The House of Representatives passed legislation this week that would eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These are two provisions that can impact Social Security for some retired federal employees.
The Social Security Fairness Act (H.R. 82) was introduced last year by Congressman Garret Graves (R-LA).
Federal employee advocacy groups are hailing the passage of the legislation in the House as a win for federal retirees. NARFE National President William “Bill” Shackelford said:
We’ve waited over 40 years to get to this moment. We wholeheartedly applaud the representatives who have supported this bill, and especially those lawmakers who supported H.R. 82 during tonight’s supermajority vote. This passage ensures a significant step in a movement to bring the Social Security Fairness Act to a vote. In NARFE’s entire history, we have not made it this far in our concerted effort to repeal the harmful Windfall Elimination Provision and Government Pension Offset.
Brian Renfroe, President, National Association of Letter Carriers, said, “This is a major win for letter carriers and other federal annuitants who have been victimized by the WEP and GPO for decades.”
He added, “With House passage, we are one step closer to finally righting this wrong that impacts so many CSRS retirees.”
NARFE has called the WEP and GPO “unfair and punitive” in the past in describing them. Earlier this year, Shackelford wrote in a letter to the House Ways and Means Committee:
WEP and GPO were arbitrary, unfair and punitive when they were enacted, and remain so today. That they have been permitted to remain on the books for decades only makes their impact worse. Year after year, the WEP and GPO penalize public workers, including federal employees, police officers, firefighters, teachers, and more, simply because these individuals earned a pension through their service to their nation and local communities.
Arguments Against Repeal
While arguments against the repeal of the GPO and WEP are often lost in lobbying efforts, there are several.
The first concern is the cost. Critics contend that eliminating the GPO and WEP increases the financial burden on the Social Security system, potentially damaging its long-term strength.
According to the Congressional Budget Office (CBO), the cost of eliminating the WEP and GPO would be $196 billion over the next 10 years. This would put increased financial strain on a system that is already in a perilous financial position.
The second concern is expressed as issues of equity and fairness. Opponents argue that GPO and WEP were implemented to ensure fairness in benefit distribution, including those at lower income levels. Eliminating these provisions could result in a less equitable distribution of benefits for those with lower income levels.
Third is the potential impact on other social programs by putting a financial burden on the Social Security System. These are concerns about the broader impact of H.R. 82 on other social programs, as changes to Social Security policies can have cascading effects on related programs and government finances.
What Was the Purpose of the WEP and GPO?
It is helpful to understand the original rationale for why these two bills (GPO and WEP) were initially passed into law.
Government Pension Offset (GPO)
The GPO was passed in 1983 and designed to ensure individuals receiving government pensions from work not covered by Social Security (such as federal workers under the CSRS) did not receive spousal or survivor benefits exceeding what they would receive if they had earned a Social Security benefit through covered employment.
The GPO reduces spousal or survivor benefits by two-thirds of the government pension amount. The effect of this on the Social Security benefit to which you would be entitled on the earnings record of another person may be substantial.
Windfall Elimination Provision (WEP)
The WEP was also enacted in 1983 as part of the significant amendments for shoring up financing for the Social Security program. The purpose was to remove an unintended advantage or “windfall” that the regular Social Security benefit formula provided to workers who also had pensions from non-covered employment.
In other words, WEP was enacted to address situations where individuals receive both a pension from non-Social Security covered employment and Social Security benefits from covered employment. This can result in a person receiving larger benefits than what a worker with similar total lifetime earnings solely from covered employment would receive.
WEP adjusts the Social Security benefit formula for individuals with pensions from non-covered employment, resulting in a lower, sometimes a much lower, Social Security benefit than they would receive without the pension.
This Social Security calculator may help some readers determine the WEP’s financial impact on retirement income.
Effects of the WEP and GPO
The WEP and GPO are two provisions of the Social Security law affecting Social Security benefits for some CSRS retirees. The WEP can apply to CSRS Offset and FERS Transferee retirees as well.
These two provisions were introduced in the 1980s to strengthen the Social Security system. Unions and public employee advocates in Congress have worked to repeal or revise them since the bills were passed.
The GPO does not apply to CSRS Offset and FERS Transferees once they have worked under CSRS Offset or FERS for five years.
Like many other retirement rules and regulations, the Windfall Elimination Provision and the Government Pension Offset are confusing. Consider the titles of these programs:
- The Windfall Elimination Provision does not eliminate a Social Security benefit to which you are entitled on your own earnings record. It will usually drastically reduce the benefit.
- The Government Pension Offset’s offset of any Social Security benefit to which you would be entitled on the earnings record of another may eliminate this benefit.
These provisions can impact FERS and CSRS employees to some extent. They apply to anyone who has earned pension benefits based on work not covered by Social Security. This includes CSRS Offset employees and FERS employees who transferred from CSRS after having five years of civilian service (enough to entitle them to a CSRS retirement benefit).
Will It Pass?
Numerous legislative efforts have been made over the years to repeal the WEP and GPO and have ultimately not ever passed into law. While it is not possible to know for certain what the outcome will be, there appears to be a lot of support in Congress for the legislation. As of the time of this writing, a companion bill in the Senate has 62 co-sponsors.
Presumably President Biden would sign the bill if it passed the Senate as he has supported repealing these provisions in the past.
