CRS Updates Exceptional Fallout Provision Report to Reflect Pending Legislation

The Congressional Research Service (CRS) has released an updated version of its report regarding the Fallout Elimination Provision (WEP) and Government Pension Offset (GPO). It includes a discussion of pending legislation that would affect both.

The updated version of “Social Security: The Windfall Elimination Provision (WEP),” the CRS report that addresses WEP and GPO benefit packages that reduce Social Security benefits for workers and members of their eligible family if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security – now includes information regarding bills before the Houses of Congress that would affect the formulas. “Recent legislation has generally proposed to either eliminate the provision for all or some of the affected beneficiaries, or replace the current law provision with a new proportional formula based on past earnings from covered and uncovered employment,” notes the report.

About WEP

WEP is a modified benefit formula that reduces Social Security benefits for certain retired or disabled workers who are also entitled to retirement benefits based on earnings from jobs not covered by Social Security and therefore not subject to the tax. on social security wages. It aims to remove a benefit or “bonus” that these workers would otherwise inadvertently receive due to the interaction between the regular Social Security benefit formula and the relatively short careers of workers in a job covered by Social Security.

As of December 2021, WEP affected approximately 2 million people – primarily state and local government employees covered by alternative staff retirement systems, as well as most permanent civilian federal employees hired before January 1, 1984 , which are covered by the public service. Retirement System (CSRS).

There are pros and cons regarding WEP:

  • Proponents argue that the formula is a reasonable way to prevent overly generous payments and involuntary benefits to people who have income not covered by Social Security and who receive pensions from uncovered work.
  • Opponents argue that the provision significantly reduces a benefit that workers may have included in their retirement plans, and that it disproportionately reduces benefits for low-income households. Others criticize the current WEP formula as an inaccurate way to determine the true bargain when applied to individual cases.

Legislation that would affect WEP

The pending federal legislation generally proposes either to eliminate the provision for all or some of the affected beneficiaries or to replace the current law provision with a new proportional formula based on past earnings from covered and uncovered employment.

The Public Servants Equal Treatment Act 2021

Rep. Kevin Brady (R-TX) introduced the Public Servants Equal Treatment Act of 2021, HR 5834, on Nov. 3, 2021. The bill would replace WEP with the new proportional formula for people who become eligible to social security benefits. in 2023 or later. Those becoming eligible during the transitional period between 2023 and 2061 would receive the higher of their benefit under the current entitlement WEP or the proportional formula. For those who become eligible in 2062 and after, benefits would be based solely on the proportional formula. The bill would also provide reimbursement payment starting nine months after enactment for workers (up to $100 per month) and their dependents (up to $50 per month) affected by the current WEP. Reimbursements would increase with cost of living adjustments.

Status. The measure was referred to the Committee of Ways and Means; more specifically, its subcommittee on social security. He did not do anything.

Social Security 2100: A Sacred Trust

Social Security 2100: A Sacred Trust was introduced in both houses of Congress on October 26, 2021. Rep. John Larson (D-CT) introduced the House version, HR 5723; Sen. Richard Blumenthal (D-CT) introduced the Senate version, S. 3071.

The bills include provisions that would repeal the WEP and GPO for benefits payable during the 2022-2026 period. The Social Security Administration’s Office of the Chief Actuary estimated that enacting this provision alone would increase the long-term net cost by 0.01% of taxable payroll.

Status. HR 5723 was referred to the House Ways and Means Committee – specifically, its subcommittee on Social Security; it was also referred to the House Energy and Commerce Committee — specifically, its subcommittee on health. Section 3071 has been referred to the Senate Finance Committee. They remain pending in these instances.

Welfare of Every Civil Servant Act 2021

Rep. Julia Letlow (R-LA) introduced the Every Public Servant Welfare Act of 2021, HR 4788, on July 29, 2021. It provides that people whose combined monthly benefits from Social Security and public pensions not covered are less than an indexed salary amount of $5,500 would be exempt from WEP. Beneficiaries whose combined monthly Social Security and uncovered public pension benefits are between $5,500 and $6,333 would be subject to a partial WEP reduction. The law would apply to benefits payable for months after the passage of this law.

Status. The measure was referred to the Committee of Ways and Means; more specifically, its subcommittee on social security. He did not do anything.

Social Security Equity Act of 2021

On January 4, 2021, Rep. Rodney Davis (D-IL) introduced HR 82, the House version of the Social Security Fairness Act of 2021. The bill would amend Title II of the Social Security Fairness Act of Social Security to eliminate WEP and GPO. ; it would also repeal provisions that reduce Social Security benefits for people who receive other benefits, such as a pension from a state or local government. These changes would take effect for benefits payable after December 2021. On April 22, Sen. Sherrod Brown (D-OH) introduced the Senate version, S. 1302.

Status. On July 15, 2022, a motion was introduced in the House to put the bill on the consensus calendar; on September 20, the House did; this means that the bill could be considered by the House of Representatives at the end of September. Section 1302 has been referred to the Senate Finance Committee, which has yet to make a decision on it.

Public Servants Protection and Fairness Act, 2021

On April 1, 2021, Rep. Richard Neal (D-MA), Chairman of the House Ways and Means Committee, introduced HR 2337, the Public Servants Protection and Fairness Act.

The bill would replace WEP with the new proportional formula for people who become eligible for OASDI benefits in 2023 or later. A benefit guarantee provision would allow individuals to receive the greater of their benefits under the current WEP or the proportional formula. The proposal would also provide a reimbursement payment beginning nine months after enactment for retired and disabled beneficiaries affected by the current WEP (up to $150 per month); reimbursements would increase with cost-of-living adjustments.

Status. The measure was referred to the Committee of Ways and Means; more specifically, its subcommittee on social security. He did not do anything.

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