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90–237 PDF 2004

S. Hrg. 108–279

PENALTY FOR PUBLIC SERVICE: DO THE SOCIAL

SECURITY GOVERNMENT PENSION OFFSET AND

WINDFALL ELIMINATION PROVISION UNFAIRLY

DISCRIMINATE AGAINST EMPLOYEES AND RETIREES?

HEARING

BEFORE THE

COMMITTEE ON 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

SEPTEMBER 24, 2003

Printed for the use of the Committee on Governmental Affairs

(

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

PETER G. FITZGERALD, Illinois 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

RICHARD J. DURBIN, Illinois 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JENNIFER A. HEMINGWAY, Professional Staff Member 

PRISCILLA HOBSON HANLEY, Professional Staff Member 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel 

LARRY B. NOVEY, Minority Counsel 

AMY B. NEWHOUSE, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Collins ................................................................................................. 4

Senator Akaka .................................................................................................. 6

Prepared statement: 

Senator Lautenberg .......................................................................................... 31

WITNESSES 

WEDNESDAY, SEPTEMBER 24, 2003

Hon. Dianne Feinstein, a U.S. Senator from the State of California .................. 1

Jo Anne B. Barnhart, Commissioner, Social Security Administration ............... 8

Julia Worcester, Columbia, Maine ......................................................................... 19

Charles L. Fallis, National President, National Association of Retired Federal 

Employees ............................................................................................................. 21

Kenneth Rocks, National Vice President, Fraternal Order of Police .................. 23

ALPHABETICAL LIST OF WITNESSES

Barnhart, Jo Anne B.: 

Testimony .......................................................................................................... 8

Prepared Statement ......................................................................................... 32

Fallis, Charles L.: 

Testimony .......................................................................................................... 21

Prepared Statement ......................................................................................... 46

Feinstein, Hon. Dianne: 

Testimony .......................................................................................................... 1

Rocks, Kenneth: 

Testimony .......................................................................................................... 23

Prepared Statement ......................................................................................... 52

Worcester, Julia: 

Testimony .......................................................................................................... 19

Prepared Statement ......................................................................................... 42

APPENDIX

Hon. Barbara A. Mikulski, a U.S. Senator from the State of Maryland, prepared statement ................................................................................................... 56

Maria M. Alamor and Leo R. Alamar, Social Security Administration Decision 

submitted by Mr. Fallis ....................................................................................... 59

Additional prepared statements submitted for the Record: 

Ronald S. Dick, Silver Spring, Maryland ....................................................... 70

Junita Drisko, Orrington, Maine ..................................................................... 72

Carolyn T. Engers, Joliet, Illinois ................................................................... 73

Jane Nelson, Cleveland, Texas ........................................................................ 76

Sharon Richard, Sour Lake, Texas ................................................................. 78

Suzanne Shaw, Penobscot, Maine ................................................................... 81

Ralph White, President, Retired State, County and Municipal Employees 

Association of Massachusetts, and Shawn Duhamel, Legislative Liaison .................................................................................................................. 87

Patricia Wolfe, President, Federally Employed Women (FEW) .................... 90

(1)

PENALTY FOR PUBLIC SERVICE: DO THE SOCIAL SECURITY GOVERNMENT PENSION 

OFFSET AND WINDFALL ELIMINATION PROVISION UNFAIRLY DISCRIMINATE AGAINST 

EMPLOYEES AND RETIREES? 

WEDNESDAY, SEPTEMBER 24, 2003

U.S. SENATE, 

COMMITTEE ON GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:33 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Susan M. Collins, 

Chairman of the Committee, presiding. 

Present: Senators Collins and Akaka. 

Chairman COLLINS. The Committee will come to order. 

Good morning. Today, the Committee on Governmental Affairs is 

holding a hearing to examine the effect that the Social Security 

government pension offset and the windfall elimination provisions 

have on public employees and retirees. 

I am going to go immediately to the distinguished senior Senator 

from California, Senator Dianne Feinstein, for her opening statement because of scheduling considerations. I will then resume with 

my own opening statement and we will continue with the hearing. 

I want to welcome Senator Feinstein here this morning. She has 

been such a leader in the Senate in remedying this inequity that 

has affected so many of our constituents. I am very proud to be the 

lead Republican cosponsor of the legislation that Senator Feinstein 

has introduced. We work together on many issues and it is a great 

pleasure to welcome her to the Committee this morning. 

Senator Feinstein. 

TESTIMONY OF HON. DIANNE FEINSTEIN, A U.S. SENATOR 

FROM THE STATE OF CALIFORNIA 

Senator FEINSTEIN. Thank you very much, Madam Chairman. I 

appreciate your holding this hearing, and even more than that I 

appreciate your cosponsorship of this legislation which we together 

have introduced, along with 21 others of our body. 

The reason we have introduced it is because under current law, 

public employees, whose salaries are often lower than those in the 

private sector, actually find that they are penalized and held to a 

different standard when it comes to retirement benefits. The arbitrary reduction in their benefits makes it more difficult to recruit 

teachers, police officers, and firefighters, and it does so at a time 

2

when we should be doing everything we can to recruit the very best 

and brightest to these careers. 

I am very delighted to have introduced you to Bill Lambert, of 

the United Teachers of Los Angeles. He represents some 48,000 

teachers, the dominant majority of whom lose benefits under the 

present system that no one in the private sector does, and that is 

what our bill seeks to remedy. 

The current government pension offset provision reduces Social 

Security spousal benefits by an amount equal to two-thirds of the 

spouse’s public employment civil service pension. This can have the 

effect of taking away entirely a spouse’s benefits from Social Security, and as one might guess, this provision disproportionately affects women. So as Mr. Lambert just said to you, you had better 

hope if you are going to be a teacher that you live a long time because if you don’t, your spouse is going to be disadvantaged because you chose a public career rather than a private one. 

The Social Security windfall elimination provision reduces Social 

Security benefits for retirees who pay into Social Security and also 

receive a government pension, such as from a teacher retirement 

fund. Private sector retirees receive monthly Social Security checks 

equal to 90 percent of the first $561 in average monthly earnings, 

plus 32 percent of monthly earnings up to $3,381, and 15 percent 

of earnings above $3,381. Government pensioners, however, are 

only allowed to receive 40 percent of the first $561 in career 

monthly earnings. Now, that is a penalty of $280.50. It is a big 

penalty for people who really need those funds. To my mind, it is 

simply unfair. 

Our legislation will allow government pensioners the chance to 

earn the 90 percent to which non-government pension recipients 

are entitled. I don’t understand why we want to discourage people 

from pursuing careers in public service by essentially saying that 

if you do enter public service, your family is going to suffer by not 

being able to receive the full retirement benefits they would otherwise be entitled to. 

Record enrollments in public schools and the projected retirements of thousands of veteran teachers are driving this urgent 

need for teacher recruitment. Efforts to reduce class size also necessitate hiring additional teachers. It is estimated that schools 

will need to hire between 2.2 and 2.7 million new teachers nationwide by 2009. 

My State, California, currently has more than 285,000 teachers, 

but is going to need to hire an additional 300,000 teachers by 2010 

to keep up with California’s rate of student enrollment, which is 

three times the national average. All in all, California has to hire 

26,000 new teachers. 

Now, to combat the growing teacher crisis, 45 States and the District of Columbia now offer alternative routes for certification to 

teach in the Nation’s schools. It is a sad irony that policymakers 

are encouraging experienced people to change careers and enter the 

teaching profession at the same time that we clearly tell them we 

will reduce your Social Security benefits for making such a change, 

benefits they worked hard to earn. 

Almost 300,000 government retirees nationwide are affected by 

the government pension offset and windfall elimination provisions, 

3

but their impact is greatest in the 13 states that chose to keep 

their own public employee retirement systems, including yours and 

mine. 

According to the Congressional Budget Office, the government 

pension offset reduces benefits for some 200,000 individuals by 

more than $3,600 a year. That is the loss; it is tremendous. As I 

mentioned earlier, the windfall elimination provision causes already low-paid public employees outside the Social Security system, 

like teachers, firefighters and police officers, to lose up to 60 percent of the Social Security benefits to which they are entitled. 

Sadly, the loss of Social Security benefits may make these individuals eligible for more costly assistance, such as food stamps. So 

we deny these workers the benefits and that entitles them to food 

stamps. I am not sure this is the pride that we want to take in 

public employees. 

I am also very aware that we are facing extraordinary deficits 

and that fixing the problem that we are talking about here will be 

expensive. So I am open, and I know you are open to considering 

all options that move us toward our goal of allowing individuals to 

keep the Social Security benefits to which they are entitled. 

The reforms that led to the government pension offset provision 

and the windfall elimination provision are almost 20 years old now. 

At the time they were enacted, I am sure they seemed like a good 

idea. Now that we are witnessing the practical effects of those reforms, I think it is time that we pass legislation to address the unfair reduction of benefits that make it even more difficult to recruit 

and retain public employees. 

What I want you and Senator Akaka to know is that I look forward to working with this Committee as you work this issue out. 

It is an expensive issue, but there is no question, on the side of 

fairness, that fairness says we should remedy this problem. So because on our bill we have some 23 Senators, and I know Senator 

Mikulski has a bill that does half what we do and I believe she has 

some 25 cosponsors, it seems to me that between the two bills, we 

ought to be able to put something together to get a fair conclusion 

to this in this session of the Congress. 

Thank you very much. 

Chairman COLLINS. Thank you very much, Senator. I certainly 

share your hope in that regard. I am proud to be a cosponsor of 

Senator Mikulski’s bill, as well. Like you, I am open to compromises on this issue, but my hope is that by holding this hearing 

today, the Committee can shine a spotlight on what is a very troubling problem particularly for lower-income women retirees, as 

your statement so eloquently has pointed out, and that we will be 

able to prompt the Finance Committee to move these bills. 

