Social Security Windfall Law Explained
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MAY 2000 - For our members, affected by Social Security’s Government Pension Offset (GPO) law, there is good news. Congressman William Jefferson’s (D-La) GPO relief bill, H.R. 1217, is supported by 219 of the 435 members in the US House of Representatives, at press time.
All representatives in the Mass delegation are in that majority. Both Senators Kennedy and Kerry have signed onto a companion bill in the Senate (S 717).
“A great deal of credit should go to the National Association of Retired Federal Employees (NARFE) on securing the majority support for H.R. 1217,” comments Legislative Chairman Bill Hill. “Without their tireless efforts, and those of the coalition (Coalition to Assure Retirement Equity, also known as CARE) which they spearhead and to which we belong, this milestone would not have been achieved.”
It’s important for our members to remember that the GPO does not affect every public pensioner. First, a pensioner must be seeking SS benefits through their spouse’s, and not their own, work history under Social Security. Second, it applies generally to pensioners, seeking spousal benefits, who were not eligible for (i.e., not actually receiving, but could be) their public pension before July 1, 1983 and did not receive half of their support from a spouse (i.e., more than half of family income coming from the husband or wife).
“Armed with this number of supporters, coalition (CARE) representatives are optimistic that H.R. 1217 could reach the House floor for a vote,” states Hill. “This is a critical time for action on the bill since the Congress will be packing their bags for the national conventions this summer and recessing for the November elections.”
In the meantime, US Reps. Mike Capuano and Joe Moakley, with Bill Jefferson and others, attempted to add the GPO relief measure to another Social Security-related bill which eventually passed the Congress (H.R.5) that would eliminate the Social Security earnings limitation for those age 65 to 69.
Unfortunately, their efforts were not successful. Republican House leadership would not allow amendments to H.R. 5 that went beyond retirement benefits for working seniors aged 65 to 69.
Windfall May Reduce Retiree’s Own SS Benefits
While the current focus is upon the GPO, there is another controversial provision in the Social Security Law which may reduce the amount of SS benefits certain retirees may receive based on their own, and not their spouse’s, work history under Social Security. This law, passed by the Congress back in ‘83 and known as the “windfall elimination provision” (WEP), could reduce one’s own SS benefits by 50% or more.
Only retirees, who first became eligible for (i.e., not actually receiving, but could be) their public pension after December 31, 1985, may be affected by the WEP. Even those who became eligible after that date may still not have their SS benefits reduced if they have at least 30 years of substantial earnings under Social Security. (Note: Those, with less than 30 years of SS coverage but more than 20 years, may receive a lesser reduction.)
But unfortunately, public retirees, who first became eligible for their pensions after 12/31/85 and have less than 20 years of substantial earnings under Social Security, will feel WEP’s full impact on their SS amount. What the windfall essentially does is change the formula to calculate one’s SS benefits, by awarding the retiree, affected by the law, with only 40% of a certain portion of their average earnings under Social Security, and not the 90% normally applied by the formula. Needless to say, that 50% difference in the percentage cuts deeply into the actual SS benefits to be received.
Another member of the Mass. delegation, Rep. Barney Frank, filed legislation (H.R. 860) to provide relief from the WEP. H.R. 860 would eliminate the WEP for affected public retirees whose combined pension and SS benefits is $2,000 or less monthly their combined amount is over $3,000, then those retirees would be subject to the WEP and could have the revised formula (40% and not 90%) applied to them in full.
If an affected public retiree’s combined
amount is between $2,000 and $3,000, then the WEP’s revised formula would
be phased in at different amounts until the full 40% formula would apply
at the $3,000 level. H.R. 860 is currently in the House Ways and Means
Committee’s Social Security Subcommittee.