Social Security: Effort To Eliminate Pensioner Benefit Cuts Gains Momentum — Who Would Be Affected?
Efforts to repeal a pair of decades-old provisions that have restricted Social Security benefits for public-sector pensioners are gaining renewed momentum this year, though there will likely be a tough battle getting reforms across the finish line.
See: Can I Draw Social Security at 62 and Still Work Full Time?
With a Recession Looming: Make These 3 Retirement Moves To Stay On Track
At issue are the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which were enacted in 1983 and 1977, respectively. Critics say the measures unfairly cut Social Security for public employees with pensions, the Roll Call legislative news site reported.
Because of the WEP and GPO, many state and local government jobs are not covered by Social Security, according to the Bipartisan Policy Center. That’s because these workers don’t pay Social Security taxes on their earnings or get credit for that work when the Social Security Administration calculates their benefits. Instead, they are given pensions designed to replace Social Security.
Both provisions aim to reduce unfairly high payouts from Social Security. But many lawmakers, public workers and retiree groups now claim that the measures went too far and ended up punishing teachers, police officers, firefighters, government workers and others who have served in the public sector by structuring Social Security benefits from their non-government (non-covered) jobs in an unfair way.
Among the problems with the WEP and GPO are that when Congress enacted them, comprehensive data on earnings from non-covered employment did not exist, according to the Bipartisan Policy Center. This necessitated an “imprecise approach” to adjusting Social Security benefits. An additional drawback is that affected workers can find it “nearly impossible to accurately predict their Social Security benefits and, therefore, adequately prepare for retirement.”
To address these problems, a bipartisan coalition led by U.S. Rep. Garret Graves (R-La.) has introduced a bill that would eliminate both provisions and grant higher Social Security benefits to millions of pensioners. Graves is the lead sponsor of the bill and Rep. Abigail Spanberger (D-Va.) is the Democratic sponsor.
The bill had more than 300 co-sponsors last year — enough to force a House vote. But the Ways and Means Committee blocked it from going to the floor. This year, the bill has already been backed by 180 House co-sponsors. Graves’ plan is to keep adding names, secure a House vote and then pressure the Senate to act during the current session.
“This has got to be fixed,” Graves told Roll Call. “It’s unjust. You’ve been robbing these people now for over four decades.”
Past efforts to strike down the provisions have faced political pushback. However, there could be an opportunity to gain more support this year amid heightened talk about how to prop up Social Security as one of its trust funds faces depletion within the next decade.
Graves, an ally of House Speaker Kevin McCarthy (R-Calif.), has already met with new Ways and Means Chairman Jason Smith (R-Mo.) to discuss the issue.
Smith has said that he is open to discussion, but he also noted that the Graves bill doesn’t include a formula that would avoid hastening Social Security’s funding shortfall. Another concern is the cost of repealing the provisions. The Congressional Budget Office has estimated that full repeal would cost $88 billion over a decade for the WEP and $107 billion for the GPO.
For his part, Graves said he is willing to compromise to reach some kind of agreement.
Take Our Poll: Are You Concerned the US Debt Ceiling Issue Will Endanger Social Security?
Learn: Could Your Social Security Benefits be Reduced Because of an Untaxed Pension?
“I’m not saying it’s our way or the highway,” he said. “Am I willing to take progress over perfection? Yeah, I would. But I’m also not stupid enough to negotiate with myself.”
More From GOBankingRates
- 7 Florida Cities That Could Be Headed For a Housing Crisis
- Do You Have a Tax Question? Ask a Tax Pro
- Safeguard Your Retirement From Economic Turbulence
- Here's How To Build a 6-Month Emergency Fund