So I thank you very much for taking the time out of your busy 

schedule to be here with us today. I know this is of enormous importance to you and I thank you for your leadership. 

Senator FEINSTEIN. Thanks, Madam Chairman. I appreciate it. 

Chairman COLLINS. Senator Akaka, we began the hearing by 

hearing from Senator Feinstein because she has an Appropriations 

meeting that she needs to go to. I am now going to go to my opening statement and then I will call on you shortly. 

4

OPENING STATEMENT OF CHAIRMAN COLLINS 

Chairman COLLINS. Senator Feinstein has given an excellent 

overview of the issue that we are looking at today. Individuals affected by both the government pension offset and the windfall 

elimination provisions are those who are eligible for Federal, State, 

or local pensions from work that was not covered by Social Security, but who also qualify for Social Security benefits based on their 

own work in covered employment or that of their spouses. 

While the two provisions were intended to equalize Social Security’s treatment of workers, many of us are concerned that they unfairly penalize individuals for holding jobs in public service when 

the time comes for them to retire. These two provisions have enormous financial implications not just for Federal retirees and employees, but also for our teachers, police officers, firefighters, and 

other public employees as well. 

Despite their challenging, difficult, and sometimes dangerous 

jobs, these invaluable public servants often receive far lower salaries than private sector employees. It is therefore doubly unfair to 

penalize them when it comes to their Social Security retirement 

benefits. These public servants or their spouses have all paid taxes 

into the Social Security system. So have their employers, and I 

think that is a very important point. 

Each of the people that we are talking about has paid Social Security into the system, paid payroll taxes; the employer has, too. 

So they earned these benefits. They have worked the necessary 

quarters under covered retirement. Yet, because of the way these 

two provisions work, they are unable to collect all of the Social Security benefits to which they otherwise would be entitled. 

While the GPO and the WEP affect public employees and retirees 

in virtually every State, their impact is most acute in 15 States, 

including Maine, for the reasons that Senator Feinstein explained. 

Those States have retirement systems that do not have a Social Security component. 

Nationwide, more than one-third of teachers and education employees and more than one-fifth of other public employees are affected by the GPO and/or the WEP. Almost one million retired government workers across the country have already been adversely 

affected by these provisions. Millions more stand to be affected by 

them in the future. 

Moreover, at a time when we should be doing all that we can to 

attract qualified people to public service, this reduction in Social 

Security benefits makes it even more difficult for our Federal, 

State, and local governments to recruit and retain the teachers, police officers, firefighters, and other public servants who are so critical to the safety and well-being of our families. 

The Social Security windfall elimination provision reduces benefits for retirees who paid into Social Security and also receive a 

government pension from work not covered by Social Security, such 

as pensions from the Maine State Retirement Fund. While private 

sector retirees receive monthly Social Security checks equal to 90 

percent of their first $606 in average monthly career earnings, government pensioners are only allowed to receive 40 percent—a 

harsh penalty of more than $300 per month. 

5

The government pension offset reduces an individual’s survivor 

benefit under Social Security by two-thirds of the amount of his or 

her public pension. It is estimated that 9 out of 10 public employees affected by the pension offset lose their entire spousal benefit, 

even though their spouses paid Social Security taxes year after 

year. 

What is most troubling is that this offset is most harsh for those 

who can afford it the least, and that is lower-income women. In 

fact, of those affected by the pension offset, 73 percent are women. 

According to the Congressional Budget Office, as Senator Feinstein 

noted, the GPO reduces benefits for more than 200,000 of these individuals by more than $3,600 a year. That is the difference between poverty and a comfortable retirement for a lot of low-income 

retirees. Our teachers and other public employees face difficult 

enough challenges in their day-to-day work. Individuals who have 

devoted their lives to public service should not have the added burden of worrying about their retirement. 

This issue is extraordinarily important in my home State of 

Maine and it is one of the issues that I hear the most about. People 

stop me when I am in the grocery store, at church, wherever I am, 

even at my 30th high school class reunion a couple of years ago. 

I guess all of us as we are getting older are starting to finally think 

about what we are going to do when we retire. 

Many of my high school friends entered the teaching profession. 

They are committed to living and working in Maine. They love 

their jobs and the children they teach, but they worry about their 

future and their financial security in retirement. 

I hear a lot about this in my constituent mail and I want to 

share a couple of letters that I have received. One was from Patricia DuPont, from Orland, Maine. She wrote that because she had 

taught for 15 years under Social Security in New Hampshire, she 

is living on a retirement income of less than $13,000, after 45 years 

in education. Since she also lost survivor benefits from her husband’s Social Security, she calculates that if we were to completely 

repeal the two provisions we are discussing today, it would double 

her current retirement income. And think how much better off she 

would be with $26,000 a year, still not exactly a fortune, versus 

$13,000. 

Moreover, these provisions penalize private sector employees who 

leave their jobs to become public school teachers. At a time when 

we are trying to get more people to come into teaching, I think this 

is another unfortunate effect of these provisions. 

Ruth Wilson, a teacher from Otisfield, Maine, wrote to me as follows: ‘‘I entered the teaching profession 2 years ago, partly in response to the nationwide plea for educators. As the current pool of 

educators near retirement in the next few years, our schools face 

a crisis. Low wages and long, hard hours are not great selling 

points to young students when selecting a career. I love teaching 

and only regretted my decision when I found out about the penalties I will unfairly suffer. In my former life as a well-paid systems manager at State Street Bank in Boston, I contributed the 

maximum to Social Security every year. When I decided to become 

an educator, I figured that because of my many years of maximum 

6

Social Security contributions, I would still have livable retirement 

wage. I was unaware that I would be penalized as an educator.’’

That is a perfect example of someone who thought that she had 

planned well for her retirement years, had worked in the private 

sector, then made the sacrifice to take a lower salary and teach. 

And yet she finds out that she is going to lose the benefit of those 

years in the private sector when it comes to retirement. 

Maine, like many States, is currently facing a shortage of teachers. I just don’t think that we can afford to discourage people from 

pursuing important careers like teaching in the public sector in 

this way, and that is why I have joined Senator Feinstein in introducing her bill and have cosponsored Senator Mikulski’s bill as 

well. 

Today’s hearing will examine how these two provisions work, 

why they were enacted, and what their effect has been on public 

employees and retirees. We will also look at options for their modification and repeal. We have heard from Senator Dianne Feinstein. 

We will hear next from the Social Security Commissioner, Jo Anne 

Barnhart, who will help us better understand the history and reasons underlying the pension offset and windfall elimination provisions, as well as the impact that proposals to modify or repeal 

these two provisions would have on the Social Security retirement 

and disability funds. 

Finally, we will hear from a panel representing public employees 

and retirees, including Julia Worcester, who has traveled all the 

way from Columbia, Maine, to tell us about her work both in Social 

Security-covered retirement and as a Maine teacher. We will also 

be hearing from other public employee representatives, as well. 

I look forward to hearing all the testimony today. My hope is 

that this oversight hearing, which one of our witnesses tells me is 

the first Senate hearing to delve into this issue, will lay the ground 

work for action to resolve what is a very troubling problem for far 

too many of our retirees. 

I am very pleased to call on my colleague and friend, Senator 

Akaka, for any comments that he might have. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Madam Chairman, for 

holding this hearing. I commend you for highlighting this troubling 

issue not only for women, but for people of our country. I want to 

say good morning, also, to all of those who are with us today. 

I am pleased that Senator Feinstein was able to join us and give 

her remarks. Senator Mikulski unfortunately could not be with us. 

They are leaders in addressing problems associated with the government pension offset, and also the windfall elimination provision, 

both of which impact our Federal employees and retirees. 

As the Chairman noted, the general pension offset was established to create a level playing field between government and private sector workers who receive Social Security spousal benefits 

when the individual also receives a pension for work not covered 

by Social Security. 

Under the GPO, those individuals are subject to a reduction in 

their Social Security spousal benefits equal to two-thirds of the 

7

amount of the government pension. Unfortunately, the reduction 

has proved to be imprecise and has uneven results. 

As of last December, there were 376,000 government annuitants 

whose Social Security spousal benefits were affected by the GPO. 

Approximately 73 percent of them were women. The impact of the 

GPO is especially hard on women. The 2001 data shows that the 

average monthly offset for women was nearly one-third greater 

than that for men. 

In addition, women are harmed because many may have taken 

time off work to raise a family, resulting in a reduced pension. The 

reduction in one’s pension, combined with reduced Social Security 

spousal benefits, put at risk many female retirees who have dedicated their lives to public service. 

This Committee has acted before to protect women and their retirement benefits. Last year, we passed legislation I introduced, the 

thrift savings plan catch-up bill, which allows Federal employees 

age 50 and over to contribute additional amounts to the thrift savings plan. Just like the GPO proposal before us today, the TSP 

change will help those women who return to the workforce after 

raising families and have not been able to prepare adequately for 

retirement. 

Due to the problems with the GPO and its aggravated impact on 

women, I am pleased to again cosponsor Senator Mikulski’s legislation, S. 363. This bill would eliminate the application of the GPO 

for those individuals whose monthly combination of Social Security, 

spousal benefits, and non-Social Security pensions is $1,200 or less. 

Senator Mikulski’s legislation will go a long way to minimize the 

harsh impact the GPO has on those government retirees, particularly women, who depend heavily on Social Security. 

Today, we are also discussing the windfall elimination provision. 

Although the WEP, like the GPO, was created to even the playing 

field between public and private workers, it has had the effect of 

penalizing those who had lower earnings in their non-Social Security employment. 

The problem has become so severe that last winter the CBS 

Evening News ran a special feature on the WEP, depicting the 

hardships faced by hundreds of thousands of Americans who receive less than their full Social Security benefits because of this 

provision. Congress must act now to mitigate the financial strains 

placed upon our retired workers because of the GPO and WEP. 

