GPO and WEP: Policies Affecting Pensions from Work Not Covered by Social Security

11/06/2007

Senate Committee on Finance, Subcommittee on Social Security, Pensions, and Family Policy

Mr. Chairman and Ranking Member Ensign, thank you for the opportunity to submit a statement for the record for your hearing on GPO and WEP: Policies Affecting Pensions from Work Not Covered by Social Security. The National Treasury Employees Union, representing more than 150,000 federal employees and retirees, has had a long-standing interest in these two Social Security provisions, the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). Many of our members have already felt the unfair effects of these provisions. Others are not yet aware of the impact these provisions will have on their retirement income. Federal retirees often first become aware of the existence of these provisions at the time they apply for Social Security benefits.

With record numbers of retirements from federal employment expected, continuation of such policies will make many people feel as if they are being penalized for having chosen to enter public service. There is no penalty like this that applies to individuals who collect private pension benefits and who are also eligible for spousal Social Security. Recent figures from the Congressional Research Service indicate that there are over 400,000 Social Security beneficiaries affected by the GPO. Of those affected, 42 percent were widows or widowers. About 75 percent were women. Many women suffer the effects of this provision because of career interruptions that arose from raising their children or due to the fact that many worked in lower-paid positions in the federal government. Approximately 85 percent of those affected lost their entire spousal Social Security benefits.

The Windfall Elimination Provision’s impact is harsh as well, causing the Social Security benefits of more than 970,000 federal retirees to be reduced by nearly 50 percent. Under current law, employees eligible both for their own earned Social Security benefit and a public pension, such as those under the federal Civil Service Retirement System (CSRS), find that the proportion of their earnings in the first bracket of the formula that is converted to benefits is lowered substantially.

We are very happy that there is now renewed interest in changing these provisions. In the Senate, S. 206, a bill that would amend the Social Security Act to repeal these provisions, was introduced by Sen. Dianne Feinstein (D-CA) and Sen. Susan Collins (R-ME). The bill had 34 co-sponsors as of last week, and we thank you, Mr. Chairman, for signing onto the bill and for your early support. We strongly advocate passage of this bill. In addition, S. 1254, introduced by Sen. Barbara Mikulski (D-MD) and Sen. George Voinovich (R-OH), modifies the GPO provision. This is a welcome first step toward providing relief in this area. S. 1647, introduced by Sen. Kay Bailey Hutchinson (R-TX) would modify the WEP. Rep. Barney Frank (D-MA), has introduced HR 726 in the House to modify the WEP, as well. Again, this is an important first step in providing some relief to federal retirees from the financial devastation of these two provisions.

Thank you for allowing us to present our position. NTEU hopes that the outcome of this hearing will be legislation headed to the Senate floor to correct both the GPO and WEP provisions of Social Security law. We appreciate your attention to these issues.