with lower AIMEs 

and monthly benefit amounts than those with higher benefit amounts. Simply, the WEP 

disadvantages those who have lower earnings. 

HR. 711, the Equa!Treatmenl of Public Servants Act of 2015 

H.R. 711 would alter Social Security benefit calculations for WEP-affected beneficiaries as 

follows: 

For individuals who turn(ed) 62 prior to 2017: The bill would reduce the current WEP 

penalty on their Social Security benefits by a cetiain percentage, not to exceed 50 

percent. The exact amount will be determined by the Social Security Administration 

(SSA) actuary, but has been estimated at 32 percent. This penalty reduction would not be 

retroactive, but would be applied only to Social Security payments going forward, 

statiing in 2017. 

For individuals turning 62 in or after 2017: The fmmula used to detern1ine an 

individual's WEP penalty would be replaced with a new, fairer formula designed to more 

accurately account for the years a public employee paid into Social Security versus the 

years paid into a public pension system in a non-Social Security-covered position. 

Specifically, a beneficiaty's ATME and PTA first would be calculated using both covered 

and non-covered earnings. The new PTA (monthly benefit) would then be multiplied by 

the share of the ATME that came from covered earnings to detem1ine the actual PTA or 

monthly benefit amount. The new formula is expected to increase benetits for most, but 

especially those with lower lifetime earnings. 

The bill also would direct the Social Security Administration (SSA) to use available data to 

improve enforcement of the WEP penalty for individuals who have underrepotied their public 

employment earnings to SSA. The amount of money saved through this improved enforcement 

ofWEP will determine the ammmt of the reduction in the WEP penalty for individuals who 

turn(ed) 62 prior to 2017. The SSA actuary will make the final determination of how much 

1 See "Social Security: The Windfall Elimination ProYision (WEP)," Congressional Research Service._ p. 4, available 

at: hUP_i:f/vv\'::~-~-fu~,_Qrg/~Q~~.r~j1_lisc/9_§_::_}lJ2.df 

2 
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money is estimated to be saved, and how much of a reduction in the WEP penalty will occur, but 

its current estimate is for the savings to result in a 32 percent reduction. 2 

Practically, H.R. 711 is cost-neutral in a 1 0-year budget window, and it will actually increase 

Social Security trust fund reserves over the long term. Unsurprisingly, the bill also has broad 

bipartisan support, as it represents a fair, measured way to provide relief from this unfair 

provision. 

Absent full repeal, NARFE supports H.R. 711 and urges members of this subcommittee and 

members of Congress to advance the legislation this year. 

HR. 973 & S. 1651, the Social Security Fairness Act of2015 

H.R. 973 and S. 1651 are identical bills that repeal both the WEP and the Government Pension 

O±Iset (GPO), which reduces the Social Security spousal benefit of a beneficiary by two-thirds of 

his or her public pension that is based on non-covered public employment. NARFE supports 

both bills and urges Congress to advance this legislation. 

The !'resident's HudgetjiJr /<'iscal Year (li'r) 2017 

The President's budget for FY 17 proposes instituting a formula similar to the one proposed by 

H.R. 711 for futme beneficiaries, but stmiing in 2027, rather than 2017. It also would use a 

similar method to recalculate the GPO. However, it does not include any rebates for current 

beneficiaries. Finally, instead of directing SSA to improve enforcement tiu·ough use of available 

data, it would provide $70 million to state and local governments to facilitate development of 

systems to provide SSA with more complete employment records. 

NARFE does not support the President's proposal, as it does not include any WEP relieffor 

current beneficiaries. 

The Government Pension Offset (GPO) 

The GPO unfairly deprives dedicated pub I ic servants of their full Social Security spousal and 

survivor benefits. They are denied these benefits because they also worked outside of Social 

Security-covered employment in government service. The pension they eamed through that 

govemment service reduces their spousal or survivor Social Security benefits by two-thirds of 

the govermnent pension. 

NARFE supports repeal of the GPO and is open to refom1 efforts. NARFE has not yet taken a 

position on the President's GPO reform proposal, as additional data is needed to determine its 

merits. 

'Estimates of the Financial Effects on Social Security of H.R. 5697, the "Equal Treatment of Public Servants Act of 

2014," legislation introduced on November 13, 2014 by Representative Kevin Brady, available at: 

http~:/lssa gov/oactrsolveni'..'V·'KBrady :20 14!1 l3.pdf. (For purposes of this analysis_ H.R. 5697 ( ll31

h Con,gress) is 

identical to H.R. 711 (1 14'h Congress)). 
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Whom It Affects 

The GPO applies to federal retirees who began their federal employment prior to 1983 and were 

covered by the Civil Service Retirement System (CSRS). Under CSRS, federal employees pay a 

7 percent payroll contribution toward their CSRS retirement annuities. They do not pay the 6.2 

percent payroll tax toward Social Security and, therefore, do not earn any Social Security 

benefits based on their federal work. The GPO does not apply to federal employees covered by 

the Federal Employees Retirement System (FERS), as these federal employees pay the 6.2 

percent payroll tax, in addition to their FERS retirement contributions and, therefore, earn Social 

Security benefits based on their pay. 

The GPO also applies to state and local government retirees who did not pay Social Secutity 

payroll taxes in connection with their govemment employment, instead receiving a government 

pension, similar to CSRS. It does not apply to those who paid Social Security payroll taxes in 

connection with their government employment, similar to FERS. 

As of December 2013, 614,644 beneficiaries had spousal or widow( er)'s benefits reduced or 

eliminated by the GP03 This number does not count those who were potentially eligible for 

spousal or widow(er)'s benefits but did not file for them because of their expectation that the 

GPO would eliminate their benefit completely. Of those affected, 451,785 had their benefit fully 

offset, while another 162,859 had their benefit partially ot1set. 

