SOCIAL SECURITY

Office of the Chief Actuary

November 3, 2021

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 2021,” which you 

introduced today. This Bill would generally replace the current-law 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 2062 or later.

Individuals becoming eligible after 2022, but before 2062, 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 270 days after enactment for individuals affected by the 

current-law 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 2022 through 2031, we 

estimate the program benefit cost for the OASDI program would be increased by $27.7 billion. 

The net cash flow effect on OASDI would be slightly less (a reduction of $26.3 billion), 

because the additional income tax on the increased benefit payments would be mostly directed 

to the OASI and DI Trust Funds, partially offsetting the additional benefit cost. 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 2021 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 
Page 2 – The Honorable Kevin Brady

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. 

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 2022, 

but before 2062, 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 2062

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-law

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 2023 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 

October 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 $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 
Page 3 – The Honorable Kevin Brady

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

but would have it withheld to help repay the overpayment.

OASDI Program Cost Effects

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

after 2022 and before 2062, whose benefit amount would be reduced less by the PSF than by 

the WEP. As noted above, most of the income tax on the increased benefit payments would be 

directed to the OASI and DI Trust Funds, which would partially offset the additional benefit 

cost. The increase in OASDI program benefit cost is estimated at $1.9 billion in total for 

calendar years 2022 through 2031 for those newly eligible for OASDI benefits after 2022 who 

are advantaged by the alternative benefit computation using the PSF. The change in OASDI

cash flow due to this formula change, net of OASDI revenue from income taxation of benefits, 

is estimated to be a reduction of $1.8 billion in total for calendar years 2022 through 2031.

The amount of rebate payments for months beginning at least 270 days after enactment applied 

for beneficiaries who are affected by the WEP is estimated to be $25.8 billion in total for 

calendar years 2022 through 2031. For these estimates, we are assuming enactment of the Bill 

at the end of calendar year 2021. The change in OASDI cash flow due to these rebate payments, 

net of OASDI revenue from income taxation of benefits, is estimated to be a reduction of $24.5

billion in total for calendar years 2022 through 2031.

Combining the effects described in the previous two paragraphs, the benefit cost for both the 

formula change and the rebate payments is estimated to be $27.7 billion in total for calendar

years 2022 through 2031. The change in OASDI cash flow, net of OASDI revenue from income 

taxation of these benefits, is estimated to be a reduction of $26.3 billion in total for calendar 

years 2022 through 2031.

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 2061. Therefore, our estimate reflects small 

benefit reductions from the PSF for a relatively large number of workers who would not be 

reduced by the WEP. 

Over the long-range period, the net effect of enacting 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 2067. Thereafter, changes would increase (improve) annual 

balances due to the application of the PSF formula to all worker beneficiaries becoming 

eligible after 2061 who had non-covered earnings. These estimates do not reflect the 

implications of any change in administrative expenses necessary to implement the provisions 

of this Bill.

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 
Page 4 – The Honorable Kevin Brady

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 2062 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 and are not receiving a pension based on foreign employment. 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 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 2023 and 2061 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.

Additionally, we estimate monthly rebate payments would have been provided to roughly 1.8

million retired worker and disabled worker beneficiaries and 175 thousand auxiliary 
Page 5 – The Honorable Kevin Brady

beneficiaries whose benefit was reduced under the WEP in 2018, assuming the rebate payments 

had started in 2018 and that the other provisions of the proposal applied for beneficiaries 

becoming newly eligible after 2018.