Madam Chairman, I hope we can work together to find a solution 

to the problems facing retired government employees and their 

spouses, and help those who have dedicated their lives to public 

service. You have been a great leader, Madam Chairman, in this 

respect, too, and I thank you again for holding this hearing. 

Chairman COLLINS. Thank you very much, Senator. 

Senator AKAKA. Madam Chairman, I am sorry that I have another hearing to go to and I won’t be able to stay for the remainder 

of the hearing. 

Chairman COLLINS. I understand. I have that hearing also, so 

represent me well there. 

Senator AKAKA. Thank you. 

Chairman COLLINS. This is a day with a lot of hearing conflicts, 

but thank you very much for coming by. 

8

1The prepared statement of Ms. Barnhart appears in the Appendix on page 32. 

The Committee would now like to welcome and call forward the 

Hon. Jo Anne Barnhart, the Commissioner of the Social Security 

Administration. I know that the Commissioner rearranged her very 

busy schedule in order to be with us today, and I want to express 

my appreciation for her efforts. 

I also want to say that the Commissioner has done an excellent 

job running the Social Security Administration. It is an enormous 

task. My case workers in Maine tell me that you have made real 

progress in cutting down on the backlogs and processing claims and 

disputes, and I want to recognize that good work. 

Commissioner Barnhart’s experience with Social Security dates 

back to her service in 1981 as Deputy Associate Commissioner of 

the Office of Family Assistance. I would note that she also served 

as the Republican staff director for this very Committee and that 

we had the pleasure of working together decades ago. 

We look forward to hearing your testimony this morning. You 

may proceed. 

TESTIMONY OF JO ANNE B. BARNHART,1 COMMISSIONER, 

SOCIAL SECURITY ADMINISTRATION 

Ms. BARNHART. Thank you, Madam Chairman. I appreciate those 

kind comments about Social Security. Also, I must say that it was 

something of a nostalgic trip for me to walk in here this morning, 

because I don’t think I have been in this hearing room for 15 years 

since I did serve as Republican staff director. 

I want to thank you for inviting me to discuss the government 

pension offset provision, or GPO, and the windfall elimination provision, which is also known as WEP. These provisions are extremely complex and they are not well understood, so I appreciate 

this opportunity to briefly describe their purpose, how they work, 

and issues that should be evaluated when you are considering legislative changes. 

I would like to begin with GPO which, as you have indicated, affects government retirees who are eligible for two benefits, a pension based on their own work in a Federal, State, or local government job that was not covered by Social Security and a Social Security spouse’s or surviving spouse’s benefit based on their husband’s 

or wife’s work in Social Security-covered employment. 

If the GPO applies, the person’s spouse or surviving benefit is reduced by an amount equal to two-thirds of the person’s government 

pension based on work not covered by Social Security. As of December 2002, about 367,000 beneficiaries had their benefits fully or 

partially offset due to the GPO. Of those, 73 percent were women. 

In enacting the GPO, Congress intended to assure that individuals working in non-covered employment would be treated in the 

same manner as those working in covered employment. Prior to 

GPO, a person who worked in a government job not covered under 

Social Security could receive, in addition to the government pension based on his or her own earnings, a full Social Security 

spouse’s or surviving spouse’s benefit. However, a person who 

works in a job covered under Social Security is subject to the dual 

entitlement provision. 

9

This provision, which has been applied since 1940, requires that 

Social Security benefits payable to a spouse or a surviving spouse 

be offset by that person’s own Social Security benefit amount. 

Therefore, GPO really acts as a surrogate for the dual entitlement 

offset, ensuring that spouses and surviving spouses are treated 

similarly regardless of whether their jobs are covered under Social 

Security or not. 

The impetus for enacting the GPO provision was a March 1977 

Supreme Court ruling in Califano v. Goldfarb. That ruling eliminated the dependency test that then applied to men but not women 

in order to qualify for Social Security spousal benefits. Essentially, 

it eliminated gender bias in the Social Security programs. Because 

of the dual entitlement provision, men who worked in covered employment still did not typically receive spouse or widow benefits, 

but those who worked in non-covered employment could. Therefore, 

Congress enacted the GPO in December 1977. 

While the GPO provision is intended to accomplish the same purpose as the offset under the dual entitlement provision, the amount 

of the reduction under the GPO is different. Under the dual entitlement provision, dollar-for-dollar is reduced. Under the GPO, there 

is a two-thirds reduction, and I would like to give just a brief example to clarify the difference. 

If we take Ms. Jones, who is receiving a Social Security retire- ment benefit of $900 a month based on her own work, her own employment, she is also potentially eligible for $900 as a widow’s benefit. So that would be a total of $1,800 if she were allowed to receive both. Her Social Security retirement benefit is subtracted 

from her widow’s benefit, resulting in her widow’s benefit being 

fully offset. So her Social Security benefit is subtracted from the 

$1,800 total and she receives only $900 in Social Security benefits. 

A second widow, Ms. Brown, is in a comparable situation. She worked for the government and her pension is $900. Potentially, 

she too could be eligible for a Social Security widow’s benefit of 

$900. However, the GPO provision reduces the $900 widow’s benefit by two-thirds of her pension, or $600. So she receives a $300 

Social Security benefit, in addition to her $900 government pension. Therefore, she receives $1,200, while the individual who 

worked in covered employment receives $900. 

That is just a brief example to explain what, looking back over 

legislative history, it appears was Congress’ intent in enacting the 

GPO—to create a situation comparable to the dual entitlement provision. 

I would now like to briefly address the WEP provision. In 1983, 

the Social Security Act was amended and included WEP as a 

means to eliminate what were called and have been called windfall 

Social Security benefits for retired and disabled workers who were 

receiving pensions from employment that isn’t covered by Social 

Security. 

Generally while the WEP applies to any pension based on noncovered employment, it primarily affects government workers. The 

WEP, I want to point out, though, does not affect Social Security 

benefits that are payable to survivors of workers. 

The WEP removes an unintended advantage that the weighting 

in the regular Social Security benefit formula would otherwise proVerDate 0ct 09 2002 13:49 Feb 02, 2004 Jkt 090237 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\DOCS\90237.TXT SAFFAIRS PsN: PHOGAN
10

vide for persons who have substantial pensions from non-covered 

employment. This weighting is intended to help workers who spent 

their whole lives in low-paying jobs. It provides them with a relatively higher benefit in relation to their prior earnings than the 

benefit that is provided for higher-paid workers. 

However, because Social Security benefits are based on average 

earnings over a working lifetime, a worker who has spent part of 

his or her career in employment not covered by Social Security actually appears to have a lower lifetime earning than he or she actually had. Without the WEP, such a worker would be treated as a 

low-income worker for Social Security benefit purposes and therefore receive the advantage of the weighted benefit formula that was 

designed to help lower-wage earners. 

I would like to explain how the WEP is computed. The primary 

insurance amount formula for determining Social Security benefits 

for workers who reach age 62 in 2003 is, as Senator Feinstein described in her testimony, 90 percent for the first $606 in average 

monthly earnings, plus 32 percent of the next $3,047, and 15 percent of average monthly earnings above $3,653. 

Under the WEP computation, the 90 percent factor is reduced, so that the 90 percent of the first $606 becomes 40 percent of the first 

$606. Under the regular Social Security benefit formula, a worker 

would get $545 of that $606. Under WEP, the individual would receive $242 of the first $606. Under both scenarios, the 32-percent 

and the 15-percent factors remain the same. So the effect of WEP 

occurs at that first level of calculation. 

For a worker first eligible in 2003, the maximum WEP reduction is $303 a month, because when you take 40 percent of $606, that 

is the largest reduction that you have, the 50 percent, the difference between the 40 and the 90 percent. Unlike the GPO, the 

WEP can never eliminate a person’s Social Security benefit. 

For workers who have 30 or more years of substantial covered 

earnings, the WEP does not apply at all. Substantial earnings for 

2003 are defined as $16,125 a year. The WEP is phased out gradually for workers who have substantial earnings for 21 to 29 years. 

There is a phase-out of the WEP from the 21st year down to the 

30th year, where the total exemption from WEP begins. As of December 2002, WEP reduced the Social Security benefits of approximately 635,000 retired and disabled workers, and of those affected 

workers, 66 percent are men. 

The President’s fiscal year 2004 budget includes a proposal that 

would improve the administration of both WEP and GPO. It is a 

change that would allow SSA to independently verify whether 

beneficiaries have pension income from employment not covered by 

Social Security. Right now, we rely largely on the applicants who 

come into the office. We do have an ongoing computer matching 

program with OPM that helps us as far as Federal employees go. 

But with State employees, it is a much more difficult situation. 

A number of proposals have also been advanced to change the 

WEP and GPO provisions, and Senator Feinstein’s bill is one of 

those. Senator Mikulski’s, which you and Senator Akaka referenced, is another, and there are several others. Some would 

eliminate those provisions entirely. Others, like Senator Mikulski’s 

bill, have set a limit for the offset. 

11

These provisions would be costly and would restore the more favorable treatment afforded to many workers in non-covered employment prior to the enactment of the GPO and WEP. I raise that 

issue because I think it was Congress’ intent to establish equity in 

enacting these previsions. Since you are looking at issues that 

would need to be addressed as you move ahead in looking at the 

GPO and WEP, certainly that is one that would warrant consideration. Further, if both WEP and GPO were eliminated, the Social 

Security trust fund exhaustion date would advance by 1 year, from 

2042 to 2041, as would the year of cash flow deficit advance from 

2018 to 2017. 