Of those subject to the GPO, more than 341,000 were spouses, while more than 273,000 were 

widow( er)s. About 81 percent of all affected persons were women. 

How It Operates 

The GPO reduces the spousal or widow(er)'s benefit of someone who also receives a pension 

from govemment employment (whether federal, state or local) based on work that was not 

covered by Social Security. The GPO reduction is equal to two-thirds of the pension received 

from the non-covered govermnent employment. In many cases, the reduction will eliminate the 

spousal or widow(er)'s benefit entirely. 

While the GPO is intended to operate similarly to (and with a similar policy rationale for) the 

dual entitlement rule, the two-thirds reduction is excessive and based on a misguided rationale. 

The dual entitlement rule prevents a worker from receiving benefits based on their own work 

record and a full spousal or widow(er)'s benefit. Instead, they receive the larger of the two. 

The GPO essentially equates two-thirds of a public pension with an earned Social Security 

benefit, and assumes the remaining one-third is the equivalent of a private pension (and not 

subject to the dual entitlement rule). 

But these assumptions are faulty and unfair for government retirees. First, Social Security 

benefits are not designed as full pensions. Instead, they are a safety net for those without 

3 See "Social Security: The Government Pension Offset (GPO)," Congressional Research Service, p. 8, available at: 

bltD_~_/i\\'\vw.__fu;;_,_Q!_&~p,lcrs/misc/RL32/lllJ24f. 

4 
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adequate pensions and as a supplement for those with full (private or public) pensions and/or 

significant retirement savings_ Two-thirds of a public pension is often more substantial than a 

small, earned Social Security benefit Second, part of what allows public pensions to provide 

adequate retirement income is that employees often make significant contributions to their 

pension funds_ For example, federal employees under CSRS contribute 7 percent of salary to the 

Civil Service Retirement and Disability Fund, and that 7 percent is matched by their agencies_ 

Third, public pension benefits are subject to full federal taxation, while Social Security benefits 

are not 

NARFE opposes the GPO, and supports full repeaL 

HR_ 973 & S. 1651, the Social Security Fairness Act oj'20/5 

H_R_ 973 and S_ 1651 are identical bills that repeal both the WEP and the GPO_ NARFE supports 

both bills_ 

The President's Budget for Fiscal Year 2017 

The President's budget for FY17 proposes a new fonnula for determining Social Security 

spousal and widow(er)'s benefits for those currently subject to the GPO_ Specifically, a 

beneticiruy's AlME and PIA would be calculated using both covered and non-covered earnings_ 

Any spousal or widow(er)'s benefit then would be reduced by the difference between the new 

PIA and the covered PIA- this is essentially the new GP04 For individuals who have earned 

Social Security benefits through their own covered work history, any new GPO would be 

deducted from the excess benefit payable as a spouse or survivor_ The President's proposal 

would not apply to benefit determinations until2027_ 

NARFE has not yet taken a position on this proposal, as more data is needed to determine its 

effects_ However, NARFE is pleased that the Administration has made efforts toward GPO 

refonn_ 

Conclusion 

The GPO and WEP penalize individuals who have dedicated their lives to public service, and 

their spouses, by taking away the Social Security benefits they earned_ This results in thousands 

of dollars in lost benefits every year, drastically impacting retirees living on fixed incomes_ 

They are unfair provisions that devalue the public service of federal, state and local law 

enforcement and firefighters, nurses and doctors caring for veterans, prison guards, letter 

catTiers, engineers, mechanics and technicians supporting our military and ensuring safe air 

travel, teachers and many more_ Until they can be repealed, we should take this current 

opp01iunity for reform_ 

NARFE is encouraged by the ongoing various reform efforts, particularly with regard to H_R_ 

711. This bill would help mitigate the WEP penalty by providing some relief for both current 

4 This would also be multiplied by an age-reduction factor, which is not well-defined in any publicly available 

proposal. 

5 
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beneficiaries through a rebate and future Social Security recipients by improving the fonnula 

going forward. This relief is long past due but would be very much appreciated by individuals 

who are being penalized for their public service. 

NARFE applauds the continued and creative efforts ofChai1man Brady to reform the WEP. He 

has not given up on a problem that many seem to have forgotten. We look forward to working 

with Chairman Brady and the members of the Ways and Means Committee to move this bill 

through the legislative process. 

Thank you again for the opportunity to share our views with you. 

6 
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March 21, 2016 

The Honorable Kevin Brady 

Chairman 

House Committee on Ways and r...1eans 

301 Cannon House Office Building 

Washington, DC 20515-4308 

The Honorable Sander Levin 

Ranking Member 

House Committee on Ways and Means 

1236 Longwot1h House Office Building 

Washington, DC 20515-2209 

The Honorable Sam Johnson 

Chairman 

Re~xcca) 

Vic<: Pres:Je;:t 

J0h:1 C. :'J:.Grk:. 

f>,pcuttve Director 

House Committee on Ways and Means, 

Subcommittee on Social Security 

2304 Rayburn House Office Building 

Washington, DC 20515-4303 

The Honorable Xavier Becerra 

Ranking Member 

House Committee on Ways and Means, 

Subcommittee on Social Security 

1226 Longworth House Office Building 

Washington, DC 20515-0534 

Re: Social Security and Public Sen-ants: Ensuring Equal Treatment 

Dear Chairman Brady, Chainnan Johnson, Ranking Member Levin, and Ranking Member Becerra 

On behalf of the three million members of the National Education Association and the students they 

serve, we would like to offer our views on the Government Pension Offset (GPO) and \Vindfall 

Elimination Provision (WEP) in connection with the l\1arch 22 hearing, "Social Security and Public 

Servants: Ensuring Equal Treatment." NEA strongly supports the Social Security Fairness Act 

(H.R.973/S. 1651), which would fully repeal both the GPO and WEP. We appreciate that the Equal 

Treatment of Public Servants Act (H.R. 711) addresses inequities perpetuated by the WEP, but are 

concerned that it leaves the GPO intact and could actually broaden its application and enforcement. 