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

Year Cost Rate

Income

Rate

Annual

Balance Cost Rate

Income

Rate

Annual

Balance

2021 14.11 12.31 -1.81 253 0.00 0.00 0.00

2022 14.31 12.93 -1.38 231 0.00 0.00 0.00

2023 14.46 12.91 -1.55 213 0.03 0.00 -0.03

2024 14.67 12.94 -1.72 195 0.03 0.00 -0.03

2025 14.88 12.96 -1.92 177 0.03 0.00 -0.03

2026 15.13 13.08 -2.05 158 0.03 0.00 -0.03

2027 15.39 13.10 -2.29 140 0.03 0.00 -0.03

2028 15.65 13.14 -2.51 121 0.03 0.00 -0.03

2029 15.90 13.17 -2.73 103 0.03 0.00 -0.03

2030 16.14 13.19 -2.94 83 0.03 0.00 -0.03

2031 16.31 13.21 -3.10 64 0.03 0.00 -0.03

2032 16.46 13.22 -3.24 45 0.03 0.00 -0.03

2033 16.58 13.23 -3.35 25 0.03 0.00 -0.03

2034 16.68 13.24 -3.45 6 0.03 0.00 -0.02

2035 16.76 13.25 -3.52 ---- 0.03 0.00 -0.02

2036 16.83 13.25 -3.57 ---- 0.02 0.00 -0.02

2037 16.89 13.26 -3.63 ---- 0.02 0.00 -0.02

2038 16.94 13.26 -3.67 ---- 0.02 0.00 -0.02

2039 16.97 13.27 -3.71 ---- 0.02 0.00 -0.02

2040 17.00 13.27 -3.73 ---- 0.02 0.00 -0.02

2041 17.04 13.27 -3.76 ---- 0.02 0.00 -0.02

2042 17.06 13.28 -3.78 ---- 0.02 0.00 -0.02

2043 17.06 13.28 -3.78 ---- 0.02 0.00 -0.02

2044 17.06 13.28 -3.78 ---- 0.02 0.00 -0.02

2045 17.07 13.28 -3.79 ---- 0.02 0.00 -0.02

2046 17.07 13.28 -3.79 ---- 0.02 0.00 -0.02

2047 17.09 13.28 -3.81 ---- 0.02 0.00 -0.02

2048 17.11 13.29 -3.83 ---- 0.02 0.00 -0.01

2049 17.13 13.29 -3.84 ---- 0.02 0.00 -0.01

2050 17.15 13.29 -3.86 ---- 0.01 0.00 -0.01

2051 17.18 13.29 -3.88 ---- 0.01 0.00 -0.01

2052 17.20 13.30 -3.91 ---- 0.01 0.00 -0.01

2053 17.23 13.30 -3.93 ---- 0.01 0.00 -0.01

2054 17.27 13.30 -3.96 ---- 0.01 0.00 -0.01

2055 17.31 13.31 -4.00 ---- 0.01 0.00 -0.01

2056 17.35 13.31 -4.04 ---- 0.01 0.00 -0.01

2057 17.40 13.31 -4.08 ---- 0.01 0.00 -0.01

2058 17.45 13.32 -4.13 ---- 0.01 0.00 -0.01

2059 17.51 13.32 -4.18 ---- 0.01 0.00 -0.01

2060 17.56 13.33 -4.23 ---- 0.01 0.00 -0.01

2061 17.62 13.33 -4.28 ---- 0.01 0.00 -0.01

2062 17.67 13.34 -4.33 ---- 0.01 0.00 -0.01

2063 17.72 13.34 -4.37 ---- 0.01 0.00 -0.01

2064 17.76 13.35 -4.42 ---- 0.01 0.00 -0.01

2065 17.81 13.35 -4.46 ---- 0.01 0.00 -0.01

2066 17.86 13.35 -4.51 ---- 0.01 0.00 -0.01

2067 17.91 13.36 -4.55 ---- 0.00 0.00 0.00

2068 17.95 13.36 -4.59 ---- 0.00 0.00 0.00

2069 18.00 13.36 -4.64 ---- -0.01 0.00 0.01

2070 18.05 13.37 -4.69 ---- -0.01 0.00 0.01

2071 18.10 13.37 -4.73 ---- -0.02 0.00 0.02

2072 18.15 13.38 -4.78 ---- -0.02 0.00 0.02

2073 18.20 13.38 -4.82 ---- -0.03 0.00 0.03

2074 18.24 13.38 -4.86 ---- -0.03 0.00 0.03

2075 18.28 13.39 -4.89 ---- -0.04 0.00 0.03

2076 18.31 13.39 -4.92 ---- -0.04 0.00 0.04

2077 18.33 13.39 -4.93 ---- -0.04 0.00 0.04

2078 18.33 13.39 -4.94 ---- -0.05 0.00 0.04

2079 18.32 13.39 -4.93 ---- -0.05 0.00 0.05

2080 18.30 13.39 -4.91 ---- -0.05 0.00 0.05

2081 18.27 13.39 -4.88 ---- -0.06 0.00 0.05

2082 18.23 13.39 -4.84 ---- -0.06 0.00 0.06

2083 18.19 13.39 -4.80 ---- -0.06 0.00 0.06

2084 18.13 13.38 -4.75 ---- -0.07 0.00 0.06

2085 18.07 13.38 -4.69 ---- -0.07 0.00 0.06

2086 18.01 13.38 -4.63 ---- -0.07 0.00 0.07

2087 17.94 13.37 -4.56 ---- -0.07 0.00 0.07

2088 17.86 13.37 -4.50 ---- -0.07 0.00 0.07

2089 17.80 13.36 -4.43 ---- -0.07 0.00 0.07

2090 17.74 13.36 -4.38 ---- -0.08 0.00 0.07

2091 17.69 13.36 -4.33 ---- -0.08 0.00 0.07

2092 17.65 13.36 -4.30 ---- -0.08 0.00 0.07

2093 17.63 13.35 -4.28 ---- -0.08 0.00 0.08

2094 17.62 13.35 -4.27 ---- -0.08 0.00 0.08

2095 17.62 13.35 -4.27 ---- -0.08 0.00 0.08

2096 17.62 13.35 -4.27 ---- -0.08 0.00 0.08

Summarized Rates: OASDI Summarized Rates: OASDI

Cost Rate Income Rate

Actuarial 

Balance

Change in 

Cost rate

Change in 

Income Rate

Change in 

Actuarial

Balance

2021 - 2095 17.31% 13.78% -3.53% 2034 0.00% 0.00% 0.00%

Office of the Chief Actuary

Note: Based on Intermediate Assumptions of the 2021 Trustees Report. Social Security Administration 1 Under current law the year of combined Trust Fund reserve depletion is 2034. November 3, 2021

Year of reserve 

depletion1

The "Equal Treatment of Public Servants Act of 2021," introduced by Ranking Member Brady

Proposal Change from Current Law

Expressed as a percentage of current-law

taxable payroll Trust Fund

Ratio

1-1-year

Expressed as a percentage of current-law

taxable payroll