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Comments to Congress on Government Pension Offset and Windfall Elimination Provision

February 27, 2003

Mr. Chairman and Members of the Subcommittee:

On behalf of the National Education Association's 2.7 million members, we would like to thank you for the opportunity to submit our comments on the Social Security Protection Act (H.R. 743). Our comments will focus solely on Section 418 of the Act, which would require a public employee to work a minimum of 60 months in a job covered by Social Security in order to avoid application of the Government Pension Offset (GPO).

NEA strongly supports complete repeal of the Government Pension Offset and the Windfall Elimination Provision (WEP), which unfairly reduce the Social Security and Social Security survivor benefits certain public employees may receive. We oppose efforts, such as that in Section 418 of the proposed Social Security Protection Act, that would close the so-called "loophole" employed by some public employees in order to avoid the devastating impacts of the GPO. Instead, we urge the Subcommittee, and the entire Congress, to address the underlying problem, by repealing the GPO and WEP. Although Section 418 attempts only to close the "loophole" with respect to the GPO, we will address both the GPO and WEP in our testimony.

The Government Pension Offset: Background

The original Social Security system, established in 1935, excluded state and local government employees from coverage. In the 1960s, however, state and local employees were given the opportunity to elect to participate in the Social Security system. As a result, public sector employees in 36 states opted to enroll in Social Security in the 1960s and 1970s.

In 1977, Congress enacted legislation requiring a dollar-for-dollar reduction of Social Security spousal benefits to public employees and retired public employees receiving earned benefits from a federal, state or local retirement system. This offset impacted educators in 15 states as well as other public servants — including police, firefighters and federal workers across the country.

In response to significant calls for repeal of this dollar-for-dollar reduction, Congress and the President agreed in 1983 to limit the spousal benefits reduction to two-thirds of a public employee's retirement system benefits. This remedial step, however, falls well short of addressing the continuing devastating impact of the GPO.

The Windfall Elimination Provision: Background

The original Social Security formula was intended to help low-paid workers by replacing a higher proportion of their earnings than for workers with higher earnings. However, the formula could not differentiate between those who worked in low-paid jobs throughout their careers and those who appeared to have been low paid because they worked many years in jobs not covered by Social Security. Congress enacted the WEP in 1983, intending to remove this advantage. Yet, instead of protecting low-earning retirees, the WEP has unfairly impacted lower-paid retirees such as educators.

The impact of the GPO on public employees

The GPO penalizes individuals who have dedicated their lives to public service, often at substantial financial sacrifice. Nationwide, more than one-third of teachers and education employees, and more than one-fifth of other public employees, are not covered by Social Security and are, therefore, subject to the Government Pension Offset. These individuals lose benefits earned by their spouses — benefits they counted on in planning their retirement.

The Government Pension Offset (GPO) reduces public employees' Social Security spousal or survivor benefits by two-thirds of their public pension. Estimates indicate that nine out of 10 public employees affected by the GPO lose their entire spousal benefit, even though their deceased spouse paid Social Security taxes for many years. Moreover, these estimates do not include those public employees or retirees who never applied for spousal benefits because they were informed they were ineligible. The offset has the harshest impact on those who can least afford the loss: lower-income women. Ironically, those impacted have less money to spend in their local economy, and sometimes have to turn to expensive government programs like food stamps to make ends meet.

For example:

  • Stella, an NEA member, worked for over 20 years in the Colorado public school system as a teacher's aide. She receives a monthly pension of $637. Her husband worked in the private sector, paying into Social Security for 50 years. After her husband's death, Stella expected to receive $520 a month in survivor benefits. However, the GPO reduced Stella's survivor benefits by 2/3 of her public pension. As a result, Stella only receives $96 a month in Social Security. Her total monthly income is $733, instead of the $1157 she would have gotten if not for the GPO.
  • NEA member Martha began working as a teacher in Texas in 1978. Martha's husband worked in the private sector and paid into Social Security. Based on his earnings, Martha should have been eligible for $970 in widow's benefits. However, Martha has also been told that, should she outlive her spouse, her widow's benefits would be reduced by 2/3 of her public pension, or by $949 a month. Therefore, her $970 benefit would be reduced to only $21 a month.