Currently, the WEP reduces the Social Security benefits of 1.3 million people who also receive public 

pensions from work not covered by Social Security-for example, educators and other dedicated public 

servants who must take part-time or summer jobs to make ends meet. H.R_7\1 would replace the ~'EP 

with a new "public service fairness formula" for people who tum 62 during or after 2017. Under this 

formula, the Social Security Administration would take into account the years a public sector employee 

paid into Social Security versus the years that employee paid into a public pension system while working 

in a position not covered by Social Security. Under H.R_ 711, Social Security benefits would be 

calculated as if all the worker's earnings were subject to Social Security taxes. This amount would then be 

multiplied by the percent of earnings covered by Social Security, thus taking into account that Social 

Security benefits are based on Social Security wages 

We recognize that H.R. 711 attempts to address existing inequities fairly. However, we have concerns 

regarding the: 
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Potential impact on public employees who do not vest in a public pension plan and receive Social 

Security benefits subject to reduced benefits under the bill 

Fiscal challenges associated with the enforcement of the offset provisions for existing Social 

Security beneficiaries who are identified as having received overpayments 

Universe of beneficiaries who will no longer be exempt from the offsets because they have 30 

years of Social Security-covered earnings 

In addition, while we commend efforts seeking to address the harmful benefit reductions associated with 

the WEP, H.R. 711 fails to address the GPO, which rednces Social Security spousal and survivor benefits 

and affects a far larger number of people. Nationwide, more than one-third of educators and more than 

one-fifth of police officers, firefighters, and other public employees are not covered by Social Security 

and are, therefore, subject to the GPO. An estimated 9 out of 10 public employees affected by the GPO 

lose their entire spousal benefit, even though their deceased spouse paid Social Security taxes for many 

years. The impact is harshest for those who can least afford the loss: lower-income women. Once the 

GPO kicks in, some have so little money they must turn to food stamps. 

The fo11owing excerpt from a letter to NEA is but one example of the devastating impact the GPO and 

WEP can have: 

My husband was diagnosed with glioblastoma, the most aggressive type of brain cancer. Afier 

sur,r,sery, radiation and chemotherapy, his sight tvas a.flected so he could no longer drive or read 

Therefore, he could no longer work as a real estate appraiser. We lived on my teacher retirement 

pension, my small Social Security benefit ($250 a month before Medicare), and his Social 

Security check of$1,600. It was an adjustment having one income totally- lost, but with carefit! 

management and no unforeseen unexpected expenses we could do it. Mv husband lost his battle in 

April. Within two weeks of his death his Social Security benefit no longer was coming. Afier a 

phone intervic.nw· with a Social Security representative, /found out that I would see none q/it. l"v'ow 

my income was almost cut in ha!f again. Trying to deal with his death was compounded 

immeasurably by this huge lossfinancially. I still wonder how I am going to make it. My husband 

worked all his life and paid into Social Security. He was in the Marines and the Army and was a 

Vietnam vet. I worked as a teacher ofyoung children most of my life as well as otherjobs to earn 

my Socia/ Security henefit. The GPO and the WrY are devastating to me. What can I do to help 

gel these repealed? Heidifi'om Maine 

As noted above, NEA supports full repeal of both the GPO and the \YEP. We are, however, open to 

incremental steps towards full repeaL We are neutral on H.R. 711 pending the receipt of additional 

information on how H.R.711 would affect our members-specifically, who would gain and who would 

lose if it were to be enacted. 

We thank the committee for ca11ing attention to the vita11y important issues associated with Social 

Security offsets-their resolution remains a priority for us and our members. We look forward to working 

with the committee to address these issues and thank you for the opportunity to offer these comments. 

Sincerely, 

Mary Kusler 

Director, Government Relations 
186 


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SCHOOL EMPLOYEES RETIREMENT SYSTEM OF OHIO 300 E. BROAD ST., SUITE 100 • COLUMBUS, OHIO 43215-3746 

614-222-5853 • Toll-Free 800-878-5853 • www.ohsers.org 

March 22, 2016 

The Honorable Sam Johnson 

Chairman, House Ways and Means Social Security Subcommittee 

2304 Rayburn HOB 

Washington, D.C. 20515 

Re: Hearing on Social Security and Public Servants: Ensuring Equal Treatment 

Dear Chairman Johnson: 

LISA J. MORRIS 

Executive Director 

HELEN M NINOS 

Deputy Executive D1rector 

On behalf of the more than 197,000 active and retired members of the School 

Employees Retirement System of Ohio (SERS) who will be unfairly disadvantaged by 

the Windfall Elimination Provision (WEP) when they retire, the SERS Retirement Board 

wholeheartedly supports a proportional calculation of Social Security benefits, like the 

one proposed in H.R. 711, the Equal Treatment for Public Servants Act. 

In a non-Social Security state like Ohio, all public employees who qualify for a pension 

are subject to WEP reductions. In a recent SERS membership survey, 54% of our 

members said they paid into Social Security for 11-20 years, which means they will lose 

the maximum $428 per month (in 2016) in Social Security benefits they earned. 

Because the majority of our membership works in low-paying school support positions, 

the reduction of the modest Social Security benefit they earned is enough to cause 

financial hardships in retirement. 

A recent SERS retiree, Catherine, is a perfect example of the inequity the WEP causes. 

