Neal Reintroduces Proposal to Fix WEP

Rep. Richard Neal (D-MA), ranking member of the House Ways and Means Committee, on June 21 reintroduced legislation that would make a variety of adjustments to the windfall elimination provision (WEP). 

The Public Servants Protection and Fairness Act of 2023 would:

• introduce a new proportional formula to the WEP;
• provide immediate relief to current Social Security beneficiaries affected by the WEP; 
• provide an extra $150 a month to current beneficiaries, and those turning 62 before 2025, who are affected by the WEP due to their own public service work, starting nine months after enactment and continuing for as long as the eligible individuals are receiving Social Security benefits; 
• provide that future retirees—those turning 62 in 2025 and later—will be eligible for a new benefit formula, called the Public Servant Protection (PSP) formula; 
• provide a permanent benefit guarantee for all future retirees stating that if someone’s PSP benefit is not as high as their WEP benefit, they would automatically receive the higher benefit; and
• state that the relief amount could not exceed the size of each person’s current WEP reduction.

In a press release, Neal said that the WEP affects 2 million retired public servants across the country, including almost 90,000 in Massachusetts, and said that “our firefighters, teachers, and police officers deserve relief.” Neal adds  that, “With this legislation, these valued members of our communities will have greater retirement security and peace of mind.”

Not Alone

Neal and the co-sponsors of his bill are not lone wolves. Not only has legislation to that effect been introduced in the past, three states are currently calling for action concerning the WEP and the government pension offset (GPO). The Maine legislature is considering a resolution that calls on the Maine Public Employees Retirement System to study the creation of an interstate compact with other states affected by the WEP and the government pension offset (GPO). And legislation is before the legislatures of Illinois and Louisiana that call on Congress for outright repeal of both. 

About the WEP 

The WEP is intended to remove an advantage or “windfall” some employees would otherwise inadvertently receive due to the interaction between the regular Social Security benefit formula and their relatively short careers in Social Security-covered employment. 

How many? According to the Congressional Research Service (CRS), in December 2021, the WEP affected around 2 million people—mainly state and local government employees covered by alternative staff-retirement systems, as well as most permanent civilian federal employees hired before Jan. 1, 1984, who are covered by the Civil Service Retirement System. 

Yea and Nay. The WEP has its supporters and detractors.

Supporters argue that it is a reasonable tool for preventing overgenerous payments and unintended benefits being provided to people who have earnings Social Security does not cover and who receive pensions from noncovered work.

Detractors argue that the WEP substantially reduces a benefit that workers may have included in their retirement plans, and it cuts benefits disproportionately for those with lower incomes. Others say the current WEP formula is an imprecise way to determine the actual windfall when it is applied to individual cases.