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Congressional Testimony
June 27, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2387 words
HEADLINE:
TESTIMONY June 27, 2000 WILLIAM J. JEFFERSON CONGRESSMAN HOUSE
WAYS AND MEANS SOCIAL SECURITY SOCIAL SECURITY GOVERNMENT PENSION
OFFSET
BODY:
June 26, 2000, Statement
CONGRESSMAN WILLIAM J. JEFFERSON THE GOVERNMENT PENSION OFFSET
REFORM BILL (H.R. 1217) Ways & Means Social Security Subcommittee hearing
Mr. Chairman, I am pleased to have the opportunity to urge this Committee to
support the-Government Pension Offset Reform legislation, H.R.
1217, I introduced at the beginning of this session and which now has 244
cosponsors(Pension Offset Reform). Pension Offset Reform is needed because the
existing offset law continues to gut the retirement security of many retired
federal workers by wiping out their spousal and survivor benefits. Ending this
injustice is a top priority for me. It is a top priority for many of my
constituents in Louisiana. It is a top priority for many seniors groups and
state and local government employees across the nation. And, it is also a top
priority for the 244 cosponsors of the Pension Offset Reform legislation. In
short Mr. Chairman, the time to reform the harsh and unfair Pension offset law
is now. The Pension Offset was originally enacted in 1977 in response to the
perceived abuses to the Social Security System that would result from the
Goldfarb decision. Prior to Goldfarb, the Social Security System provided that
if a spouse who worked and paid into Social Security died, the benefits were to
be paid to the surviving spouse as a survivor benefit. However, men were
required to prove dependency on their spouses before they became eligible for
Social Security survivor benefits. There was no such requirement for women. The
Goldfarb decision eliminated the unequal treatment of men and women and required
Social Security to pay benefits to either spouse without regard to dependency.
Concern arose because many of the men who would benefit from the OD-1-dfArb
decision were also receiving large go, government pensions. Many officials
believed that paying these benefits would bankrupt the Social Security system.
To combat this perceived problem, Pension Offset legislation was enacted. The
legislation reduced the Social Security benefits that aged or surviving spouses
received by one dollar for every dollar they received in earned pension benefits
from a federal, state, or local government employer not covered by Social
Security. Widespread opposition to the Pension Offset erupted in the federal
retirement community, forcing Congress to moderate its stance on the Pension
Offset. In 1983, as a compromise, the Pension Offset was reduced to two-thirds
of the public employer survivor benefits. The purported rationale was that
two-thirds of the government pension was equivalent to Social Security benefits
and one-third of the pension was equivalent to the pension available in the
private sector. Mr. Chairman, the compromise reached in 1983 has not relieved
the harsh impact of the Pension Offset, especially on women. While the Pension
Offset successfully curtailed the windfall to high paid government employees, it
continues to have very devastating and unintended consequences to low income
public service employees. The Pension Offset as applied to this group is
punitive, unfairly harsh and bad policy. Unlike upper level government workers,
whose government pensions are more likely to be sufficient to ensure their
retirement security, lower salaried government workers such as teachers,
secretaries, school cafeteria workers and others will be unable to survive
solely on their lower pension benefits. Additional government assistance, such
as Temporary Assistance to Needy Families, will be needed. To illustrate the
harsh impact of the Pension Offset, consider a widow who retired from the
federal government and receives a civil service annuity of $600 monthly and is
otherwise entitled to full widow's survivor benefit of $400. The current Pension
Offset law reduces the widow's survivor benefit to $0 a month (2/3 of the $600
civil service annuity is $400, which is then subtracted from the $400 widow's
survivor benefit, leaving $0). The widow receives $600 ($600 + $0) per month,
instead of $1000. The Pension Offset destroys this widows retirement security
and forces her to live out her remaining years in poverty. A harsh and unfair
result that must be changed . . . must be changed now. My office has received
numerous calls, all from widows who are just getting by and desperately need
some relief from the Pension Offset. Enacting the Pension Offset Reform
legislation would bring them this needed relief. The legislation, does not
completely repeal the Pension Offset, but provides a modification to a complete
repeal. It will allow pensioners and widows affected by, Pension Offset
provisions to receive a minimum $1200 per month, indexed to inflation, before
offset provisions could be imposed. The legislation also contains a hold
harmless provision to ensure that no recipient's benefits are reduced by this
legislation. A corresponding Senate bill, S717 was introduced in the Senate by
Senator Barbara A. Mikulski (D-MD) and now has 20 cosponsors. Mr, Chairman, the
Pension Offset Reform legislation is good economic, social and public policy.
Limiting the exclusion to $1200 of combined benefits allows us to protect our
teachers and other low waged government workers from poverty, while still
allowing us to prevent the abuses by high pensioned workers targeted by the
government pension offset. Best of all, it provides this needed
security without threatening the long term viability of the Social Security
system. Proponents of the Pension Offset claim that the offset is justified
because it treats widows who worked in employment not covered with Social
Security in the same manner as those who worked in covered employment. However,
this fairness argument is dubious and disingenuous at best. First, unfairness to
low income seniors by applying the Pension Offset cannot be justified by
unfairness to low income seniors by applying the dual entitlement rule. No
benefit rule that forces already poor seniors further into poverty can be deemed
fair. Our legislation simply allows these poor women to keep $1200 a month in
combined benefits before any offset is applied. Second, it is unfair to reduce
survivors benefits of non covered workers because unlike covered workers under
Social Security non covered workers are not double dipping from the Social
Security pot. Pension benefits are paid out of the state retirement fund and not
out of the Social Security trust fund. Thus, the perceived threat to Social
Security solvency is less, especially for low income individuals. Third, despite
proponents' claim to the contrary, widows affected by the Pension offset have
not had sufficient notice to make alternative plans for retirement. Covered
workers have always been subject to the dual entitlement rule. However, non
covered workers were not subject to the Pension Offset until phasing began in
1977. Fourth, extending the Pension Offset to government employees creates an
inequity between public and private pension recipients. While Social Security
benefits of surviving spouses earning government pensions are reduced by the
Pension Offset, Social Security benefits of surviving spouses earning private
pensions are not subject to offset at all. Mr.Chairman I ask you, If retirees on
private pensions do not have Social Security benefits subject to offset, why
should retirees who worked in public service? The Pension Offset has created a
problem that cries out for reform. The inequity in the Pension Offset was not
fixed in 1983 when the offset was reduced from $1 for $1 to the two-thirds
offset. Infact, most of the benefits in treating one-third of the government
pension as a private pension went to high pensioned workers'. The current
Pension Offset, as applied to low income pension recipients, will cause tens of
thousands of retired government employees, including many teachers, custodians
or lunch room workers, to live their retirement years at or near the poverty
level. I urge this Committee to support this vital piece of legislation and
assist me in moving it through the legislative process. The time to reform the
Pension Offset is now. We owe it to our teachers, we owe it to our seniors,. we
owe it to the American people. Thank you Mr. Chairman.
LOAD-DATE: July 10, 2000, Monday