Catherine worked for 15 years in a Social Security job before she began working in the 

office of a Wayne County school district. She qualified for $675 in Social Security 

benefits at the time of retirement, but had to forfeit the maximum ($413 in 2015) 

because of her SERS pension. Despite properly reporting her pension amount to Social 

Security, she received the full $675 benefit for months before the correct amount was 

delivered. This created a situation where she had to repay the amount overpaid, which 

caused an additional hardship. 

Even though SERS educates members about the WEP penalty long before they retire, 

most members do not realize the financial impact until they are ready to retire. The 

complaint we hear the most is that members believe that they should receive the Social 

Security benefits they earned. 
187 


21290.154.eps

Page 2 

Thank you for holding this hearing and for considering a proportional calculation that will 

help our members receive the Social Security benefits they earned while working in 

private sector jobs. 

Regards, 

Lisa J. Morris 

Executive Director 

School Employees Retirement System of Ohio (SERS) 

Ph: 614-222-5918 

Fax: 614-340-1295 
188 


21290.155.eps

Representative Sam Johnson, Chairman 

House Ways and Means 

Social Security Sub-Committee 

U.S. House of Representatives 

Washington, D.C. 

RE: Comment on March 22,2016, Hearing on RR. 711, 

"Social Security and Public Servants: Ensuring Equal Treatment" 

Dear Members of the Committee: 

April4, 2016 

1 am pleased that once again Congress had taken up the unfairness of the WEP. Another letter 

has been submitted by the CommilleejiJr which mentions, among other 

issues, the unfamiliarity of the legal system with this (or the GPO) resulting in bad legal 

settlements. I am particularly familiar with this outcome. 

My husband filed for divorce after 24 years of marriage. I had worked l 0 years in the public 

sector and part-time for 10 years in the "mom and pop" business we owned. During the latter 

period, our accotmtant suggested 1 not collect wages because l would be eligible for Social 

Security through my husband's participation. The business failed during the economic turmoil of 

the Carter years but fortunately my husband found a decent job and T began substitute teaching. 

A few years later, during the divorce process, I earned my credential and began teaching. I was 

awarded 3 years of spousal support which I needed because I still had two children (legally 

adults) who still needed financial assistance which their father refused to provide. I was earning 

beginning wages and working night school and we were doing okay. However, after three years, 

I found myself in court again where I lost my spousal support because I had "saved" $15,000! 

Despite my efforts to explain the money in my pension fi.md was in lieu of Social Security and 

included employer contributions, even my own lawyer did not seem to understand the situation. 

A few weeks later T received the judge's final decision that mentioned California teacher 

pensions were among the best in the country. What he did not take into consideration was that I 

began teaching in my late 40s and would not be getting very much of an already small SS 

benefit. Also, my pension increases arc not tied to a COLA. T get 2% per year of only the original 

benefit when l retired. lt is not compounded. furthermore, 1 had to retire at 63, because of 

lengthy Cancer treatment, after only 19.5 years of teaching. 

I don't quite understand how your proposal affects already retired public employees, but any 

increase would diminish my fears of an ''inflated" fi.1ture. Also, l helieve that the additional 

money we would receive would be pumped back into the economy as many senior citizens 

would be less reluctant to spend and less likely to need additional assistance. 

Thank you for reviewing this issue, 

Pamela Chance 
189 


21290.156.eps

Thank you for this opportunity. Since moving to Colorado, my partner has 

worked for the school system. Because of this, she only qualifies for a 

portion of her social security, WEP. It is difficult to understand why 

working for a nonprofit, as our education, would cause a person to lose a 

portion of benefit for which they worked many years. Some states do not 

do 

this. It seems only fair that someone who has done a variety of work would 

still qualify for this benefit in full. Many people have different aspects 

of their career or even take years off from the workforce. However these 

people do not have their social security docked for this reason. So for 

this reason, why would someone who decides to do public service after a 

different career have their social security reduced?? They have still 

worked for many years within the social security system and contributed as 

anyone else. So because of the WEP policy, it as though these people 

only 

worked and contributed a fraction of these years. 

Please reconsider this social security rule, WEP. It is unfair for those 

who have contributed, yet decided to provide other service as in the school 

system. Schools cannot support a better salary. I would hope that social 

security would not penalize a person for contributing to our children1s 

education. 

Thank you for this consideration. 

Pamela Chipman 
190 


21290.157.eps

Dear Sirs: 

Between My deceased husband and I, we have paid into Social Security 

for SEVENTY FIVE (75) years. I receive only, after deductions $106.00 a 

month. We both planned for our retirement with the expectations that the 

full benefit funds would support us in our old age. Upon retirement I found 

out that not to be the case. 

This law has proven to be unfair and unjust to the people who worked 

all their life paying into this system. Not only has this law penalized me but 

has penalized my husband1s benefits as well. I would be entitled to full 

benefits if it were not for WEP/GPO. This also amounts to double jeopardy 

People from other countries, can come into this country and pay into SS 

and get the full benefit. This burden should be put upon them instead of 

hurting the people that were born in the United States of America and made 

this country great. PLEASE REPEAL THIS LAWSS. 

Patricia J Lopez 

Sent from Mail for Windows 10 
191 


21290.158.eps

Good Morning Mr. Chairman: 

I am writing this email on behalf of myself and any other persons who might 

be in the same position as myself. 

I am a member of SERS in Ohio and I also have 17 years in Social 

Security. I turned 60 years old last June (2015) and decided it was nearing 

time to plan for retirement, even more so due to the changes that are being 

made in SERS effective July 2017. 

In my meeting with SERS, they informed me that I would be losing 

approximately $400 per month in Social Security benefits due to the 

WEP. And, if I were to take my ex-husbands social security benefit, it 

could be significantly higher. 

I was a stay at home Mom when my kids were young. I went to work part 

time in Social Security jobs when they went to school to supplement our 

income. Eighteen years ago, I took this full time job at a local school 

district which had great medical benefits and a retirement plan (SERS) for 

my kids, myself and my spouse. Unfortunately, after 34 years, we 

divorced. 

