SOCIAL SECURITY

Office of the Chief Actuary

July 24, 2019 

The Honorable Kevin Brady 

House of Representatives 

Washington, D.C. 20515 

Dear Ranking Member Brady:

I am writing in response to your request for our estimate of the financial effects on the Social 

Security Trust Funds of the “Equal Treatment of Public Servants Act of 2019,” which you 

introduced today. This Bill would generally replace the windfall elimination provision (WEP) 

with a new formula that you have referred to as the “Public Servant Fairness Formula” (PSF) 

for individuals becoming eligible for OASDI benefits in 2061 or later. Individuals becoming 

eligible after 2021, but before 2061, would receive the higher of their benefit using the PSF and 

their benefit using the current-law WEP. The proposal would also provide for a rebate payment 

starting in 2022 for individuals affected by the current WEP. Our analysis and estimates 

provided for this proposal reflect the efforts of many in the Office of the Chief Actuary, but 

particularly Jacqueline Walsh, Chris Chaplain, Daniel Nickerson, and Karen Glenn. 

The balance of this letter provides our understanding of the intent of the sections of the Bill 

with direct effects on Social Security program cost, followed by estimates of the OASDI 

program cost effects assuming enactment of the Bill. Over the period 2020 through 2029, we 

estimate the net program cost for the OASDI program would be increased by about $23.1 

billion. We estimate that enactment of the Bill would have no significant effect on the OASDI 

actuarial balance over the 75-year projection period as a whole. All estimates reflect the 

intermediate assumptions of the 2019 Trustees Report. 

Bill Specifications

The proposal would, ultimately, replace the current complex WEP with a more 

straightforward approach. The PSF provides retired-worker and disabled-worker 

beneficiaries (and their dependents) with a modified benefit computed reflecting all past 

earnings (including earnings in employment that was not covered under the OASDI program 

in our records starting with 1978), then multiplied by the ratio of the average indexed 

monthly earnings (AIME) computed without non-covered earnings to a modified average 

indexed monthly earnings (AIME′) that includes both covered and non-covered earnings in 

our records. As with OASDI covered earnings, potential beneficiaries would be asked to 

review the non-covered earnings we have in our records so that they would have the 

opportunity to make corrections. 
Page 2 – The Honorable Kevin Brady

Another way to describe the new PSF approach is that beneficiaries will receive a benefit 

that reflects the replacement rate applicable for a worker with the same career earnings, 

where all earnings had been covered. Effectively, the PSF formula would compute the 

worker’s PIA as the ratio of PIA based on all earnings (covered and non-covered) to the 

AIME′ computed based on all earnings, multiplied by the AIME based on covered earnings 

only. These two ways of describing the new approach are mathematically equivalent.

Individuals who become eligible for retired-worker and disabled-worker benefits after 2021, 

but before 2061, who have non-covered earnings (earnings that were not covered under the 

OASDI program), would have a benefit level computed under the current WEP provision, 

and in addition a benefit level computed under the new PSF provision. The benefit level 

provided would be the higher of these two computations. 

Individuals who become eligible for retired-worker and disabled-worker benefits in 2061 

or later, would have their benefit level computed using new PSF provision. Importantly, 

for such workers, the proposal would eliminate the requirement for receipt of a pension 

based on earnings not covered by the OASDI program in order to apply the new PSF. 

However, because SSA does not have foreign earnings in workers’ records, the PSF 

would not apply for disabled-worker and retired-worker beneficiaries who are entitled to 

receive periodic payments based on foreign employment not covered under a totalization 

agreement, regardless of when they become eligible for benefits. Instead, the current 

WEP would be utilized for such beneficiaries, with regard to any periodic payments 

received based on the foreign and/or any domestic non-covered earnings.

Retired or disabled workers and their auxiliary beneficiaries who become eligible before 

January 2022 or receive a foreign pension will receive a monthly “rebate payment” for each 

month they receive a Social Security benefit that is reduced by the current-law WEP, starting 

in January 2022. The amount of the rebate will be $100 for each month of benefit entitlement 

affected by the WEP in 2022 for retired-worker and disabled-worker beneficiaries, and will be 

$50 for each month of benefit entitlement affected by the WEP in 2022 for spouse and child 

auxiliary beneficiaries. The level of rebate amounts for months of entitlement affected by the 

WEP in years after 2022 will be increased by the annual cost of living adjustments.

