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April 16, 2024 at 05:13 PM
What You Need to Know
- A House panel held another hearing on the much-debated Social Security windfall elimination provision and the program’s government pension offset rules.
- Much of the criticism pertains to the way the Social Security benefits of spouses of longtime government workers can be affected by WEP and GPO.
- The bigger topic of Social Security insolvency in the early to mid-2030s also came up time and again in the hearing.
The Social Security Subcommittee of the U.S. House Committee on Ways and Means hosted another hearing Tuesday to dissect Social Security’s much-debated windfall elimination provision and the program’s government pension offset rules.
While their testimony differed in some key ways with respect to how Social Security’s broader funding woes should be addressed, all of the subcommittee’s witnesses agreed that communication problems and poor public appreciation of the “WEP” and “GPO” policies can leave public service workers and their spouses vulnerable to big surprises in retirement.
Many people fail to realize that they will be subject to either the WEP or GPO in the already challenging Social Security claiming process, meaning they may end up making suboptimal choices about when and how to retire.
Adding to the problem, according to the witnesses, is the fact that the complexity of the WEP and GPO policies actually leads the Social Security Administration to make a small but not insignificant number of erroneous payments to beneficiaries, which can then potentially be clawed back.
At best, the result of all this is a confusing, often rage-inducing Social Security claiming experience for public-sector workers and their families. At worst, the current system results in added hardship and a higher potential for poverty in retirement for people who have dedicated their working lives to the public sector.
Called before the panel were Jason Fichtner, a former Social Security official and current chief economist at the Bipartisan Policy Center; Rachel Greszler, visiting fellow in workforce at the Economic Policy Innovation Center; Nancy Altman, president of Social Security Works; and Charles Blahous, the J. Fish and Lillian F. Smith chair and senior research strategist at the Mercatus Center at George Mason University.
As the witnesses explained in their opening remarks and in response to member questions, the windfall and pension provisions were established decades ago to address flaws in Social Security’s benefit 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 commensurate government pension benefit.
Blahous pointed out that the establishment of these policies nearly 50 years ago was seen as a matter of necessity and fairness, because people with ostensibly similar earnings histories could see substantially different outcomes in the benefit filing process depending on how their earnings history was balanced across covered and non-covered work.