With SERS changing their retirement plans, I technically should retire June 

30, 2017. If I would retire then to get the highest monthly benefit, I would 

be short one year of receiving medical benefits at 50%. Therefore, my 

single monthly medical premiums would be $1200.00 for a single 

person. Along with that, I would be losing nearly $400.00 of my Social 

Security benefit. 

Because I am divorced and "self-supporting", this reduction in my Social 

Security benefits (WEP), and the new retirement laws at SERS, are 

causing me to have to work at least until I am 67. Please do not get me 

wrong, I do not mind working and thank Goodness my health will allow that. 

It just does NOT seem fair, especially since I am a divorced woman, that I 

am not entitled to all of the Social Security I would receive if I were not 

receiving my SERS benefit. I paid into both of these plans, therefore, I 

should be entitled to collect BOTH of them, and it would surely HELP me 

financially, especially, since my healthcare will be a significant portion of 

the dollar benefit I will be receiving. 
192 


21290.159.eps

I appreciate your time listening to my situation, and hope you take this into 

consideration along with other hardships, etc. that have been submitted to 

you and your committee. 

Sincerely, 

Patti Gardner 

Patti D. Gardner 

Treasury Associate 

Sycamore Community Schools 

5959 Hagewa Drive 

Cincinnati, OH 45242 

513-686-1700 X 5012 
193 


21290.160.eps

To Chairman Kevin Brady, Representative Richard Neal and the 

Ways and Means Committee, 

Thank you for your introduction of the Equal Treatment of Public 

Servants Act of 2015. Thank you as well for this opportunity to 

comment. 

Since moving to Colorado thirteen years ago I have been working 

in the Mancos and Cortez Colorado school systems through 

the SanJuan Board of Cooperative Education Services. I am now 

approaching retirement and only qualify for a portion of my Social 

Security as a result of WEP. It is difficult to understand why 

working for a nonprofit service organization would cause a person 

to lose a portion of their Social Security benefit for which they 

have worked and contributed for so many years. Many states do 

not penalize in this way. It seems only fair that someone who has 

worked and paid into the Social Security system should still 

qualify for their total number of service years insurance benefit. 

This is especially true when, in most cases these public 

employees are providing highly necessary services in our 

communities. In my case I have worked for the past 13 years 

providing therapy services for students with special needs like 

Cerebral Palsy, brain and birth injuries, Autism and other physical 

and mentally disabling conditions. Most people have been free to 

follow different aspects of their careers and accept a variety of 

positions but do not have their Social Security docked as a result. 

So for this reason, why would someone who decides to do public 

service as part of a varied career have their Social Security 

reduced? We are not asking to have additional years added to the 

SS Insurance benefit we have earned, but rather simply be paid in 

full for those years worked and contributed within that system. 

Some of us have worked for many years within the Social 

Security system and contributed like everyone else; but because 

of the WEP policy, it is as though we only worked and contributed 

a fraction of the actual years. OUCH! 
194 


21290.161.eps

Please reconsider this Social Security WEP policy and make it 

equitable throughout all states. WEP is unfair to those who have 

been teachers, police officers, firefighters, and providers of other 

essential public services in the state of Colorado for 

example. Colorado schools already have a very difficult time 

recruiting talent to the profession in large part because they 

cannot provide a competitive salary. It is next to impossible to 

interest mid career therapists, teachers and other providers in 

switching from their private sector employment to accept a 

position in the schools when they find out about the heavy impact 

of WEP. As a result we experience long periods oftime (18 

months to secure a physical therapist, as an example) with empty 

positions, poorly met student needs and burn out of existing staff. 

We would hope that Social Security would not penalize us for our 

community service and contributions to our children1s safety and 

education. 

To those of you on the Ways and Means Committee, we too are 

serving our country just as you are. Please consider that many of 

us work for substantially lower pay and will be relying on the FULL 

number of years we contributed to the Social Security Insurance 

system to sustain us after we retire. 

Please recommend revision and a formula that treats teachers, 

first responders, and other public service providers with fairness 

and respect. 

With the highest regard for your service and consideration, 

Respectfully submitted by: 

Rebecca Siefer 
195 


21290.162.eps

School Employee 

Retirees of Ohio, Inc. 

March 23, 2016 

The Honorable Sam Johnson 

(614) 431-0387 

(614) 431-0391 (fax) 

info(<i; ohio-sero.com 

Chairman, House Ways and Means Social Security Subcommittee 

2304 Rayburn HOB 

Washington, D.C. 20515 

Dear Chairman Johnson, 

6161 Busch Blvd Suite 131 

Columbus. OH 43229 

l'V'tYW .ohio-sero.co.m 

School Employee Retirees of Ohio, Inc. advocates for 197,000 active employees and retired members through 

the School Employees Retirement System of Ohio. We fully approve and support HR711 - "The Equal 

Treatment of Public Servants Act." 

Retirees have continued to communicate to us that they feel they have been unfairly targeted by the 

reductions in the WEP. Many retirees claim that the contributions they have made during their work history 

are all diminished by the reductions under the current WEP calculations. It has been a constant complaint 

from the members "Why can't we just get the contributions that we made, like everyone else?" It appears to 

us that this bill will revise the calculation now used for public workers to be in line with what is used for private 

worker's. We appreciate and anticipate this fair calculation for public workers. 

Unfortunately, retirees learn the full effects of the reductions when they are unable to make changes, so at a 

time when these retirees expected to be fully retired many have taken on additional jobs to supplement this 

loss to their retirement incomes. 

We know our retirees will be grateful that this new legislation will give them the benefits they have earned and 

that they are no longer penalized for being a public servant. We look forward to working with you on this 

important legislation for our retirees for 2017. 

