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This letter was submitted for the record on June 27, 2000 during a House Ways and Means Subcommittee on Social Security hearing on the Government Pension Offset. June 26, 2000 The Honorable E. Clay Shaw, Jr., Chairman Re: Support for HR 1217 Dear Chairman Shaw: I write on behalf of the National Conference of State Legislatures in support of HR 1217 and other efforts by Congress to address the inequities and unintended consequences to state and local government retirees caused by the Government Pension Offset (GPO). NCSL is appreciative of your efforts to draw attention to the fundamental unfairness faced by government retirees as a result of the Government Pension Offset. I urge the Ways and Means Committee to expeditiously forward legislation to the House floor that will reduce the detrimental impact of the GPO on government retirees. Several proposals before Congress, including HR 1217, sponsored by Representative William Jefferson of Louisiana, would exempt a portion of uncovered government pension benefits from application of the GPO and would adjust this amount annually for inflation. HR 1217 in effect creates a combined monthly minimum benefit of government pension and Social Security benefits, $1,200 in 2000. HR 1217 would insure that government retirees have adequate financial support in retirement and would restore the safety net for thousands of retirees who qualify for both an uncovered public pension benefit and Social Security spousal (widow's) benefits. The GPO, as currently imposed, imprecisely and unfairly reduces the spousal benefit received by those who have earned an uncovered government pension benefit. These reductions have unintentionally harmed moderate and lower-wage earners, and have disproportionately harmed women who have earned uncovered government pensions. Further, the offset provides a disincentive to work and may contribute to elderly poverty. Proponents of the GPO argue that the offset reinforces the "dual entitlement rule." Under the dual entitlement rule Social Security beneficiaries who qualify for both an earned benefit and a spousal benefit receive the greater of the two benefits. The assumption underlying the dual entitlement rule is that spousal benefits are intended to provide a safety net to those who are financially dependent upon their spouse. The GPO as currently imposed makes no determination as to the financial dependency of a government retiree on his or her spouse, who may have also earned an uncovered government pension. As imposed, the Government Pension Offset (GPO), reduces the Social Security spouse's (widow's) benefit by two-thirds (2/3) of the amount of the public retirement benefit received by the beneficiary. In some cases, the offset eliminates the Social Security benefit entirely. The GPO makes no accommodation as to the value of the uncovered pension benefit received, nor does the Social Security Administration make any determination as to the level of support provided to the household as a result of uncovered government work or from the uncovered government pension benefit. In many states and localities, a worker is vested and eligible to receive a pension after completing only a few years of service. Retired government workers who receive a full pension benefit from uncovered work and those who received only a partial benefit have their Social Security spousal benefit reduced by the same two-thirds. Similarly, retirees whose work may have been interrupted by illness, childbearing, child rearing or other familial responsibilities have their spousal benefits reduced by two-thirds. Again, the offset as imposed does not take these reduced benefits under consideration in determining the level of spousal benefit received. The National Conference of State Legislatures believes that H.R. 1217 provides the best opportunity to address the inequities and unintended consequences that result from the unilateral imposition of the GPO on government retirees. We urge passage of this legislation during the 106th Congress. H.R. 1217 has broad bipartisan support and is co-sponsored by 243 members of the House. Further, the Social Security actuaries have determined that the cost of "enactment of this proposal would increase the OASDI long range actuarial deficit by an amount that is estimated to be negligible." Given these circumstances we believe that action on HR 1217 would benefit a large number of retirees with very little burden, both administratively and financially, to the federal government. We appreciate your consideration of the views of the National Conference of State Legislatures on this issue. If NCSL or I can provide additional information or support, please contact our committee staff, Gerri Madrid at (202) 624-8670. Sincerely, Representative Robert Junell Summary of Federal
Reductions to Social Security Benefits of State and Local
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