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Windfall Elimination Provision and the Government Pension Offset Ongress Approved the Wind- Tiplier for Those with 30 Years of Such Earnings

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Windfall Elimination Provision and the Government Pension Offset Ongress Approved the Wind- Tiplier for Those with 30 Years of Such Earnings Director of Retired Members Windfall Elimination Provision and the Government Pension Offset ongress approved the Wind- tiplier for those with 30 years of such earnings. fall Elimination Provision (WEP) The main reason Congress gave for including this provision Cin 1983, as part of a larger pack- in the overall Social Security reform package was to remove age of Social Security reforms (which a so-called windfall that these employees would receive for also included an increase in the full participating in two retirement systems. This false perception retirement age). is completely unfair when compared to workers in the private This provision reduces the Social sector whose Social Security benefits are not reduced if they Security benefit of a public employee receive benefits from their private pension plans. CSRS em- who has job earnings in non-Social ployees earned their full Social Security benefits and are en- Security-covered employment, but titled to receive them. who also worked in covered em- In December 2020, about 2 million Americans were being ployment and qualified for a Social adversely affected by the WEP provision, a number that will Security benefit by working at least grow as more CSRS employees retire. FERS retirees are not 40 quarters (or 10 years). The WEP affected. directly affects many state and local Dan government employees who are cov- The Government Pension Offset ered by alternative retirement sys- Toth tems. It also affects most permanent Social Security pays benefits to the spouses of retired and civilian federal employees hired be- disabled workers and to widow(er)s of deceased workers. fore Jan. 1, 1984, who are covered by the Civil Service Retire- The Government Pension Offset (GPO) is intended to regulate ment System (CSRS). Upon retirement, workers can see their Social Security benefits for spouses who receive pensions Social Security benefits reduced by as much as 55 percent. based on non-Social Security-covered employment. The WEP affects the determination of a new retiree’s month- The GPO typically eliminates most, if not all, of the other- ly Social Security benefit, the primary insurance amount (PIA). wise payable spousal and survivor benefits for retirees who This is done by separating your average earnings into three receive a government annuity for non-Social Security work. amounts and multiplying the amounts using three factors to That’s because the GPO reduces Social Security spousal and compute your full PIA. For example, for a worker who turns 62 survivor benefits by $2 for every $3 paid in CSRS annuity ben- in 2021, the first $996 of average monthly earnings is mul- efits to affected retirees. tiplied by 90 percent; earnings between $996 and $6,002 For example, if a CSRS retiree’s spouse receives $2,000 in are multiplied by 32 percent; and the balance is multiplied Social Security retirement benefits, the 50 percent spousal by 15 percent. The sum of the three amounts equals the PIA, benefit would normally be $1,000 per month. But if the an- which is then decreased or increased depending on whether nuitant receives $3,000 in CSRS benefits, his spousal benefit the worker starts benefits before or after full retirement age. would be totally eliminated. This formula produces the monthly payment amount. That’s how the calculation works for private-sector workers Legal and legislative action and/or Federal Employees Retirement System (FERS) work- ers. But for CSRS retirees, the first bracket of the calculation is At our 70th biennial convention in Los Angeles, the Execu- different. The Social Security Administration (SSA) multiplies tive Council approved a resolution to file a class-action law- the first $996 of their average indexed monthly earnings suit on behalf of CSRS and FERS-transferee retirees with the (from private sector jobs) by 40 percent instead of 90 per- U.S. federal court to repeal the GPO and the WEP. Since that cent—reducing the benefit by up to $498 per month ($5,976 time, the national union looked into the class-action suit and annually). This is grossly unfair, as workers with private pen- found that it was not a viable option. Now NALC is pursuing sions face no similar reduction in Social Security benefits. an alternative legal strategy focusing on how the law discrim- The impact of the WEP can be reduced if CSRS workers inates between private and public pensioners. Meanwhile, have at least 21 years of substantial earnings from Social Se- we will also continue to seek redress through the legislative curity-covered employment (in private-sector jobs before and process. after their CSRS employment—or through second jobs during Working with the NALC, Congress has just reintroduced the their federal service). The 40 percent multiplier is increased Social Security Fairness Act of 2021 (H.R. 82). This legislation to 45 percent for a worker with 21 years of substantial Social would completely repeal the GPO and the WEP titles of the Security earnings—and by 5 percent for each additional year Social Security Act. In just a couple of months, we already of such earnings—until it reaches the normal 90 percent mul- have strong bipartisan support moving forward on this bill. May 2021 May 2021 The Postal Record 43.
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