The rebate amount would not be subject to benefit adjustments, such as for the GPO, RET, 

early/late claiming, and dual entitlement. Further specifications relating to the rebate include: 

(1) individuals whose benefits are offset (to zero) due to the government pension offset 

(GPO), retirement earnings test (RET), workers’ compensation (WC) offset, family 

maximum, etc. still receive a rebate; (2) if a worker’s benefit is suspended, then a spouse or 

child in receipt of an auxiliary benefit on the worker’s account would still receive the rebate; 

(3) individuals whose benefits are suspended due to incarceration or return to work would not 

receive the rebate; and (4) individuals with an outstanding overpayment would be eligible for 

the rebate but would have it withheld to help repay the overpayment.
Page 3 – The Honorable Kevin Brady

OASDI Program Cost Effects

The proposal will result in added program cost for workers newly eligible for an OASDI 

benefit after 2021 whose benefit amount would be reduced less by the PSF than by the WEP. 

However, because the PSF does not require receipt of a pension based on non-covered 

earnings, and eliminates most exemptions from adjustments based on non-covered earnings 

for workers becoming newly eligible for OASDI benefits after December 2060, our estimate 

reflects small benefit reductions from the PSF for a relatively large number of workers who 

would not be reduced by the WEP. The net OASDI program benefit costs are estimated at 

$1.5 billion total for calendar years 2020 through 2029 for those newly eligible for OASDI 

benefits after 2021 who are affected by the proposal. The cost for the rebate applied for 

beneficiaries affected by the WEP in 2020 through 2029 is estimated to be $21.6 billion. Over 

the long-range period, the net effect of the proposal on the 75-year actuarial balance would be 

negligible (i.e., less than 0.005 percent of payroll). Table 1, attached, indicates that the net 

effect of the changes in the Bill would reduce (worsen) annual balances for the OASDI 

program through 2066 and increase (improve) annual balances in all years thereafter. These 

estimates do not reflect the implications of any change in administrative expenses necessary to 

implement the provisions of this Bill.

The implications of the proposal would change over the long-range period. Eventually, the 

group affected by the proposal will be limited principally to the roughly 25 percent of all state 

and local government employees with earnings that are not covered by OASDI, because the 

closed group of Federal government employees whose earnings are not covered by OASDI 

were all hired before 1984.

Our estimates for the proposal reflect extensive innovative analysis of data for individuals 

born in 1950 with experience through May of 2018, including SSA records of earnings not 

covered by OASDI back to 1978, with adjustments for over-recording of non-covered 

earnings for years 1978 through 1981. This analysis has allowed us to model the potential 

effect of the proposal for 2018 as if it were fully in effect for all retired and disabled workers 

at that time. Based on these results, we are able to model the expected effects of the PSF.

Effects of the Proposal on Beneficiaries

In order to meaningfully illustrate the effects of the new PSF on workers who will become 

eligible starting in 2061 under this proposal, we provide here estimates of the effects of the 

PSF for all current beneficiaries in 2018, assuming the new approach were fully phased in and 

had applied for them since their initial benefit eligibility.

If applied to them, the PSF formula would affect the benefits of roughly 1.6 million retiredworker and disabled-worker beneficiaries in 2018 whose primary benefit is reduced under the 

current WEP. About 1.1 million (about 69 percent) of these beneficiaries would receive a 

higher average benefit (on average, $74 higher) with application of the PSF. Under the PSF, 

this group would receive an average benefit of $548, while under the current WEP their 

average benefit is $474. The remaining 0.5 million (about 31 percent) of these beneficiaries 

would receive a lower average benefit (on average, $55 lower) with application of the PSF. For 
Page 4 – The Honorable Kevin Brady

these beneficiaries, the PSF would provide an average benefit of $588, while under the current 

WEP their average benefit is $643.

For 2018, we estimate that there are roughly 18 million retired-worker and disabled-worker 

beneficiaries with some non-covered earnings who are not reduced under the current WEP 

(assuming adjustments for erroneous recording of non-covered earnings for some workers in 

years 1978 through 1981). Again, we illustrate how this group would be affected if the new 

PSF had been in effect for them since their initial benefit eligibility. We estimate that for about 

4.5 million (about 25 percent) of these beneficiaries in 2018, the new PSF would not change 

their primary benefit. For the other 13.5 million beneficiaries, the average benefit under the 

PSF would be $1,453 per month (about $29 less than would be payable under current law). 

