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Congressional Testimony
June 27, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2680 words
HEADLINE:
TESTIMONY June 27, 2000 ROBERT T. SCULLY NATIONAL ASSOCIATION OF POLICE
ORGANIZATIONS HOUSE SOCIAL SECURITY GOVERNMENT
BODY:
June 27, 2000 STATEMENT OF ROBERT T. SCULLY
EXECUTIVE DIRECTOR NATIONAL ASSOCIATION OF POLICE ORGANIZATIONS Submitted to the
Social Security Subcommittee of the Committee on Ways and Means, U.S. House of
Representatives 1. Introduction I am Robert Scully, the Executive Director of
the National Association of Police Organizations, otherwise known as NAPO. I am
a retired police officer who served for 25 years with the Detroit Police
Department. I also served as a full-time elected officer of the Detroit Police
Officers Association and was a collective bargaining team member from
1973--1992. In addition, I was NAPO's elected president from 1983 to 1993. NAPO
is a national non-profit organization representing state and local law
enforcement officers throughout the United States. NAPO is a coalition of police
associations and unions serving to advance the interest of law enforcement
officers through advocacy, education and legislation. NAPO represents 4,000
organizations, with 220,000 sworn law enforcement officers and I 1,000 retired
officers, who put their lives on the line daily to protect the American public.
I would like to take this opportunity to thank Chairman E. Clay Shaw, Jr., and
members of the Subcommittee on Social Security of the Committee on Ways and
Means, for holding this hearing on the Government Pension
Offset (GPO). The GPO, instituted in 1977 and later amended in 1983,
calls for a two- thirds offset for Social Security benefits of spouses or
surviving spouses earning government pensions that did not pay into Social
Security. The federal Government Pension Offset law unduly
penalizes federal, state and local public employees from receiving spouses or
surviving spouses' Social Security benefits. NAPO strongly supports a remedy to
alleviate the impact and severity of the GPO and its effect on public employees.
NAPO urges members of the House of Representatives to pass H.R. 1217,
legislation, which if enacted, would alleviate the offset for some public
employees. 11. Brief History of the Government Pension Offset
Social Security provides spouse's benefits to wives or husbands who receive
partial Social Security benefits or none at all. However, within the Social
Security system, an individual cannot receive both his/her own Social Security
benefit, as well as a full spousal benefit from Social Security. This is
prohibited under Social Security and is commonly known as 'dual entitlement.'
For example, an individual's own Social Security offsets dollar for dollar the
amount individual may receive from a spouse's Social Security benefit. The
intention of the spousal benefit was for those spouses who depended on their
husbands or wives for financial needs. Before the GPO was instituted, it was
possible for an employee to receive a pension that didn't pay into Social
Security and a spouse's benefit from Social Security. Congress felt that this
was 'dual entitlement' and enacted the GPO law as part of the 1977 Social
Security Amendments. The law treated government pensions and annuities as though
they were Social Security benefits This law provided a dollar for dollar offset
of a spouse's Social Security benefit if that individual also received a
government annuity that did not pay into Social Security. If the individual was
eligible to receive a government pension before December of 1982, they were
exempted from the GPO. The dollar for dollar offset was an excessive penalty for
local, state and federal employees. An individual in the private sector who
received a pension and Social Security was exempt from the 'dual entitlement
'rule. In 1983 Congress changed the dollar for dollar amount to a two-thirds
offset. Therefore, a public employee who earned a government pension and was
eligible for a spouse or widows benefit was subject to the two-thirds offset of
their pension under the 'dual entitlement' rule. 111. The Effect of GPO on
Public Employees NAPO strongly feels that the two-thirds offset of a government
pension on a widow or spouse's benefit is excessive, unfair and an imprecise
calculation. It is estimated that over 284,000 local, state and federal
employees have unfairly been affected by the Government Pension
Offset. In the public safety community 75% of all law enforcement
officers do not pay into Social Security and have the potential to be stricken
by the excessive affects of the GPO. The two-thirds offset of a widow or
spouses' benefit can have a serious affect on a retiree living off a monthly
income. For example: If a widow received $600 from a government pension and was
eligible for a $400 widow's benefit from Social Security, the two-thirds offset
would diminish the Social Security benefit to $0. Therefore, the retiree would
receive a combined monthly benefit of $600 from the government pension and
Social Security benefit. The GPO is a complicated and often confusing rule that
affects hundreds of thousands of local, state and federal employees. Public
employees have little knowledge of the offset and the affect it has on their
Social Security benefit. For many employees, the GPO will come as a complete
surprise, devastating retirees' future financial planning. NAPO recognizes the
genesis of the 'dual entitlement' provision that prevents retirees from
receiving both their own Social Security benefit and a full spousal benefit.