Most other proposals to modify the effects of WEP or GPO provide higher Social Security benefits for government workers whose 

pensions from non-covered employment, in combination with Social 

Security benefits, are below certain levels. That would be Senator 

Mikulski’s bill. However, those bills do not address the dual entitlement offset that applies to millions of comparable beneficiaries who 

worked only in covered employment. If you look at addressing the 

dual entitlement provision that has been in effect since 1940, you 

find that the cost increases substantially to over $500 billion. 

As indicated, the GPO and WEP are two highly technical provisions of law that are not well understood by the public, and we 

have therefore greatly increased our public information efforts on 

these provisions. We have revised the annual Social Security statement to attempt to make it clearer to people who receive the statement that they could be affected by the government pension offset 

or by the windfall elimination provision. 

We have individuals who conduct pre-retirement seminars. We 

have a website with a calculator so workers can actually see the 

individual effect of these reductions—actually put in their figures. 

And we are obviously happy to walk them through it if they come 

into our offices for an appointment because it is complicated and 

difficult for people to understand. 

We are in the process right now of putting up a special website 

related specifically to WEP and GPO, in large measure because of 

the increased emphasis and interest that this issue has received; 

many people have expressed concern and a lack of understanding 

about how these provisions operate. We felt it was very important 

to make information accessible in every possible form. 

At this time, I would be happy to answer any questions that you 

might have, Madam Chairman. 

Chairman COLLINS. Thank you very much, Commissioner. Your 

explanation of how the law works, which was very good, demonstrates a problem, however, and that is its complexity. What I 

have found is that many of the people who have come to me about 

this issue were surprised to learn of the impact of the pension offset and the windfall elimination provision on their future Social Security benefits. 

Ms. Worcester, who will be testifying on our next panel, is one 

of those who found out about it only when she happened to go to 

a retirement seminar. It is very common in my State that people 

are surprised to learn of the impact. One teacher friend of mine 

told me that he had worked every summer purposefully during his 

teaching career in order to earn his Social Security benefits, having 

12

no idea that they would be offset. I am glad to hear about your efforts because I really think there is a lack of understanding that 

compounds the problem for a lot of retirees. 

You mentioned the Social Security statements that we get after 

a certain age on an annual basis. The last time I got mine I specifically looked for mention of these provisions because I am one of 

those who has employment under both the public and private sector. I knew the amount that was listed was not going to be the 

amount that I would be eligible for, but I didn’t see any warning 

or any caution to me. 

Has that been changed recently? 

Ms. BARNHART. Actually, it was, Senator. Thank you for asking 

that question, Madam Chairman, because I did make changes in 

the Social Security statement this past spring. So I hope that you 

are not going to tell me you received your statement since May of 

this year. 

Chairman COLLINS. I did not. What does it say now? 

Ms. BARNHART. We actually put in a highlighted area. It is in 

bold print and it actually says, under your estimated benefits, ‘‘The 

law governing benefit amounts may change. Your benefit amount 

may be affected by military service, railroad employment, or pensions earned through work on which you did not pay Social Security. Visit’’—then we give the website—‘‘to see whether your Social 

Security benefit amount will be affected.’’

In addition, in the ‘‘Some Facts About Social Security’’ section, 

we list five publications that we have available and one of those 

is ‘‘The Windfall Elimination Provision: How It Affects Your Retirement of Disability Benefits,’’ and ‘‘Government Pension Offset: Explanation of a Law that Affects Spouse’s or Widow(er)’s Benefits.’’

This information had not been included prior to the changes that 

were made last spring. I felt it was important because of the increased concern that I was hearing that we include this warning 

and advisory, basically, to individuals who might not realize that 

their benefits could be affected. 

When we put this statement out—and we do it for everyone 25 

years of age and older—we estimate future earnings, and we estimate your benefit; we have the posted earnings—but we don’t have 

a way to tell you at this point what the offset would be because 

we don’t know whether you will receive a noncovered pension or 

the amount of your pension. 

We are looking at ways to see if we could set some sort of parameter for individuals who, on their statement, have many years of 

covered work, but then they have years of noncovered work, or they 

have years of noncovered work and then they are working in covered employment. The feasibility of setting up some sort of a computer alert, an automated alert, so we could then put a special advisory in those statements—is something we are investigating now 

to see if it is possible. 

We still wouldn’t be able to tell the individual the dollar effect, 

but if we are able to accomplish this, we could give a more direct 

advisory to the person that it appears, because of ‘‘x’’ years of noncovered employment, you may be affected by this. 

Chairman COLLINS. I think that would be extremely helpful. I 

still believe the provisions themselves need to be modified and, in 

13

practice, have become unfair. But the least we can do is make sure 

that people realize the impact. And I think because the law was 

changed, a lot of people are surprised. 

In the case of Ms. Worcester, for example, her mother’s retirement was not affected. So I think it is incumbent upon the Social 

Security Administration to do everything possible to wave a red 

flag so that at least people can make appropriate plans for their 

retirement until we can get this modified or fixed. 

Ms. BARNHART. I certainly appreciate that and if you or other 

Members of the Committee have recommendations or the panelists 

that are following me have other recommendations of other activities we could undertake, I would certainly be willing to take those 

under consideration. 

Chairman COLLINS. Thank you. Some have criticized, including 

myself, the windfall elimination provision for the way that it actually works in practice; that it sounded fine, perhaps, when it was 

passed—I wasn’t a Member of the Senate at the time and I want 

to make sure everybody in the room knows that—but that, in practice, it creates inequities and hardships. 

For example, many would contend that the arbitrary 40-percent 

factor in the formula does not reflect the actual ‘‘windfall’’ when it 

is applied in individual cases. The current formula seems to overpenalize lower-paid workers with shorter careers or with full careers that are fairly evenly split between Social Security-covered 

and non-covered employment. The current formula, in my judgment, also is regressive because the reduction causes a relatively 

large reduction in benefits for lower-wage workers. 

Would it be appropriate to modify the formula, for example, by 

perhaps including a means test—Senator Mikulski’s bill does that 

to some extent—to ensure that low-wage workers receive a greater 

portion of the earned benefits? 

Ms. BARNHART. One of the basic tenets of the Social Security program has been the ‘‘earned right’’ nature of the program, and that 

is that you pay into the system for the benefits that you obtain. I 

do think that if Congress considers the inclusion of a means test, 

it would be important to recognize that could be viewed as a significant departure from that ‘‘earned right’’ nature of the Social Security program. 

Also, it may be helpful for you if I could provide some information to you about the relative poverty status of individuals who are 

affected by the WEP. 

Chairman COLLINS. It would be helpful. 

Ms. BARNHART. I would be happy to do that. 

The information follows:

INFORMATION PROVIDED BY MS. BARNHART 

POVERTY STATUS OF BENEFICIARIES AFFECTED BY THE WINDFALL ELIMINATION

PROVISION

Based on the most recent data available, approximately 3 percent of beneficiaries affected by the windfall elimination provision have incomes below 

the poverty level ($8,628 for aged individual in 2002 and $10,874 for aged 

couple). In contrast, 8.4 percent of all aged (age 65 or older) Social Security 

beneficiaries have incomes below the povery level.

14

Chairman COLLINS. Thank you. You mentioned the ‘‘earned 

right’’ feature of Social Security, but I think that is what is so frustrating to teachers and firefighters and police officers who have 

paid in personally into the system, worked for 10 years in the private sector, earned their benefits and can’t get the benefit—don’t 

get them. 

Ms. BARNHART. I certainly understand that. I think the thing 

that is a very difficult aspect of the WEP to explain, again, looking 

back at the comparability between individuals working in covered 

and non-covered employment, part-time in each of those or entirely 

covered employment—the Social Security program benefit, structure provides a different replacement rate depending on the lifetime amount of covered wages of the individual. 

For the low-income earner, the replacement rate is approximately 56 percent of pre-retirement income. For the average earner, it is around 42 percent and for the high-wage earner it is somewhere around 27 to 30 percent. So the issue here is if you have an 

individual who worked for 10 years in covered employment at, say, 

$60,000 a year, when we calculate the Social Security benefit, we 

do it over a 35-year work history. So we take that $60,000 for 10 

years and for the remainder of the years, we put zeroes in for all 

those years. 

So it presents in the benefit calculation a situation where that 

individual has a much lower lifetime earning. In other words, the 

$60,000 a year over 10 years gets averaged out over that 35-year 

time period and it appears that the individual worked for many 

years as a low-wage earner. If we had a person who worked in Social Security and had the equivalent lifetime earnings as the case 

that I just described, they would, in fact, be a low-wage earner, and 

therefore entitled to the progressivity of the replacement rate. 

I think this is really the dilemma, Madam Chairman, when we 

look at this in terms of how the Social Security benefit is structured and the effect that changing the WEP would have on the concern that low-wage workers receive a higher replacement rate than 

higher-wage workers do. 

Chairman COLLINS. But if you look at the CBO study about the 

impact of these two provisions, it seems that they disproportionately affect lower-income workers because of the way the formula 

works. Since, as you mentioned, Social Security is designed to replace more of the income for lower-income workers than higher-income workers, in a sense it already has a means test built in, in 

that it isn’t an equal benefit as far as the replacement of wages. 

That is why it seems that, at the very least, a first step ought 

to be to try to help those lower-income workers who are particularly hard hit by these provisions, because I really don’t think that 

Congress intended that. It was an attempt, as you said, to have equity in the system, to make sure the dual eligibles were not treated 

differently or more harshly than those with other pensions. But, in 

practice, it has created a lot of problems. 

Ms. BARNHART. I certainly understand, and I have read the testimony of the panelists who are going to follow me. 

Chairman COLLINS. I was going to ask you that. Good. I am glad 

you did. 

15

Ms. BARNHART. Yes, I absolutely did, last night. Let me just take 

this opportunity to say, if I may, in the situation that related to 

the overpayment, I read about that last night and met with my 

staff this morning and have asked them to look into that situation 

and find out the circumstances that created it. I will contact your 

office to let you know if that situation can be resolved in any way. 