Sincerely, 

Va&ueR~ 

Valerie Rodgers 

Executive Director 

School Employee Retirees of Ohio, Inc. 

Phone: 614-431-0387 

Fax: 614-431-0391 
196 


21290.163.eps

lOll! N. Fairfax Street • Suite 101 • Alexandria, VA 22314 • (703) 548-5568 

e-mail: info@'~;tsclhq.org • \Vebsite: vnnv.SeniorsLeague.org 

March 22, 2016 

The Honorable Kevin Brady 

United States House of Representatives 

1102 Longworth House Office Building 

Washington, DC 20515 

Dear Chairman Brady, 

On behalf of the approximately one million members and supporters ofThe Senior Citizens League (TSCL), 

4,441 of whom are your constituents, I would like to commend you for introducing the Equal Treatment 

of Public Servants Act, H.R. 711. 

TSCL's members and supporters tend to be older, less affluent seniors. Many of them worked as devoted 

public employees for decades and are now unfairly affected by the Windfall Elimination Provision (WEP) 

and the Government Pension Offset (GPO). As you know, these two provisions have not worked as 

intended since they were enacted in 1983. As a result, the earned Social Security benefits of many 

teachers, firefighters, police officers, and other public servants are reduced arbitrarily, often by one-half 

or more. 

According to a recent study completed by TSCL, Social Security beneficiaries have lost over 20 percent of 

their purchasing power since 2000. Those who are subject to the WEP and the GPO have undoubtedly 

fallen even further behind. It is now more important than ever for Congress to address the inequities that 

have been created by the WEP and the GPO, and TSCL believes the Equal Treatment of Public Servants Act 

is a fair and responsible solution that would provide vital financial relief to those currently affected. 

Your legislation, if enacted, would give America's public servants the Social Security benefits they have 

earned and deserve. The Senior Citizens League salutes you for introducing legislation that would make 

the Social Security program more equitable, and we are pleased to lend our enthusiastic support, and the 

support of our membership, to H.R. 711. 

Again, thank you for being a positive voice for America's public servants in the U.S. House of 

Representatives. 

Sincerely, 

Edward Cates 

Chairman, The Senior Citizens League 
197 


21290.164.eps

HR 711 

I am writing on behalf of the Committee for Social 

Security Fairness, a nation-wide group of public 

servants. I have been affected by 40% reduction of my 

Social Security Benefit. The worst part, is not knowing 

how this would be revealed when I retire. Employees 

are told by the Social Security benefit person what you 

had earned and an approximate factor used to reduce 

Social Security during your application process. For 

me that is about $400 + per month. The factor used 

causes a higher reduction of benefits for low-income 

retirees. 

I worked in private industry and Federal Government 

working range levels GS 4 to GS9, these positions are 

all FICA/Social Security jobs. The time period covers 

just less than 20 years of Social Security paid benefits. 

My Social Security Benefit would be about $1,300 to 

$1,400 per month. Social Security has applied a factor 

which reduces my monthly benefit to $823. 

I worked 9.5 years for the State of Alaska, a non FICA 

employer. I receive a small pension and after expenses 

I receive less than $400 per month. 

As you can see those of us Civil Servants thinking 

while taking care of the family and working little jobs it 

could provide $25K or so in retirement. 

So if you add up my State of Alaska pension and the 

WEP social security, I receive about $1,223 per month 
198 


21290.165.eps

or $14, 676 per year. Know anybody who is living on 

this? What will happen to me if my spouse dies? 

3

The lack of clear and accessible communication about 

both of Social Security penalties has been one of the 

most outrageous aspects of the Social Security offsets2 

my spouse and I would have planned to differently if we 

had had all the information about this despicable 

injustice to civil servants. 

With almost 20 years of Social Security earnings, I 

believed that these were two different pots of money 

are for my future not for WEP deductions. 

Thank you 
199 


21290.166.eps

April 4, 2016 

The Honorable Sam Johnson 

U.S. House of Representatives 

Washington, D. C. 

Dear Sir; 

I am writing to ask that the windfall provision of Social Security be eliminated. 

In support of my proposal, I make the following points: 

1. I served nearly six years on active duty with the U.S. Army during the Vietnam era. Later I 

completed a total of twenty-one years of combined active duty and Colorado Army National 

Guard service. 

2. Ten of those National Guard years were with the Fifth Battalion of the 19'h Special Forces Group 

(Green Berets). I rose to the position of company sergeant major. 

3. I concluded my National Guard service as the State Operations Sergeant Major in State 

headquarters. 

4. During all of that twenty-one years of service I paid into Social Security. 

During my National Guard service my full-time job was as a Trooper in the Colorado State Patrol. During 

my thirty years with the State Patrol I was promoted to the position of Captain. My last duty assignment 

was serving as the Colorado State Patrol action officer for the 2008 Democratic National Convention. I 

retired soon after the convention. 

Because I receive a State pension, under current law, when I file for my Social Security benefit, my 

benefit will be reduced. All this because I served my State in an occupation that didn't withhold social 

security tax. 

In my opinion this is patently unfair. 

I paid into the system for over twenty-one years, and now, I will not receive the full benefit of my 

payments. 

I urge your committee to change the windfall provisions of the Social Security law. 
200 


21290.167.eps

1:Cf:J!. Texas Classroom 

~" Teachers Association 

PO 13ox 1489 .'\u~Lin, 'lexas "787G7 ~ tcta.org 

888.879 B2H2! :ll2.-f7"7.94L1 i fax: 512.469,9527 

Statement on Social Security and Public Servants: 

Ensuring Equal Treatment 

Before the House Ways and Means Committee 

Subcommittee on Social Security 

March 22, 2016 

The Texas Classroom Teachers Association strongly supports revision of the \Vindfall Ulirnination 

Prm'ision (\'(iEP) and (~owmment Pension ( ltiset (C~PO), two federal laws that negatively impact 

onr mt'mbers. TCT,\ is a non-partisan, independent profes-;ional association representing 50,000 

teachers and related non-administrative prot(·ssional personnel in Texas public schools across the 

state \.vho have a keen interest in tills n1atter, and we appreciate the attention of this subcomnllttee 

and other members of Congress \vho arc ·working toward solutions. 

