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June 27, 2000, Tuesday

SECTION: PREPARED TESTIMONY

LENGTH: 1135 words

HEADLINE: PREPARED TESTIMONY OF FRANK G. ATWATER NATIONAL PRESIDENT AND CEO THE NATIONAL ASSOCIATION OF RETIRED FEDERAL EMPLOYEES AND MEMBER OF COALITION TO ASSURE RETIREMENT EQUITY (CARE)

BEFORE THE HOUSE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON SOCIAL SECURITY

SUBJECT - SOCIAL SECURITY "GOVERNMENT PENSION OFFSET"

BODY:
Mr. Chairman and members of the Subcommittee, I am Frank G. Atwater, the National President and CEO of the National Association of Retired Federal Employees (NARFE). I thank you for scheduling this hearing on the Social Security Government Pension Offset (GPO). I am grateful that you have afforded me the opportunity to testify on an issue of such great importance to our members.

I am wearing two hats today. I am testifying on behalf of my own organization, NARFE, which represents over 400,000 federal retirees, employees, spouses, and their survivors across the United States. I am also speaking on behalf of the Coalition to Assure Retirement Equity (CARE), a coalition of 43 organizations representing millions of federal, state, and local government retirees and employees. In 1991, CARE was formed specifically to address the Social Security Government Pension Offset (GPO) which, as you are aware, was enacted as part of the Social Security Amendments of 1977.

In 1935, when the Social Security Act was originally enacted, it provided the same benefits to workers, with and without spouses, and no survivors' benefits. The amendments, of the Social Security Act, enacted in 1939, added spousal and survivor benefits to provide extra protection to workers with families.

The GPO Social Security Act amendment, originally enacted in 1977, went into effect in 1983, and since then, has affected over almost 285,000 federal, state, and local retirees. It reduces or eliminates the Social Security spousal benefit (wife, husband, widow, or widower) to which an affected retiree may be eligible. Two-thirds of the amount of the monthly government annuity that the retiree has earned, is used to offset whatever Social Security spousal or survivor benefit might be payable.

According to the Congressional Budget Office, "about 145,000 retirees from federal, state, and local governments had their Social Security auxiliary benefits reduced or eliminated as a result of the GPO in December 1991." t Since then, that figure has almost doubled.

The Social Security Administration states that the number of social security beneficiaries affected by GPO as of December 1997 was 270,9752. That number increased by December 1999 to 284,3833.

Of the 284,383 affected beneficiaries, 229,941 or 80 percent are fully offset, which translates into no benefit. It is crucial for you to note that 104,137 or 38 percent of the total number of affected beneficiaries are widows or widowers and 71,175 or 68 percent of them are fully offset.

As noted below, in December 1997, ten states in this country represented 169,358 or 63 percent of the total number of affected individuals. California, Ohio and Texas had significantly higher numbers than the others, but Illinois and Florida follow close behind.

Top Ten States (in descending order) of beneficiaries affected by GPO as of December 1997

1. California 36,973 2. Ohio 34,591 3. Texas 24,484 4. Illinois 14,827 5. Florida 14,301 6. Louisiana 10,722 7. Massachusetts 10,480 8. Colorado 8,243 9. New York 7,701 10. Georgia 7,036

Total 169,358

Mr. Chairman, I understand from our members, through correspondence with their congressional representatives, there are members of this committee who have concerns regarding "means testing". I am led to believe that these concerns specifically relate to H.R. 1217 and the provision of a $1200 per month threshold before GPO would be applied.

When Congress enacted GPO in 1983, it set a 'means test' precedent by introducing a means test provision into the Social Security program by denying the full application of spousal benefits to persons receiving government pensions. This application of denial is not applied to those persons who are the recipients of annuities or other retirement benefits from the private sector.

We, as federal annuitants, share you and your colleagues' concerns over the impropriety of "means testing" in Social Security and believe that Congressman Jefferson's bill H.R. 1217 is the most pragmatic approach to the modification of the GPO, in lieu of repealing it.

Public Law 106-182, introduced as H.R.5 by Congressman Sam Johnson, was passed in both houses of Congress and signed into law by the President on April 7, 2000. This law "eliminates the earnings test for individuals who have attained retirement age". The estimated cost of the earnings repeal is projected to be $8 billion in the first year and $22.7 billion over the next ten years. The projected estimate for H.R. 1217 is about $300 million in the first year and $4.4 billion over the next ten years.

These preliminary projections for H.R. 1217 are based on a threshold of $1200, and indexed by the Social Security COLA over ten years, retroactive to December 31, 1999.4 Social Security Administration actuaries have determined that, just as with the earnings test repeal, enactment of H.R. 1217 would "increase the OASDI long-range actuarial deficit by an amount that is estimated to be negligible (i.e., less than 0.005 percent of taxable payroll)."5

Members of the committee, you were able to expeditiously change the Social Security Act to benefit older workers through Public Law 106- 182. We are now asking you to expend that same effort to effect change through H.R. 1217 for government retirees.

In fact, since repeal of the earnings limit, government workers 65 and older can receive full social security benefits based on their own work or as spouses or survivors. However, as soon as they retire, their social security is cut or ceases altogether. Therefore, a benefit counted on for retirement is paid while one is working, only to disappear when needed most --- at retirement.

We urge you to support Congressman Jefferson's legislation, H.R. 1217, a proposal to modify the Social Security Government Pension Offset, as supported by the millions of federal, state and local government employees and retirees across the United States, represented by CARE.

I would now like to introduce Mrs. Ruth Pickard, a member of NARFE and a constituent of the Chairman, Congressman Shaw.

FOOTNOTES:

1 CBO Testimony - Statement of Nancy M. Gordon, Asst. D/r. for Human Resources and Community Development, Congressional Budget Office before the Subcommittee on Social Security, Committee on Ways and Means, US House of Representatives- April 8, 1992

2 See attachement A - Beneficiaries affected by the COP as of December 1997

3 Sec attachment B-TABLE G103- Number of beneficiaries affected by the GOP by gender and type of benefit, fully and partially offset, December, 1999

4 See attachment C - est. costs of Cong. Jefferson's proposal (preliminary and unofficial SSA figures)

5 See attachment D - Social Security Administration actuarial memorandum (February 23, 2000)

END

LOAD-DATE: June 28, 2000

Document 8 of 26.


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