Chairman COLLINS. I appreciate that. That was an issue that I 

was going to bring up to you. 

For those in the audience who haven’t read the testimony of the 

next panel, the President of the National Association of Retired 

Federal Employees brought to our attention the case of a 79-yearold widow who worked for the Veterans Administration, retired in 

1994. No one ever told her about the impact of these two provisions. As a consequence, she received both Social Security and her 

pension without an offset and has now been told that she owes 

more than $20,000. 

I want to tell you, Commissioner, that this is not uncommon, 

that my case workers in my six State offices deal with exactly this 

kind of overpayment case all the time. As you can imagine, it imposes a tremendous hardship on elderly people when they all of a 

sudden are presented with this huge bill because of an overpayment. 

I did want to ask you what the Social Security Administration’s 

general policy is in dealing with overpayments and whether there 

is any procedure for waiving or lessening them when it is clear it 

would impose a considerable financial hardship, and it is also clear 

that the individuals involved had no idea and were not at fault. 

Ms. BARNHART. Yes, let me say we do have procedures. First of 

all, the law would allow us technically to withhold the entire benefit check. We most times do not do that, particularly in cases 

where it is evident that the individual was not at fault and it certainly was an unintended situation. 

Generally what we do, first of all, is offer to sit down and negotiate and look at the person’s financial status and withhold a much 

smaller amount over time, so that we do not expect to be paid back 

immediately. We actually try to work with the individual to do 

something that will not financially penalize them even further. 

We are allowed to grant waivers, and there are special circumstances. I would be happy to provide a description of that waiver process for you for the record, if you would like. 

Chairman COLLINS. That would be helpful. 

The information follows:

INFORMATION PROVIDED BY MS. BARNHART 

The following outlines the Social Security Administration’s process for determining if an overpayment can be waived:

• The Social Security Act (Section 204(b)) provides that recovery of an overpayment can be waived if the person from whom we are seeking recovery is without fault in causing the overpayment and recovery would either defeat the 

purpose of title II of the Act or be against equity and good conscience.

• To make a fault/without fault finding, we consider all of the circumstances 

surrounding the overpayment in each case. We take into account any physical, mental, educational or linguistic limitations the person has. If the person 

caused or helped to cause the overpayment, he is found at fault. If he is 

blameless in the creation of the overpayment, he is without fault.

16

• To determine if recovery would defeat the purpose, we look at the person’s 

current financial condition, that is, his situation at the time the waiver decision is being made. Current financial information is defined as no more than 

1 year old when the waiver decision is made. Financial information must be 

provided to make a defeat the purpose determination.

• If a person does not wish to pursue the defeat the purpose criteria by providing current financial information, he may still pursue waiver by showing 

that recovery is against equity and good conscience. As defined by Social Security regulations, this means that the person changed his position for the 

worse or relinquished a valuable right because of reliance on a notice that a 

payment would be made or because of the overpayment itself. Financial circumstances are not material to a finding of against equity and good conscience.

• A decision by SSA regarding a request for waiver of an overpayment is an 

initial determination and a decision that is unfavorable to the beneficiary 

may be appealed through all levels of administrative appeals within SSA (i.e., 

reconsideration, hearing before an Administrative Law Judge, and review by 

the Appeals Council.) When all administrative appeals have been exhausted, 

the beneficiary may file a civil action with the appropriate United States District Court.

Ms. BARNHART. That is precisely what I have my staff looking 

into to see if this would be one of those cases where such a waiver 

might be appropriate. I would point out to you this is one of the 

reasons—the fact that this situation occurs is one of the reasons 

that the President’s budget includes the proposal I described in my 

testimony. Because we have situations where we don’t know 

whether a claimant is receiving a pension from non-covered work, 

even though our workers are trained to ask. I am sure that doesn’t 

happen a hundred percent of the time. Although we have very dedicated workers, there are a lot of things they must attend to when 

someone comes in to apply for retirement. 

By the same token, I am sure in some cases individuals don’t 

necessarily understand what that means, even if an attempt is 

made to describe it, or they may not be receiving a pension at that 

time and the situation may change later. In fact, they may be eligible fully for Social Security at one point, but not for the other pension because of different rules, and so forth. 

That is one of the reasons that we wanted to have the ability to 

do independent verification so that we wouldn’t have people in 

these situations where they receive Social Security and then get 

this overpayment notice. It really is an administrative issue for us. 

Chairman COLLINS. One of the challenges in tackling this problem is the cost. You mentioned in your statement that if we enacted the various legislative proposals, the Social Security trust 

fund would be depleted a year earlier. I have two questions in that 

regard. 

One is, either today or for the record, could you give us an estimate of the Feinstein-Collins bill and the Mikulski-Collins bill so 

that we do have a sense of what we are dealing with? 

Second, is the administration open to working on this issue to try 

to come up with some sort of approach that would lessen the burden particularly for lower-income retirees? I realize that, much as 

I would like to see outright repeal, that may not be feasible this 

year or next year, but surely we can start down the path of remedying some of the problems that are described by our next panel 

of witnesses. 

17

Ms. BARNHART. I do have some estimates that were developed by 

our independent chief actuary’s office. First of all, to eliminate the 

GPO and the WEP, as the Feinstein-Collins legislation provides, it 

would cost $22.5 billion over 5 years and $61.9 billion over 10 

years. In the Mikulski-Collins legislation, which modifies the GPO, 

as has been described earlier, the cost is estimated at $10.1 billion 

over 10 years. 

So we are talking, if we look at it from a 10-year perspective, for either the Mikulski or Feinstein bills, about a range of $10 to $60 

billion-plus in cost. 

Chairman COLLINS. Thank you. And not to press you, but will 

the administration continue to work with us to try to see if there 

is a way that we can start to remedy this? 

Ms. BARNHART. I wrote that down because I knew I would forget 

the second part of that question. I have my 35th high school reunion coming up. 

Certainly, we at the Social Security Administration would be 

very happy to work with you and the Committee and any other 

Members in terms of providing any analysis that we can on the effect that various provisions would have. I would say this, that due 

to the cost, and certainly if we look at the $10 to $60 billion-plus, 

and then looking at the dual entitlement—the cost of eliminating 

the dual entitlement should be somewhere around $500 billion, not 

that you suggested that, but if we get into those kinds of equity 

issues, I would say that I do think that one could make a real case 

for waiting until the entire Social Security program has been 

strengthened and protected to entertain these kinds of costly 

changes. 

As you know, and as we have discussed and alluded to in the 

hearing earlier, it is projected by our actuaries that the Social Security trust fund will move into a negative cash flow basis in 2017 

and that the trust funds will be entirely exhausted by 2042, which, 

absent any action, would necessitate that only 73 percent of benefits would be able to be paid. So it would be my hope that as we 

undertake changes to benefits—and clearly this would affect the 

benefit program into the future—that it could be done in that context. 

Chairman COLLINS. I want to thank you very much for your testimony today which has been very helpful to the Committee as we 

consider this important issue. Your testimony was very helpful in 

giving us a better understanding of how it works, and I salute you 

for your efforts on the education front to make sure that people understand the impact. 

I still feel very strongly that we do need to act, that we can’t wait 

on this issue, because every day it creates a hardship for people 

who are struggling to live on their retirement income. Every day, 

it discourages another would-be teacher, firefighter, Federal employee, or police officer from going into public sector employment. 

So I hope we can come up with a creative approach and work together to see if we can remedy this problem, and I very much appreciate your being here today. 

Ms. BARNHART. Thank you, Madam Chairman, and in that spirit 

of cooperation that you have just expressed, let me say that we 

stand ready, as I say, to provide any information and analysis, and 

18

to answer any questions for the record you or your colleagues may 

have, and certainly any questions that arise as a result of the 

panel that is going to follow me. 

Chairman COLLINS. Thank you very much. 

Ms. BARNHART. Thank you. 

Chairman COLLINS. We now will call forward our next panel. I 

would like to extend a special welcome to Julia Worcester, of Columbia, Maine. Ms. Worcester worked for 20 years in Social Security-covered employment before deciding at the age of 49 to go back 

to school to pursue her dream of becoming a teacher. 

I think it is a wonderful story, Ms. Worcester, and I admire you 

so much for doing that. 

After teaching full-time for 15 years, Ms. Worcester retired and 

now her monthly income is substantially reduced because of the 

government pension offset and the windfall elimination provisions. 

As a result, she is still substitute-teaching to make ends meet. 

Again, Ms. Worcester, we very much appreciate your willingness 

to share your story with the Committee today. I want to mention 

that you were brought to our attention by Sue Shaw, who has been 

a very strong advocate in the State of Maine on this issue, and she 

will be submitting some testimony which, without objection, we will 

enter into the record as well. 

The Committee is also delighted to welcome Charles Fallis, who 

will testify on behalf of the 400,000 members of the National Association of Retired Federal Employees. Since 1921, the association 

has focused on improving the retirement benefits of Federal retirees, employees, and their families. I know that elimination of both 

the GPO and the WEP provisions are top legislative priorities for 

the National Association of Retired Federal Employees, and the 

Committee thanks you for your work on this issue and for being 

here today. 

Finally, I would like to welcome to the Committee Kenneth 

Rocks, the National Vice President of the Fraternal Order of Police. 

Due to the physical demands of their jobs and the number of law 

enforcement officers who augment their income with second and 

third jobs, law enforcement officers are particularly affected by the 

provisions we are discussing today. 

In fact, Mr. Rocks, my most recent constituent to contact me on 

this issue stopped me at a convenience store in Bangor, Maine. He 

was a Bangor police lieutenant who told me that he had been working two jobs for years to try to ensure that he would have sufficient 

retirement income and had only just learned of what the impact of 

these provisions would be on his retirement as well. So we very 

much appreciate your being here today on behalf of your members. 