For the half of this 18 million that would be least affected by the PSF, the average primary 

benefit under the PSF would be $1,487, less than $1 per month below the level payable under 

current law. For the half that would be most affected by the PSF, the average benefit under the 

PSF would be $1,402 (about $43 lower than their average benefit payable under current law). 

About 52 percent of the 18 million, or roughly 9 million beneficiaries, qualify now for 

exemption from the current WEP because they have 30 or more years of substantial OASDI 

covered earnings. Because these 9 million retired- worker or disabled-worker beneficiaries 

have relatively few years of non-covered earnings, their reduction under the new approach 

would be relatively small if the PSF were applicable for them. In addition, more than 75 

percent of these 18 million workers have fewer than 5 years with any non-covered earnings.

Workers who become eligible between 2022 and 2060 would receive the higher of the currentlaw WEP and the PSF. In 2018, were this approach fully phased in, 1.1 million beneficiaries 

whose primary benefit is reduced under the current WEP would receive a higher benefit.

We hope these estimates will be helpful. Please let us know if we may provide further 

assistance.

Sincerely,

 

Stephen C. Goss, ASA, MAAA 

Chief Actuary

Enclosure
Year Cost Rate

Income

Rate

Annual

Balance Cost Rate

Income

Rate

Annual

Balance

2019 13.91 12.85 -1.06 273 0.00 0.00 0.00

2020 13.94 12.87 -1.07 260 0.00 0.00 0.00

2021 14.09 12.90 -1.19 245 0.00 0.00 0.00

2022 14.26 12.92 -1.34 229 0.03 0.00 -0.03

2023 14.43 12.94 -1.49 213 0.03 0.00 -0.03

2024 14.61 12.97 -1.65 196 0.03 0.00 -0.03

2025 14.81 12.99 -1.83 179 0.03 0.00 -0.03

2026 15.02 13.11 -1.90 162 0.03 0.00 -0.03

2027 15.22 13.13 -2.08 146 0.03 0.00 -0.03

2028 15.46 13.18 -2.28 129 0.03 0.00 -0.03

2029 15.65 13.19 -2.46 112 0.03 0.00 -0.03

2030 15.83 13.21 -2.63 96 0.03 0.00 -0.03

2031 15.99 13.22 -2.77 79 0.03 0.00 -0.02

2032 16.13 13.23 -2.91 62 0.03 0.00 -0.02

2033 16.26 13.24 -3.02 44 0.03 0.00 -0.02

2034 16.35 13.25 -3.10 26 0.02 0.00 -0.02

2035 16.42 13.25 -3.17 8 0.02 0.00 -0.02

2036 16.48 13.26 -3.22 ---- 0.02 0.00 -0.02

2037 16.54 13.26 -3.28 ---- 0.02 0.00 -0.02

2038 16.59 13.27 -3.32 ---- 0.02 0.00 -0.02

2039 16.62 13.27 -3.35 ---- 0.02 0.00 -0.02

2040 16.64 13.27 -3.36 ---- 0.02 0.00 -0.02

2041 16.63 13.28 -3.35 ---- 0.02 0.00 -0.02

2042 16.61 13.28 -3.33 ---- 0.02 0.00 -0.02

2043 16.57 13.27 -3.30 ---- 0.02 0.00 -0.02

2044 16.54 13.27 -3.27 ---- 0.02 0.00 -0.02

2045 16.50 13.27 -3.23 ---- 0.02 0.00 -0.01

2046 16.47 13.27 -3.20 ---- 0.02 0.00 -0.01

2047 16.44 13.27 -3.17 ---- 0.01 0.00 -0.01

2048 16.42 13.27 -3.15 ---- 0.01 0.00 -0.01

2049 16.40 13.27 -3.13 ---- 0.01 0.00 -0.01

2050 16.38 13.27 -3.11 ---- 0.01 0.00 -0.01

