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Retirement Planning > Social Security

Bill Would Boost Social Security for Some Public Workers

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What You Need to Know

  • The bill would establish a "new, fairer" Windfall Elimination Provision formula, Rep. Neal says.
  • WEP unfairly penalizes many public employees, Neal said.
  • Current WEP retirees will receive $150 a month in relief payments.

House Ways and Means Committee Chairman Richard Neal, D-Mass., reintroduced on April 1 the Public Servants Protection and Fairness Act of 2021, legislation that fixes Social Security’s Windfall Elimination Provision (WEP), a law that reduces the Social Security benefits of certain public workers who receive pensions and don’t pay Social Security taxes.

“Originally, the WEP was intended to equalize the Social Security benefit formula for workers with similar earnings histories, both inside and outside of the Social Security system,” Neal said in a statement. “However, in practice, it unfairly penalizes many public employees.”

The “much-needed reforms” in the bill provide “meaningful WEP relief to current retirees and public employees while treating all workers fairly,” Neal said.

As the Social Security Administration explains, the WEP can affect how it calculates workers’ retirement or disability benefit.

“If you work for an employer who doesn’t withhold Social Security taxes from your salary, such as a government agency or an employer in another country, any retirement or disability pension you get from that work can reduce your Social Security benefits,” the SSA explained.

The WEP “can reduce your U.S. retirement or disability benefits if you receive a pension based on work and you did not pay U.S. Social Security taxes on those earnings,” according to the agency.

Neal said his bill “establishes a new, fairer” WEP formula.

The Public Servants Protection and Fairness Act was introduced last year and “garnered more support in Congress last year than any previous WEP reform bill,” Neal said. “This year, I look forward to building on that momentum to advance the bill even further, and we’re off to a running start with 139 original cosponsors.”

The WEP “negatively affects nearly 2 million retired public servants across the country, including 83,000 in Massachusetts,” Neal said.

The bill creates an alternative formula for new retirees who become eligible for benefits starting in 2023, coupled with a benefit guarantee ensuring no benefit cuts relative to current law for all current and future retirees. Current WEP retirees will receive $150 a month in relief payments.

The bill would change the current-law WEP by adding a new formula, referred to as the Public Servant Protection (PSP) formula.

“Individuals who have non-covered earnings and become eligible for OASDI benefits in 2023 or later would receive the higher of their benefit using the PSP or their benefit using the current-law WEP,” Stephen Goss, chief actuary for the Social Security Administration, stated in a letter to Neal.

The proposal would also provide for a “relief payment” for months beginning at least 270 days after enactment for retired-worker and disabled-worker beneficiaries first eligible before 2023 who are affected by the current WEP, Goss said.

Social Security Works endorsed Neal’s bill. “Our public employees work hard for all of us. Their Social Security benefits should be expanded, not reduced, as the so-called WEP provision currently does,” said Nancy Altman, president of Social Security Works, in a Wednesday email to ThinkAdvisor.

“The legislation is well crafted; it provides millions of public servants with larger benefits, cutting no one’s benefits, now or in the future.”

Congress, Altman said, “should pass it into law at the earliest possible opportunity.”


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