Ms. Worcester, because you are from Maine, we are going to 

start with you on this panel today. 

Ms. WORCESTER. Thank you, ma’am. It is nice to know influential people. 

Chairman COLLINS. Thank you. 

19

1The prepared statement of Ms. Worcester appears in the Appendix on page 42. 

TESTIMONY OF JULIA WORCESTER,1 COLUMBIA, MAINE 

Ms. WORCESTER. Good morning, Senators. Thank you for the 

chance to tell you how the changes in the way Social Security retirement benefits are calculated for public service employees has affected me. 

I am 73 years old and my husband of 54 years, Oswald, will be 

88 in December. I am one of seven children, all born in Downeast 

Maine. I was not raised to expect something for nothing. I live a 

modest life, I work hard, and I do not spend time fretting about 

things I cannot change, but this law has had a tremendous effect 

on me. 

I was fortunate to be raised in a family that respected education. 

My father insisted on good grammar and corrected our speech 

when we strayed. My mother’s family was college-educated and my 

mother went to what was then Machias Normal School in the 

1920’s and received a lifetime teaching certificate, which she updated toward the end of her career by taking courses by television. 

She taught school for many years and retired in the mid-1960’s. 

She was able to collect both Social Security retirement, earned 

from work she did during summers and after she retired, and her 

State of Maine pension from her teaching. She was not bad off. 

I have worked 20 years outside of my teaching career. As a 

young woman, I worked in a herring cannery factory and in a 

string bean factory. While Oswald and I had two young children, 

a son and a daughter, I persuaded him that we should move to 

Connecticut, since the school system in our town at that time was 

very small. There was a two-teacher grade school and a two-teacher high school. 

We lived in Branford, Connecticut, for 13 years, and Oswald 

worked in a stone quarry. At first, I waitressed full-time so that 

I could work nights when Oswald could be home with the children. 

When the children were teenagers, I found a day job in a factory, 

as I discovered that teenagers needed their mother paying close attention to where they were in the evening and their father was not 

very good at saying no. 

In 1968, when I was 37, we had another child. We decided to 

come home to Maine when she was 6 years old. The other children 

were out of school and on their own, and even though we had another young child, the school system had improved greatly. My parents were getting older and my husband’s brothers and sisters 

were also reaching elder years, and it was time for us to come 

home. 

When we got back to Columbia, I worked part-time for a while. 

Oswald was approaching retirement age, as he is 15 years older 

than I, and I thought seriously about our future. I decided to become a teacher, like my mother. It was something I always wanted 

to do. So at the age of 49, with the help of Pell grants and federally-subsidized loans, I started at the University of Maine, in 

Machias. I went to school year-round and completed my degree in 

3 years, completing the degree in December 1982. I did some longterm substitute teaching right away and was hired full-time in the 

20

fall of 1983, which turned out to be an ominous year for my retirement benefits, but I loved it. 

This is where the problem comes in: Four or 5 years after I started teaching, I went to a seminar put on by Horace Mann and 

learned of the new law that meant all those years of working in 

factories and waitressing were not going to count for much in my 

retirement years, and that I was not even going to be able to collect 

much on Oswald’s work record if that should be the case. That was 

when I learned that the life I had carefully planned wasn’t going 

to work out quite the way I thought it was going to. I was nearly 

60 years old, much too late to start over with a new plan. 

With my working, we are all right. Last year, I subbed 125 days 

out of the 175-day school year. The year before that, I substitutetaught 140 days out of the 175 days. It certainly makes a big difference in our income. We are not big spenders. Oswald is a bear 

about debts. We have long since paid off our mortgage and we don’t 

charge things on credit cards. 

But I have to face facts. I will not be able to teach forever and 

Oswald is getting on in years. I should have what I rightfully 

earned. My family is a family that has accepted life as it has been 

handed. You do what you can with what you have. I am not bitter 

about the situation. I just believe I have earned this benefit 

through years of honest work and I should be able to receive it. 

I also have an addendum of my monthly income, if you would 

like me to continue with that. 

Chairman COLLINS. Certainly. 

Ms. WORCESTER. My monthly retirement is $814. I pay $418 a 

month for companion plan insurance for my husband and I out of 

my retirement, which is a necessity in this day and age. I receive 

from Social Security $107 a month, which is the 40-percent area, 

and my husband receives $716 a month, and both of those Social 

Security benefits are calculated after the Part B Medicare is taken 

out. 

I thank you. 

Chairman COLLINS. Thank you very much for your testimony. 

You so embody the Maine values of independence, hard work, 

thrift, and integrity, and I really appreciate your being here today 

to help us put a human face on what is a serious problem not only 

for you, but for so many others. So I appreciate your speaking out 

and your willingness to be here. 

For all of those years that you worked so hard waitressing and 

in other jobs, to receive only $107 a month in Social Security after 

paying into the system for so long seems just so unfair to me. 

Ms. WORCESTER. Well, it is kind of like an insurance policy that 

the company is not paying off on. 

Chairman COLLINS. That is a good way to put it, and yet you 

paid the premiums—i.e. payroll taxes—year after year, as did your 

employer, too. So thank you for that testimony. 

Mr. Fallis, can you beat that? [Laughter.] 

21

1The prepared statement of Mr. Fallis appears in the Appendix on page 46. 

TESTIMONY OF CHARLES L. FALLIS,1 NATIONAL PRESIDENT, 

NATIONAL ASSOCIATION OF RETIRED FEDERAL EMPLOYEES 

Mr. FALLIS. I can’t beat that. 

Madam Chairwoman, I am Charles Fallis, President of NARFE, 

the National Association of Retired Federal Employees. I am testifying today on behalf of 400,000 retirees, employees, spouses, and 

survivors who are NARFE members. 

I would like to commend you, Senator Collins, for paving the way 

and holding the first ever Senate hearing on GPO and WEP. These 

atrocious laws have for many years destroyed the quality of life of 

a significant number of our members. We can’t afford to wait any 

longer for corrective action to repeal or reform these onerous offsets—corrective action, by the way, that has a lot of support in the 

108th Congress in the House and the Senate. 

NARFE has worked for repeal of GPO and WEP from the very 

beginning, well over 20 years. Throughout the course of those 

years, the pernicious provisions of these two offsets have denied 

many thousands of our older members, particularly women, of the 

economic dignity that they thought they would have in retirement. 

So I appreciate your invitation to come here today. I humbly ask 

for this Committee’s assistance in the repeal of GPO and WEP, and 

I reiterate NARFE’s continuing support for changes that would restore earned benefits to women and other deserving retirees. 

The GPO law targets government retirees who were first eligible 

to retire after December 1982, preventing them from collecting Social Security benefits based on their spouse’s work record while at 

the same time they are collecting government annuities based on 

their own work. This law requires that two-thirds of a non-exempt 

public sector retiree’s annuity must be used to offset whatever Social Security benefits are payable to him or her as a spouse, widow, 

widower, or survivor. 

By all accounts, this two-thirds offset against Social Security income is an arbitrary figure and, as such, we believe it should be 

reexamined. Of all the affected GPO beneficiaries, about 80 percent 

are fully offset, which translates into no benefits at all. I believe 

it is important to recognize, also, that almost 70 percent of those 

affected are low-income women, many of whom exist either in or 

on the fringes of poverty. 

Turning to WEP, current law greatly reduces the earned Social 

Security benefit of a retired or disabled worker who also receives 

a public sector annuity based on his or her own earnings. It applies 

to anyone who becomes 62 or disabled after 1985 and becomes eligible for a government annuity after 1985. This windfall reduction 

can reduce the worker’s earned monthly Social Security income by 

up to $303. 

Madam Chairwoman and Members of this Committee, I have 

stated before that the harshness of GPO and WEP as they exist 

today causes both fears and tears among thousands of older retirees. They fear for their financial survival and their tears come from 

deep frustration that Congress, despite widespread congressional 

support to do so, has not acted to ameliorate their suffering. 

22

1The information referred to appears in the Appendix on page 59. 

There are several bills pending before the Senate today that 

would offer relief to hundreds of thousands of former teachers, policemen, firefighters, cafeteria workers, postal workers, VA nurses, 

Social Security employees, and others who work long and hard for 

their benefits. There are 40 Senators of this 108th Congress, including you, Madam Chairwoman and several Members of this 

Committee, who have indicated their support for a change in GPO 

and WEP. They have cosponsored one or more of the pending bills 

introduced by Senator Feinstein and Senator Mikulski. We applaud 

you and we thank all of you for your continuing efforts to change 

or eliminate these Social Security offsets. 

I would like to share with you today a sad and compelling account of a situation concerning a NARFE member who contacted 

us early last week and described the details of her case. This 

NARFE member is 79 years old and is widowed. We have received 

documentation substantiating the facts in her case and, with that 

member’s permission and upon your request, Madam Chairwoman, 

we would provide the documents to you. 

Chairman COLLINS. Without objection, those documents will be 

part of the record.1

Mr. FALLIS. This unfortunate lady originally filed for divorced 

spousal benefits in 1989 while still working for the Veterans Administration. Her divorced spouse died in 1991, thus converting her 

claim to an application for surviving divorced spousal benefits. She 

became sick in 1993 and subsequently retired in early 1994 and 

began receiving her government annuity soon thereafter. 

She asserts that no one ever explained GPO or WEP to her, or 

the effect these offsets would have on her annuity and finally on 

her total income. Upon her retirement, and with no thought that 

retribution would follow, she began receiving both her government 

pension and Social Security survivor benefits. 

Then, in July 1997, this very unlucky lady received a letter from 

Social Security requesting repayment of $20,737 because of an erroneous overpayment. It had been determined belatedly, they said, 

that she was not exempt from GPO. She began an immediate appeals process that has been denied at every stage, culminating in 

a very recent final denial from an administrative law judge in Chicago. 

