The Congressional Research Service (CRS) has released an updated version of its report concerning the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). It now includes discussion of bills that would affect both.
The updated version of “Social Security: The Windfall Elimination Provision (WEP),” the CRS report that concerns the WEP and the GPO—benefit formulas that reduce Social Security benefits for workers and their eligible family members if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security—now includes information concerning bills before chambers of Congress that would affect the formulae. “Recent legislation has generally proposed either to eliminate the provision for all or some affected beneficiaries, or replace the current-law provision with a new proportional formula based on past earnings from both covered and noncovered employment,” notes the report.
Social Security Fairness Act of 2021
On Jan. 4, 2021, Rep. Rodney Davis (D-IL) introduced H.R. 82, the House version of the Social Security Fairness Act of 2021. The bill would amend title II of the Social Security Act to eliminate the WEP and the GPO; it also would repeal provisions that reduce Social Security benefits for individuals who receive other benefits, such as a pension from a state or local government. These changes would be effective for benefits payable after December 2021. The measure was referred to the House Ways and Means Committee, which has not taken action on it yet.
On April 22, Sen. Sherrod Brown (D-OH) introduced S. 1302, the Senate companion to H.R. 82. Brown’s bill was referred to the Senate Finance Committee, which has not taken action on it yet.
Public Servants Protection and Fairness Act of 2021
On April 1, 2021, Rep. Richard Neal (D-MA), Chairman of the House Ways and Means Committee, introduced H.R. 2337, the Public Servants Protection and Fairness Act. The measure was referred to the Ways and Means Committee.
The legislation would replace the WEP with the new proportional formula for individuals who become eligible for OASDI benefits in 2023 or later. A benefit guarantee provision would allow individuals to receive the higher of their benefit under the current-law WEP or the proportional formula. The proposal would also provide a rebate payment starting nine months after enactment for retired-worker and disabled-worker beneficiaries affected by the current WEP (up to $150 per month); the rebate payments would increase with cost-of-living adjustments.
The bill would apply to individuals who:
- first become eligible for benefits after 2022;
- have earnings from non-covered service performed after 1977; and
- have less than 30 years of coverage (i.e., years in which a beneficiary is considered to have contributed a substantial amount into the Social Security trust funds).
The bill also would provide rebates for certain beneficiaries currently affected by the existing formula.
In 2021, the Social Security Administration’s (SSA) Office of the Chief Actuary (OCACT) estimated that the bill would increase program expenditures by about $30.6 billion (mainly from the rebate) between 2021 and 2030, which would be reimbursed from the General Fund of the U.S. Treasury. In the long run—which it defines as 75 years—the OCACT says that the projected program cost would increase by an amount equal to 0.02% of taxable payroll, and the projected program income would increase by the same amount with transfers from the General Fund.
SSA Chief Actuary Stephen C. Goss in a letter to Neal responding to the Chairman’s request for information about the financial effects on the Social Security Trust Funds of the Public Servants Protection and Fairness Act of 2021, wrote that “Over the long-range 75-year period, we estimate that enactment of the bill would increase OASDI program cost and program income each by 0.02 percent of taxable payroll, thus having no significant effect on the OASDI actuarial balance.”
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