Texas teachers are atnong the nllilions of current and retired public en1ployees \\:ho are affected by 

the \V'EP and GPO. T'or many years, TCT1\ has advocated on their behalf lr>r fi.1ll repeal of these 

provi~ions. Educators arc all too often taken by surprise \vhcn they learn that the Social Security 

benefits to ·which they beheved they ·were entitled will be significantly reduced or elim.inated entirely. 

l 1or some, this discovery has led to an early exit fron1 the classroom (which in nuny cases does not 

alleviate the problem), and some potential educators have been deterred from entering the 

profession upon learning of the laws' im.pact on their Social Security benefits. 

H.R. 711 by Con1:,:rrcssmcn Brady and Neal represents a lo,srical eFfort to address the harmful impact 

of the \\·'EP while acknowledging the policy reasons for its in1plernentation. By using actual salary 

history rad1er than applying a single, somewhat arbitrary calculation as Lmder d1e WUl', 1-I.R. 711 

introduces an element of fairness that is lacking in the current la\v, and many of our metnbers \Vould 

bendit frotn the revised calculation. 

TCT;\ l1as concerns about certain details of the proposed lcf::_rislation, primarily\.vith regard to those 

retirees who have not been penalized under current law but would be under H.R. 711. Although the 

'\vinncrs and losers" approach ensures that the change in la\.1.7 is affordable, ''Tc fear that 1n a group 

that includes many relatively lo\v-paid retirees, recovery of a1nounts deemed to be "overpaid" could 

have a significant and negative affect on their financial well-being. \\'c would support grandfathcring 

and/ or phasing in of the law in order to nllninll;,.:e the irnpact on low-benefit retirees. 

Having noted that concern, though, TCT;\ is in support off-I.R. 711. \\'c believe that short of ti1ll 

repeal, this legislation provides the best current opportunity for improving how Social Security 

benefits are calculated for our tnembers \.vho have both coYered and non-covered etnployment. 

It is our hope that in the near future \Ve will have the opportunity to ·work with Congressional 

leaders on legislation to revise or repeal the Goven1n1ent Pension ()ffset to provide relief to 

etnployees negatively affected by that provision. ln the meantitne, thank you for your etiorts on 

these issues, and we look for,Nard to '"-orking \vith you in support ofTI.R. 711. 
201 


21290.168.eps

Statement for the Record 

by Texas AFT 

before the 

Subcommittee on Social Security 

of the Committee on Ways and Means 

U.S. House of Representatives 

on 

Social Security and Public Servants: Ensuring Equal Treatment 

March 22,2016 

Texas AFT (the Texas branch of the American Federation of Teachers) submits this statement on 

behalf of our 65,000 members, both active and retired, who have a vital stake in the hearing held 

on March 22, 2016, regarding Social Security offsets that adversely affect their retirement 

security_ 

The vast majority of Texas teachers and other school employees work in school districts that 

long ago elected not to participate in the Social Security system. A shock awaits many of these 

teachers and other education employees when they retire_ These education employees may think 

that they have qualified for full Social Security benefits, based on their own work for other 

employers who did take part in Social Security, or based on their spouse's work at a job covered 

by Social Security. However, when they retire these educators find out that their Social Security 

benefits are cut-in some cases even eliminated because federal law deems their Texas Teacher 

Retirement System pension a "windfall" that justit1es cutting their Social Security benef1ts. 

Government Pension Offset 

Consider the case of a widow eligible to receive a survivor's benefit of $600 a month from Social 

Security. Suppose she retires from a school district that does not take part in the Social Security 

system and in her own right has earned a TRS pension of$900 a month. Federal law imposes a 

so-called Government Pension Offset that reduces her Social Security survivor's benefit by twothirds of the amOtmt she receives from Texas TRS. That happens in this case to be a $600 

offset-which means her survivor's benefit is reduced to zero_ 

\Vindfall Elimination Provision 

Consider another case_ This time, suppose the teacher qualified for Social Security benefits by 

working for another employer for 20 years before she went to work for the school district. Or 

suppose she worked at another job evenings and weekends and summers to qualify for Social 

Security. What happens when she retires from her job with a school district that doesn't take part 

in Social Security? She faces a severe cut in her Social Security benefits, because federal law 

contains the so-called Windfall Elimination Provision. Under this law, instead of receiving 90 

percent of the first $856 of average monthly pre-retirement earnings, she receives only 40 

percent That's a $428 cut in her expected monthly Social Security benefit 
202 


21290.169.eps

Social Security Fairness Act 

With these offsets, Congress may have been aiming at well-to-do individuals who had earned 

high incomes while paying no Social Security taxes and would nonetheless quality for 

substantial Social Security benefits based on a very limited history of employment in another job 

where they did pay Social Security taxes_ Unfortunately, Congress misfired, hitting a lot of 

innocent people while aiming at a few individuals who tried to game the system. 

These offsets severely and unfairly penalize recipients of public pensions, including Texas 

teachers and other school employees as well as police officers, firefighters, and other public 

servants. The o±Isets especially harm lower-income employees. And they discourage qualified 

individuals from entering the teaching profession in Texas lest they lose their earned Social 

Security benefits. More than a million public servants are adversely afiected by these Social 

Security benefit ofisets. The victims are concentrated in Texas and a dozen other so-called "nonSocial-Security" states_ 

Texas AFT strongly supports the comprehensive repeal of both these unfair offsets that would be 

accomplished by the bipartisan Social Security Fairness Act, embodied in H.R. 973 by Reps. 

