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Retirement Planning > Social Security

Critics Bash Social Security Windfall Elimination Policies

By John Manganaro

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What You Need to Know

  • Hearing witnesses called on Congress to end the windfall elimination provision and government pension offset.
  • The speakers said these policies can leave public service workers and their spouses vulnerable to poverty in advanced age.
  • One bill to eliminate both provisions enjoys bipartisan support, but its path to passage remains murky.

A number of federal lawmakers, government worker union leaders and lifelong first responders called once again this week for the abolition of Social Security’s windfall elimination provision and the program’s government pension offset rules, arguing that these policies can leave public service workers and their spouses vulnerable to poverty in advanced age.

The witnesses made their case during a hearing hosted by Rep. Mike Carey, R-Ohio., at a St. George Fire Department facility in Baton Rouge, Louisiana. During the more than 90-minute discussion, Carey and a list of speakers that included the national president of the Fraternal Order of Police urged congressional action to swiftly eliminate both the windfall elimination provision and the government pension offset.

As Carey recalled in his opening remarks, the windfall and pension provisions were established decades ago to address flaws in Social Security’s benefits formula that could result in certain government workers receiving higher Social Security benefits as if they were longtime low-wage earners — despite having had substantial work earnings and being paid a pension benefit.

In the years since, however, stakeholders have raised a variety of issues with the ways the windfall elimination provision and government pension offset are calculated, communicated and ultimately applied — arguing that the provisions are flawed concepts that often treat public servants unfairly in practice. Much of the criticism pertains to the way the Social Security benefits of spouses of longtime government workers can be affected, especially in situations of widowhood.

“While intended to prevent overly generous benefits, these policies sometimes undercorrect, but more often they overcorrect benefits,” Carey said.

During the hearing, Carey and other witnesses praised the recent reintroduction of legislation that would do away with both provisions, and they called on Congress to enact the proposal without delay.

“Far too often, people are unaware that they are subject to the WEP and GPO until they or their spouse retire,” Carey warned. “Some people return to work and others have to adjust their spending habits or reevaluate their standard of living.”

What Is the WEP?

As explained by the hearing witnesses, the windfall elimination provision is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security — and thus not subject to the Social Security payroll tax.

Its purpose is to remove an unintended advantage that these workers sometimes receive as a result of the interaction between the regular Social Security benefit formula and the workers’ relatively short careers in Social Security-covered employment.

While participation in Social Security is compulsory for most workers, government data shows that about 6% of all workers in paid employment or self-employment are not covered by Social Security. As of December 2022, some 2 million people (or about 3% of all Social Security beneficiaries) were affected by the windfall elimination provision.

These workers mainly include state and local government employees covered by alternative staff-retirement systems as well as most permanent civilian federal employees hired before Jan. 1, 1984. This latter group is generally covered by the Civil Service Retirement System.

The government pension offset, for its part, applies if a person receives a government pension plus spousal or survivor benefits from Social Security. Depending on the circumstances, benefits can be reduced by up to two-thirds of the pension amount.

Real-World Effects

Among the witnesses to speak at the hearing was Patrick Yoes, a retired Louisiana law enforcement officer and national president of the Fraternal Order of Police. He was joined by a trio of retired Louisiana public servants — a police officer, a firefighter and an educator —  who testified about the negative affect the provisions have had on their lives.

“While I welcome the opportunity to be here with you today to talk about how the WEP and GPO hurt our nation’s retired law enforcement officers, I am also here to express the deep frustration of my members,” Yoes said. “Simply put, law enforcement officers who served in an agency outside the Social Security system may lose up to 60% of the Social Security benefit to which they are entitled by virtue of secondary or post-retirement employment which requires them to pay into the Social Security system.”

As Yoes stressed, this 60% “is a lot of money, especially when you consider that the officer and his or her family were likely counting on that benefit when they planned for retirement.”

According to Yoes and the other speakers, after 20 or 25 years on the job, many law enforcement officers who retire begin second careers and work in jobs that do pay into the Social Security system. Even more officers are likely to “moonlight” during their careers, Yoes said. That is, they hold second or even third jobs in order to augment their law enforcement income.

“This creates an unjust situation that too many of our members find themselves in,” Yoes said. “They are entitled to a state or local retirement benefit because they worked 20 or more years keeping their streets and neighborhoods safe, but they also worked at a job or jobs in which they paid into Social Security, entitling them to that benefit as well.”

However, because of the windfall elimination provision, if workers’ second careers resulted in less than 20 years of substantial earnings, upon reaching the age they are eligible to collect Social Security, they will discover that they lose a substantial portion of the benefit for which they were taxed.

“Actuarially speaking, I doubt many officers will live long enough to break even and collect the money they paid into the system, let alone receive any ‘windfall,’” Yoes said. “These men and women earned their state or local retirement benefit as public employees and they paid Social Security taxes while employed in the private sector. How is this a windfall?”

As Yoes explained, the government pension offset affects fewer people, but its ramifications can sometimes be more profound. The result is that many Americans find themselves blindsided by unanticipated benefit reductions at a vulnerable moment.

Hope for a Fix

Yoes and the other speakers repeatedly called on Congress to address these issues, noting that one piece of relevant legislation, the Social Security Fairness Act, already has more than 300 bipartisan co-sponsors and enjoys the support of key stakeholder groups like the Fraternal Order of Police.

“The manifest unfairness of the WEP and GPO provisions are well-documented, but it has been 15 years since Congress has examined this issue despite the fact that the Social Security Fairness Act has gotten more than 300 cosponsors in this and the previous Congress,” Yoes said. “In fact, this bill — which is a top legislative priority for the FOP — has routinely gotten support from a majority of House members going back for years no matter which party was in control.”

As Yoes recalled, between 2000 and 2008, the House and Senate held a combined seven hearings on the two provisions, but there has been no action or consideration of the bill since that time apart from a committee markup last year to prevent the legislation from moving off the consensus calendar under the rules of the House.

Credit: Adobe Stock 

John Manganaro

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