Madam Chairwoman, it is clear that this elderly lady with a 

meager pension from the VA of only $752 a month has no financial 

means of repaying this tremendous amount of money, money that 

she had no idea that she was not entitled to. Hers is not the only 

case such as this. There have been many, but this is a recent one 

and it is one of the worst that we have seen. But there are thousands of others in this same situation. 

Senator Collins, over the past two decades we have received 

thousands of letters from NARFE members, from Maine and elsewhere, describing in detail the anguish and economic hardships 

they experience every day because of GPO and WEP. For hundreds 

of thousands of Federal, State, and local government retirees, repeal of both of these offsets would ease or eliminate the devastating 

23

1The prepared statement of Mr. Rocks appears in the Appendix on page 52. 

financial burdens they endure because of the effects of these onerous laws. 

Social Security Administration actuaries have determined that 

repeal of GPO and WEP would increase the size of the OASDI actuarial deficit by an amount estimated at .11 percent of taxable 

payroll. Now, the amount is not negligible, of course, but returning 

this income to long-suffering and deserving retirees would help restore their financial independence, provide them with increased 

purchasing power, and return to them a measure of self-esteem 

and economic dignity that was taken from them over 20 years ago 

with the enactment of this pair of insidious laws. 

Senator Collins, your hearing advisory today says, ‘‘The individuals affected by GPO and WEP are individuals who are eligible for 

Federal, State, or local pensions from work that was not covered 

by Social Security.’’ Yes, these affected individuals’ work was not 

covered by Social Security, but they and/or their spouses worked in 

other jobs outside of the government that were covered long enough 

to make them eligible for Social Security benefits. But they still are 

being denied unfairly the Social Security benefits to which they are 

entitled and they still are being punished for having worked another full-time or part-time job in a different venue. 

I want to thank and commend you, Madam Chairwoman and 

Members of this Committee, for recognizing the need for change in 

GPO and WEP, and for addressing that need in this hearing today. 

I ask that you convey the urgency of this need to your colleagues 

on the Senate Finance Committee. Please ask them to recognize 

the significance of these issues, as well, so that we can get a bill 

out of the Senate, passed in the House, and on to the President’s 

desk for his signature, a bill that would at long last allow Federal, 

State, and local government retirees in this country some relief 

from these terrible offsets. 

Finally, on behalf of the 400,000 members of NARFE, I commit 

to you today that we stand ready to work with you and the Members of the Senate for the expeditious resolution of these issues. I 

thank you. 

Chairman COLLINS. Thank you very much for your excellent testimony. Mr. Rocks, we are pleased to welcome you here today as 

well. 

TESTIMONY OF KENNETH ROCKS,1 NATIONAL VICE 

PRESIDENT, FRATERNAL ORDER OF POLICE 

Mr. ROCKS. Good morning, Madam Chairman. My name is Kenneth Rocks and I am a Philadelphia police officer and the Vice 

President of the National Fraternal Order of Police, the largest law 

enforcement labor organization in the United States, representing 

more than 310,000 rank-and-file officers in every region of the 

country. 

I am here this morning at the request of Chuck Canterbury, National President of the Fraternal Order of Police, to share with you 

the views of the members of the Fraternal Order of Police on the 

windfall elimination provision and the government pension offset 

provisions in current Social Security law. 

24

The Fraternal Order of Police has designated the repeal of the 

windfall elimination provision and the government pension offset 

as one of its top legislative priorities, and we strongly advocate the 

passage of S. 349, the Social Security Fairness Act. The Social Security Fairness Act, introduced by Senator Dianne Feinstein, would 

repeal both the windfall elimination provision and government pension offset. This bill already has 23 cosponsors, drawing strong support from both sides of the aisle. 

It is our hope that Congress will take a serious look at the manifest unfairness of the windfall elimination provision and the government pension offset, and act to correct them by passing this bill. 

Ultimately, this legislation is about fairness to the State and local 

employees who paid for and ought to receive their Social Security 

benefits. 

Let me begin by explaining the impact of the windfall elimination provision on retired police officers. Simply put, law enforcement officers who serve communities which are not included in the 

Social Security system may lose up to 60 percent of the Social Security benefits to which they are entitled by virtue of secondary or 

post-retirement employment which required them to pay into the 

Social Security system. This 60 percent is a lot of money, especially 

when you consider the officer and his family were likely counting 

on that benefit when they planned retirement. 

The FOP contends that this provision has a disparate impact on 

law enforcement officers for several reasons. First of all, law enforcement officers retire earlier than many other professions. 

Owing to the physical demands of the job, a law enforcement officer 

is likely to retire between the ages of 45 and 60. 

Second, after 20 or 25 years on the job, many law enforcement 

officers are likely to begin second careers and hold jobs that do pay 

into the Social Security system. Even more officers are likely to 

moonlight and to hold second or third jobs throughout their law enforcement careers in order to make ends meet. 

This creates an unjust situation that too many of our members 

find themselves in. They are entitled to a State and local retirement benefit because they worked 20 or more years keeping their 

streets and neighborhoods safe, and also worked a job or jobs in 

which they paid into Social Security, entitling them to a benefit as 

well. However, because of the windfall elimination provision, if 

their second career resulted in less than 20 years of substantial 

earnings, upon reaching the age they are eligible to collect Social 

Security they will discover that they lose 60 percent of the benefit 

for which they were taxed. 

Actuarily speaking, I doubt many officers will live long enough 

to break even—that is, to collect the money they paid into the system—let alone receive any windfall. These men and women earned 

their State or local retirement benefit as public employees and they 

paid Social Security taxes while employed in the private sector. 

How is this a windfall? 

I think it is clear that Congress did not intend to reduce the benefits of hard-working Americans who choose to serve their States 

and communities as public employees and then went on to have 

second careers or worked second jobs to make ends meet. When the 

windfall elimination provision was enacted in 1983, it was part of 

25

a large reform package designed to shore up the financing of the 

Social Security system. 

The ostensible purpose was to remove a windfall for persons who 

spent 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 benefits. However, we 

can now clearly see that the windfall elimination provision was a 

benefit cut designated to squeeze a few more dollars out of a system facing financial crisis. The fallout has had a profoundly negative impact on low-paid public employees outside the Social Security system, like law enforcement officers. 

This is a matter of fairness. The arbitrary formula in current 

law, when applied, does not eliminate windfalls because of its regressive nature. The reduction is only applied to the first bracket 

of the benefit formula and causes a relatively larger reduction in 

benefits to low-paid workers. It also over-penalizes low-paid workers with short careers or, like many law enforcement officers, those 

whose careers are split inside and outside the Social Security system. Simply put, this provision has not eliminated a windfall for 

any individuals who did not earn it. It has resulted in a windfall 

for the Federal Government at the expense of public employees. 

Let me now discuss the aspects of the bill which would repeal the 

government pension offset. Like the windfall elimination provision, 

the government pension offset was adopted in 1983 to shore up the 

finances of the Social Security trust fund. This provision reduces 

the surviving spouse’s benefit from Social Security by two-thirds of 

the monthly amount received by the government pension. 

For example, the spouse of a retired law enforcement officer who 

at the time of his or her death was collecting a government pension 

of $1,200 would be eligible to collect a surviving spouse benefit of 

$600 from Social Security. Two-thirds of $1,200 is $800, which is 

greater than the spouse’s benefit of $600. Thus, under the law, the 

spouse is unable to collect a single dime of it. If the spouse’s benefit 

were $900, only $100 can be collected because $800 would be offset 

by the officer’s government pension. 

In 9 out of 10 cases, this completely eliminates the spousal benefit, even though the covered spouse paid Social Security taxes for 

many years thereby earning the right to these benefits. It is estimated that approximately 349,000 surviving spouses of State and 

local employees have been unfairly affected by the government pension offset. 

The present system creates a tremendous inequity in the distribution of Social Security benefits. The standard for this narrow 

class of individuals, retired public employees who are surviving 

spouses of retirees covered by Social Security, is inconsistent with 

the overall provisions of the Social Security Act and does not apply 

to persons receiving private pension benefits. This imbalance exists 

even though Congress, through ERISA standards and tax code provisions, has more direct influence over private employers than public employers. Clearly, this is an issue that Congress must address. 

Previous Congresses sought to save money for the Social Security 

system by cutting benefits earned by State and local employees. 

The windfall elimination provision and government offset pension 

provision do not eliminate a windfall for workers. Rather, they 

26

have provided a windfall for the Federal Government at the expense of public employees. This is not right and it is not fair. This 

Congress has a chance to set things right by passing S. 349. 

Madam Chairman, I want to thank you and the Members of this 

distinguished Committee for the chance to appear before you today. 

It is my hope that this hearing will bring greater attention to the 

issue and increase the chances that S. 349, the Social Security 

Fairness Act, will be considered in this Congress. 

Thank you for inviting me to testify before you this morning and 

I would be pleased to answer any questions that you may have. 

Chairman COLLINS. Thank you very much, Mr. Rocks. You have 

very ably represented your members and we appreciate your being 

here. 

I am going to start with a question for Mr. Fallis and Mr. Rocks 

and then go back to Ms. Worcester. 

You heard Ms. Worcester testify that she was not aware of the 

windfall elimination provisions or the government pension offset 

until she had been teaching for a number of years. At that point 

I think she testified she was about age 60 and it was a little hard 

to come up with a new plan, in her words. 

Do you think that her situation is unusual, or have you found 

with NARFE members that there is also a lack of information and 

that a lot of your members, retired Federal employees, are also 

shocked to learn of the impact? 