However, the' dual entitlement' provision, which led to the advent the GPO, is
an excessive reduction of Social Security benefits for public employees. The
public sector employer-employee ratio of contributions is far greater than that
of Social Security. Originally the GPO provision assumed that public pensions
exceeding the Social Security contributions were equivalent to a private
pension, thus instituting the dollar-for-dollar offset. After further
examination by Congress, the offset was changed to its current level of
two-thirds which we still find to be excessive, especially for low to middle
income retirees. Furthermore, many employees in the private sector contribute a
minimal amount to their pension plan. Most of the contributions, if not all,
come from the employer. However, private sector employees receive both their
private pension and a full Social Security benefit without any offset for their
Social Security benefit. IV.Le0slation to Correct the Inequity of GPO There have
been a number of legislative proposals to rectify the inequity and unintended
consequences of GPO on low and middle income retirees. One proposal included the
complete repeal Of the GPO. However, NAPO recognizes the cost associated with
such a proposal. Another proposal offered to lessen the financial impact of the
GPO would be to change the offset to one-half instead of the two-thirds offset
for Social Security benefits. This proposal would partially alleviate the fiscal
burden on retirees. A third proposal, which NAPO has endorsed, would put a cap
on the combined monthly income of a public pension and a widow or surviving
spouse Social Security benefit that would be affected by the offs0t. In the
102nd Congress, legislation was introduced that would eliminate the offset of
public employees whose combined income did not exceed a certain amount.
Congressman William Jefferson (D- LA) introduced a bill in the 104'h Congress
that would remove the offset for anyone whose combined public pension and widow
or spousal Social Security benefit was less than $1,200 a month. This
legislation would have the greatest impact on those who have been affected the
most by Social Security-low to middle income retirees. Since the beginning of
the 105 Congress, NAPO has been an active member of the CARE coalition
(Coalition to Assure Retirement Equity) whose objectives are to ensure equal
retirement benefits for public employees. NAPO, along with the 43 members of the
CARE coalition have actively lobbied and endorsed H.R. 1217, the Limitation on
Reductions in Benefits for Spouses and Surviving Spouses Receiving Government
Pensions,' in the 106'h Congress. Congressman William Jefferson has
re-introduced this legislation, which would eliminate the offset for anyone
whose combined monthly benefit from a government pension and a spouse's Social
Security benefit is $1,200 or less. This legislation has received bipartisan
support and currently has 243 cosponsors. I urge the members of the Social
Security Subcommittee to consider strongly the financial impact of the GPO on
retirees and support this meaningful legislation. H.R. 1217 would alleviate the
unfair financial burdens of the GPO on hundreds of thousands of low to middle
income public employees. We have experienced an unprecedented robust economy
that has generated a large federal surplus. We need to help those who need it
the most, including law enforcement officers who put their lives on the line
everyday. V. Conclusion The GPO has a profound effect on the economic security
of retirees, who receive a government pension and rely on the full payment of
their widow or spouse's Social Security benefit. The law unfairly offsets
benefits of recipients whose pensions were not covered by Social Security and
exempts individuals who earned their pension in the private sector. The
excessive GPO offset will continue to impact adversely the law enforcement
community, especially given the fact that 75% of law enforcement officers do not
pay into Social Security. Furthermore, public pensions are taxed, while Social
Security is not if the income falls below a certain amount, adding to the host
of inequities facing many public sector workers. With the state of our economy,
NAPO urges the Congress to act now on this important legislation. Thank you for
the opportunity to submit a statement for the record.
LOAD-DATE: July 10, 2000, Monday