Rodney Davis of Illinois and Adam Schi±I of California and S _ 1651 by Sen. Sherrod Brown of 

Ohio and Sen. Susan Collins of Maine (cosponsored by 138 House members and 23 members of 

the Senate). 

Under H.R. 973/S. 1651, the GPO and WEP would be eliminated from the calculation of Social 

Security benefits. Those already retired who have suffered the harsh impact of these offsets 

would see their future monthly benefits adjusted upward. Fuhlfe retirees would be spared the 

unfair loss of earned Social Security benefits due to the GPO and WEP. 

Congress should be helping retired public servants, not authorizing the Social Security 

Administration to penalize them for their dedicated service. These unjust offsets put a decent 

standard of living in retirement out of reach for many public employees_ The offsets also hinder 

recruitment and retention of qualified teachers and other essential education personneL 

The price tag of implementing the Fairness Act is not small but could be covered several times 

over if Congress simply enforced current tax laws to capture taxes owed but lost annually due to 

under-reporting of income by corporations. Elimination of just the most egregious loopholes 

allowing abuse of overseas tax havens would more than suffice to cover the cost 

The Equal Treatment of Public Servants Act 

Texas AFT measures alternative approaches such as H.R. 711, the Equal Treatment of Public 

Servants Act by Rep. Kevin Brady of Texas (with 65 cosponsors), against the benchmark 

established by the Social Security Fairness Act. H.R. 711 modifies the WEP offset but does not 

eliminate it. The bill does not address the GPO at alL For Texas AFT, the assessment ofH.R_ 

711 depends on the answers to some important questions about the impact of the bill for good or 

ilL Ultimately, our assessment depends on whether this bill would serve as: (a) a stopgap, interim 

measure on the way to full repeal of both the WEP and the similarly unfair GPO; or (b) a 
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stopper, serving to block and preempt action on the Social Security Fairness Act, which would 

fully repeal both the WEP and GPO. 

Though it has been described by some of its backers simply as a bill to repeal the WEP. H.R. 711 

would keep the existing WEP in place for anyone who has reached age 62 before 2017. It 

tightens enforcement of the WEP provision, too, and provides for recoupment ofbenet1ts from 

anyone who should have been covered by the WEP but for some reason wasn't. The bill also 

ends one decent feature of the cun·ent law-an exemption from the offset for those with 30 years 

of employment covered by Social Security (and a partial exemption for those with 21 to 29 

years). 

H.R. 711 also for the first time would cut benefits for those who paid into a state or local pension 

plan but did not vest and hence never received a state or local pension. For those who reach age 

62 from 2017 on, the existing WEP would be replaced by what has been called a "fairness 

fonnula" that would scale back a recipient's benefits to match the fraction of an individual's 

lifetime average earnings covered by Social Security. 

The "savings" to the Social Security system achieved by these various changes would be plowed 

back into a rebate to those still covered by the existing WEP. The amount of the rebate is not 

specified in the bill, but some preliminary estimates suggest that more than $100 a month on 

average could be restored to many. 

A number of outstanding issues and questions concerning the effects of H.R. 711 must be 

addressed. For example: 

--A careful reckoning of exactly who the winners and losers would be is needed. 

--The extension of the \VEP's impact to employees not now affected, such as those who have 

never vested in a state or local pension system, could inflict new hardships on retirees. 

particularly on lower-paid public employees. 

--Ending the exemption from the WEP for those with 30 years of employment covered by Social 

Security and the partial exemption for those with 21 to 29 years of covered employment is a 

particularly troubling step backward, in our view. 

--For those who would be newly subjected to the WEP under this bill and who may be long 

retired and unable to make up for a benefit reduction by returning to work, what relief from the 

full impact of the WEP would be provided, if any? 

--Another concem is the narrow focus of the bill on tl1e WEP offset, leaving unaddressed the 

harsh burden of the GPO, which can be even more ham1ful than the WEP and affects stillmore 

public employees, plunging some of them into outright poverty. 

Texas AFT welcomes this subcommittee hearing as an opportunity to draw renewed attention to 

the issue of Social Security fairness for the public servants affected adversely by the GPO and 

WEP. Taking a small, partial step toward greater fairness for these public servants could be 
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justified as an interim measure. The question still to be answered about H.R. 711 is whether it 

does indeed enhance fairness-both in the short run and by setting the stage for a comprehensive 

repeal of the GPO and WEP, as under H.R. 973/S. 1651, which Texas AFT maintains should be 

the ultimate goaL 
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Sirs and Madams, 

I am writing to express my long simmering anger with the WEP (windfall elimination 

provision) of the Social Security Benefits Program. I am a retired municipal police 

officer from New Jersey. I retired in 2006 after twenty-seven years of service. I receive 

a pension from the NJ PFRS and I still work because I want to stay active. 

I started contributing to Social Security in 1971 and continued doing so until 1980. 

From then until 2007 I was employed by the Moorestown Twp. Police Department in 

New Jersey and was enrolled in the NJ PFRS. I again started contributing in 2008 thru 

2010. I have earned enough credits to qualify for benefits but because of the WEP, my 

benefits will be diminished. How collecting benefits that I earned through contributions 

can be seen as a "windfall" defies logic. 

I could rant on about how unfair the WEP is in my case but it's not my nature to 

complain. I only ask that reasonable lawmakers look at the WEP and the GPO and how 

they affect real, working and retired public employees. 

Sincerely, 

Timothy R. Henry 

Moorestown Twp. NJ PO (Retired) 

Jupiter, Florida 
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