2051 16.37 13.27 -3.10 ---- 0.01 0.00 -0.01

2052 16.38 13.27 -3.11 ---- 0.01 0.00 -0.01

2053 16.39 13.27 -3.11 ---- 0.01 0.00 -0.01

2054 16.40 13.28 -3.12 ---- 0.01 0.00 -0.01

2055 16.42 13.28 -3.14 ---- 0.01 0.00 -0.01

2056 16.46 13.28 -3.17 ---- 0.01 0.00 -0.01

2057 16.49 13.29 -3.21 ---- 0.01 0.00 -0.01

2058 16.54 13.29 -3.25 ---- 0.01 0.00 -0.01

2059 16.59 13.29 -3.30 ---- 0.01 0.00 -0.01

2060 16.64 13.30 -3.34 ---- 0.01 0.00 -0.01

2061 16.69 13.30 -3.39 ---- 0.01 0.00 -0.01

2062 16.75 13.31 -3.44 ---- 0.01 0.00 -0.01

2063 16.80 13.31 -3.49 ---- 0.01 0.00 -0.01

2064 16.85 13.31 -3.54 ---- 0.01 0.00 -0.01

2065 16.90 13.32 -3.58 ---- 0.01 0.00 -0.01

2066 16.96 13.32 -3.63 ---- 0.00 0.00 -0.00

2067 17.01 13.33 -3.68 ---- -0.00 -0.00 0.00

2068 17.07 13.33 -3.74 ---- -0.01 -0.00 0.01

2069 17.12 13.33 -3.79 ---- -0.01 -0.00 0.01

2070 17.18 13.34 -3.84 ---- -0.02 -0.00 0.02

2071 17.23 13.34 -3.89 ---- -0.02 -0.00 0.02

2072 17.28 13.34 -3.93 ---- -0.03 -0.00 0.02

2073 17.32 13.35 -3.97 ---- -0.03 -0.00 0.03

2074 17.36 13.35 -4.01 ---- -0.03 -0.00 0.03

2075 17.39 13.35 -4.04 ---- -0.04 -0.00 0.04

2076 17.42 13.36 -4.06 ---- -0.04 -0.00 0.04

2077 17.43 13.36 -4.07 ---- -0.04 -0.00 0.04

2078 17.44 13.36 -4.08 ---- -0.05 -0.00 0.05

2079 17.43 13.36 -4.07 ---- -0.05 -0.00 0.05

2080 17.41 13.36 -4.05 ---- -0.05 -0.00 0.05

2081 17.39 13.36 -4.03 ---- -0.06 -0.00 0.05

2082 17.36 13.36 -4.01 ---- -0.06 -0.00 0.06

2083 17.34 13.35 -3.99 ---- -0.06 -0.00 0.06

2084 17.31 13.35 -3.96 ---- -0.06 -0.00 0.06

2085 17.29 13.35 -3.94 ---- -0.07 -0.00 0.06

2086 17.27 13.35 -3.92 ---- -0.07 -0.00 0.06

2087 17.26 13.35 -3.91 ---- -0.07 -0.00 0.07

2088 17.26 13.35 -3.91 ---- -0.07 -0.00 0.07

2089 17.26 13.35 -3.92 ---- -0.07 -0.00 0.07

2090 17.28 13.35 -3.93 ---- -0.07 -0.00 0.07

2091 17.31 13.35 -3.96 ---- -0.07 -0.00 0.07

2092 17.35 13.35 -4.00 ---- -0.08 -0.00 0.07

2093 17.40 13.36 -4.04 ---- -0.08 -0.00 0.07

2094 17.45 13.36 -4.09 ---- -0.08 -0.00 0.07

Cost Rate Income Rate

Actuarial 

Balance

Change in 

Cost rate

Change in 

Income Rate

Change in 

Actuarial

Balance

16.59% 13.81% -2.78% 2035 0.00% 0.00% 0.00%

Office of the Chief Actuary

Based on Intermediate Assumptions of the 2019 Trustees Report. Social Security Administration 1 Under present law the year of combined Trust Fund reserve depletion is 2035.

Summarized Rates: OASDI

Year of reserve 

depletion1

Summarized Rates: OASDI

2019 - 2093

July 24, 2019

Expressed as a percentage of present-law

taxable payroll Trust Fund

Ratio

1-1-year

Expressed as a percentage of present-law

taxable payroll

Table 1 - OASDI Cost Rate, Income Rate, Annual Balance, and Trust Fund Ratio

Effects of Enactment of the "Equal Treatment of Public Servants Act of 2019" 

Introduced by Ranking Member Brady on July 24, 2019

Proposal Change from Present Law