Mr. FALLIS. Yes, too many of them are unaware. I think we probably have a better communications system than in other areas. I 

think school teachers have been especially hard hit. I have two sisters-in-law in Florida who, until they retired and were hit with 

GPO and WEP, had never heard of these two terrible laws. So, yes, 

there is a problem here. 

If I might say so, I think GPO and WEP were enacted in a 

stealthy kind of way. The GPO first passed in 1977 and was not 

implemented until January 1983, thus sort of low-keying the whole 

thing in my mind. The arbitrariness of these two bills is really 

striking. In my own situation, I was eligible first to retire in 1982, 

in September, and if you come right on up to WEP, if you were eligible to retire on December 31, 1985, you were OK. But if you were 

eligible to retire on January 1, 1986, 1 day later, the sky fell. That 

is arbitrary. You know, what happened to equal protection of the 

law here, while one is victimized and the other escapes harm? This 

sort of thing is terribly unfair. 

Chairman COLLINS. I think you are right that there was not a 

lot of discussion about what the impact would be, as we have gone 

back and studied this issue. I think these changes caught a lot of 

public employees by surprise, particularly because it was such a 

dramatic change without a lot of discussion and debate. 

Mr. Rocks, are some of your members surprised to learn about 

the impact of these provisions when they go to retire and file for 

Social Security benefits? 

Mr. ROCKS. Yes. Much of it, Senator, is usually the lack of information at the local Social Security offices to be able to articulate 

to our members the adverse impact of the government pension offset and the windfall elimination provision. Many of the counselors 

in Social Security clearly don’t understand the application of the 

27

law, because our members will go in there and represent that they 

worked for 20 years and when they retired from their police departments, they continued to work in other secondary jobs, performing 

security work in their communities. 

So they felt that because they worked a substantial amount of 

time, but unfortunately less than 30 years of substantial earnings, 

and therefore they were adversely impacted by the windfall elimination provision. It clearly is a shock when you have planned for 

something because in many cases, as a previous speaker said, you 

will work with another officer who is eligible to retire on December 

31, 1985, and this officer next to him was eligible to retire on January 3, 1986. One was offset and affected by the windfall elimination 

and the other wasn’t, and therein is the confusion. 

If you got it, then I must be able to get it, and therefore the confusion actually came into the local Social Security offices. And it is 

still present, with the information being requested not really being 

articulated in a manner which our members would understand it. 

Chairman COLLINS. Ms. Worcester, you decided to become a 

teacher relatively late in life, at age 49. I suspect, though I would 

be interested in your views on this, that you probably would have 

gone into teaching regardless because you enjoyed it so much. But 

do you think that had you known of the impact that it might have 

made a difference in your career choices? 

Ms. WORCESTER. Not in my case, I don’t think, the circumstances 

being what they were and it being something I always wanted to 

do and something I could do at that age. It was definitely a boost 

financially to be able to go into the teaching profession where I 

was, and because of several other considerations concerning my 

family, it probably would have still happened. 

Chairman COLLINS. Do you think that these provisions discourage other people from changing professions later in life and deciding to become teachers at a time when we really need teachers? 

Ms. WORCESTER. I am sure it will. As a matter of fact, a young 

lady who graduated in my graduating class and ended up teaching 

in the same school I taught in worked 14 years under the teaching 

profession and then chose to leave and withdraw her State retirement, invest it privately, and seek other employment, mainly because of this law. She felt, as a young person, she had to make a 

decision whether to continue or to change professions and she 

chose to change professions. 

Chairman COLLINS. I hear that, as well, and I think that is one 

of the problems. In addition to creating hardship and inequities for 

the individuals who are affected, the provisions also discourage 

people from going into careers like teaching, like police work, like 

firefighters, like Federal employees, where we really need talented 

people to be willing to enter these careers. So I think that disincentive is an issue as well. 

Ms. WORCESTER. There is one other thing that I might add which 

has been brought up by these other gentlemen. My lifetime 

girlfriend retired last year, and because of all I had been through 

and all of the publicity, because of Sue Shaw’s enthusiasm, she understood this a little better than anybody that might not have had 

that advantage. 

28

It required four telephone calls and dogged pursuit to convince 

the Social Security Administration that they were overpaying her. 

When her Social Security checks started coming, she put them in 

a separate account because she knew she was being grossly overpaid, and it took her almost 9 months to sort this out and to convince somebody to do the work that needed to be done to settle the 

issue and come up with the right sums. 

Because she had put her Social Security checks in a separate account, she ended up, of course, just writing a check and sending it 

back. But had she not known that this existed, she is one of those 

people that would have been eventually in this sort of a repayment 

situation. 

Chairman COLLINS. I am so glad that you mentioned that because I know the case workers in my State offices deal with overpayments all the time, and very few people would have the knowledge that your friend did to actually argue the case with Social 

Security and withhold the money. And then they get into terrible 

problems, just like the case that Mr. Fallis described to us. 

I am going to pass on all of your comments to the Social Security 

Administration about people still not being aware and the local 

workers not necessarily being fully aware of how these complex 

laws work. I think that is an excellent point. 

Mr. Fallis, I would like to ask you to respond to the argument 

that the commissioner made that if we correct this problem, we create other inequities. I disagree with her about that, but do you or 

Mr. Rocks have any comments about the argument regarding dualeligibles and that if we correct the pension offset and the windfall 

elimination provisions that we will create an inequity for the dualeligibles? 

Mr. FALLIS. Well, I disagree with some of the things she said, as 

well. I think there were unintended consequences of both these 

laws when they were passed and, as I say, the chickens are coming 

home to roost now and have been for some time. 

I think the truly outrageous and bizarre twist in all of this is, 

with WEP, those people retire and find out that they have been penalized to the point that they have to go back to work and are 

working in a Social Security-covered job and are paying premiums 

into Social Security with no hope of ever getting any kind of return 

because WEP has eliminated it. 

Of course, the Social Security payments were designed to favor 

low-income people. But you take a person who takes a fairly lowincome job with the Federal Government or any public sector job 

and it is totally objective; they get no consideration because of the 

low wage, and so forth, in that retirement. And then this thing in 

Social Security, which is designed to take care of them, comes back 

and hits them and takes it away, too. 

So this individual is penalized, even though we have in our system a provision to take care of those low-income people. They get 

no benefits from their government job or their public sector job and 

because of WEP, they get none from Social Security either. So it 

is a double whammy here and it is so atrocious that I think these 

other considerations pale in comparison. 

Chairman COLLINS. I want to clarify that I understand that the 

commissioner is correct in saying why the Act was passed in the 

29

first place, but I think the impact has not been what was anticipated. 

Mr. Rocks, do you have any comments on that? 

Mr. ROCKS. I think from an actuarial standpoint, the commissioner’s argument was very sound in that with the members I represent, they may retire early due to the rigors of the job, the rotation of shift work, working 24 hours, 7 days a week, which is the 

case in some of our departments, and the stressful nature of the 

law enforcement profession. 

But our members do not live based on the actuarial standards 

set down by the Social Security Administration. So in many cases, 

we will not, like I said in my testimony, reap the benefits of even 

the monies that we put in, to recoup them. So I don’t think from 

looking at the actual dollar amounts from the actuarial standards 

that argument can carve out certain groups. You don’t have any 

basis for an argument. It is easy to throw around billion-dollar figures, but when you get into reality the actuarial tables of the life 

expectancy of law enforcement officers, you will find it significantly 

reduces and would reduce that figure. 

Chairman COLLINS. Thank you. I want to thank all of you for 

testifying. This is the first Senate hearing to review the impact of 

these two provisions. It is my intention to share our hearing record 

with every single member of the Finance Committee, in the hope 

of giving them the information that they need. 

They deal with so many different issues, but I feel this is a very 

important issue. It is important to school teachers, it is important 

to public employees, it is important to our public safety officers, 

and I am going to continue my efforts to get this law changed. To 

me, this is a matter of simple fairness. If you are paying into the 

Social Security system, if your spouse had paid into the Social Security system, if you have earned those benefits, then as Ms. 

Worcester said, it is like an insurance policy. And if you are paying 

in the premiums, when the time comes to collect, you should be 

able to do so when you have met the other requirements and otherwise would be eligible. 

So I thank you for giving us a better understanding today. I 

want to thank all of our witnesses and I want to assure you of my 

personal commitment to keep working to rectify this inequity. I 

also want to thank my staff, which worked very hard on this hearing and all others who have contributed to it. 

The hearing record will remain open for the submission of additional materials and statements for 15 days, and a special thank 

you to my constituent, Ms. Worcester, who came from Maine today. 

Thank you. 

[Applause.] 

You do deserve that applause. We don’t usually allow that, but 

this is well deserved. Thank you. 

This hearing is now adjourned. 

[Whereupon, at 11:22 a.m., the Committee was adjourned.] 

(31)

A P P E N D I X 

PREPARED STATEMENT OF SENATOR LAUTENBERG 

Madam Chairman, I believe the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) are good examples of the law of intended consequences. 

While these provisions were designed to shore up the financing of Social Security 

they have instead hurt close to one million public service employees. 

I have always supported strengthening Social Security and ensuring the programs 

fiscal solvency. However, I support the repeal of both the GPO and the WEP, and 

I have cosponsored Senator Feinstein’s bill that will do just that. 

We have an Administration that has its priorities way off the mark. The President is giving away huge tax cuts to the wealthy and neglecting our teachers, our 

police, our firefighters, and our Federal employees—people who we rely upon more 

and more in the post-September 11 world. 

These are not individuals who are counting on stock options or extremely generous corporate retirement plans. They are public servants—individuals who dedicated their careers to making our communities better. 

The current policies penalize those employees least able to afford it. I believe we 

need to fix this inequity. 

I look forward to hearing the views of all our witnesses and making progress to 

identify ways to improve Social Security’s fairness for all workers. 

Thanks you, Madam Chairman.

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