The impact of the WEP on public employees

The Windfall Elimination Provision (WEP) reduces the earned Social Security benefits of an individual who also receives a public pension from a job not covered by Social Security. While the amount of reduction depends on when the person retires and how many years of earnings he or she has accumulated, many public employees can lose up to 60 percent of the Social Security benefits they earned in other jobs.

  • NEA member Bob worked for many years in Oklahoma in jobs covered by Social Security before moving to California and becoming a teacher. He was informed by the Social Security Administration that he would receive approximately $360 a month based on his earlier earnings in the private sector. However, when he retired, Bob discovered his Social Security benefit was reduced to $172 a month because of the WEP. Bob calculates he loses $2,196 a year because of the WEP and has already lost nearly $11,000 in total.

The national impact of the GPO and WEP

The GPO and WEP have an impact far beyond those states in which public employees like educators are not covered by Social Security. Because people move from state to state, there are affected individuals everywhere. The number of people impacted across the country is growing every day as more and more people reach retirement age.

Perhaps most alarming, the GPO and WEP are impacting the recruitment of quality teachers to meet urgent national shortages. Record enrollments in public schools and the projected retirements of thousands of veteran teachers are driving an urgent need for teacher recruitment. Estimates for the number of new teachers needed range from 2.2 to 2.7 million by 2009

At the same time that policymakers are encouraging experienced people to change careers and enter the teaching profession, individuals who have worked in other careers are less likely to want to become teachers if doing so will mean a loss of Social Security benefits they have earned. Some states seeking to entice retired teachers to return to the classroom have found them reluctant to return to teaching because of the impact of the GPO and WEP. In addition, current teachers are increasingly likely to leave the profession to reduce the penalty they will incur upon retirement, and students are likely to choose other courses of study and avoid the teaching profession.

The GPO and WEP also impact other critical public service fields, including police and firefighters. Our nation can ill-afford to allow the very real fear of poverty in retirement to force talented, dedicated individuals out of these professions.

The so-called "loophole"

Educators in some states have sought to avoid the unfair and often devastating impacts of the GPO and WEP by transferring from non-Social Security school districts to school districts in which educators are covered by Social Security. By retiring from a Social Security district, these educators are then able to collect the Social Security benefits they or their spouse have earned.

The rationale behind these educators' actions is clear and understandable. Educators who have served in the public schools their whole lives, and who have counted on spousal benefits when planning their retirement, are often shocked and frightened to learn these benefits will not be there for them. Similarly, educators who paid into Social Security in previous careers are also surprised to learn that they cannot collect from the system they spent years paying into. Individuals facing retirement on substantially less income than they anticipated cannot be faulted for attempting to salvage their retirement benefits.

Given the reality of the impact of the GPO and WEP on public employees, it is clear that the underlying GPO and WEP, not the "loophole," must be fixed.


NEA urges Congress to respect, not penalize, public service. We urge you to delete section 418 of the proposed legislation as you move the rest of the bill forward. Instead of working to close a "loophole" that allows dedicated educators to avoid the harsh impacts of the GPO, Congress should focus its efforts on addressing the underlying problem.

Representatives McKeon (R-CA) and Berman (D-CA) have introduced the Social Security Fairness Act of 2003 (H.R. 594). This bipartisan legislation, which already has over 100 cosponsors, would eliminate the GPO and WEP, thereby allowing public employees, like all other employees, to collect the benefits they earned and need. The McKeon-Berman legislation garnered the bipartisan support of over 180 Members of Congress last year.

NEA urges the Subcommittee, and the entire House of Representatives, to take immediate steps toward passage of the McKeon-Berman bill. Passage of this legislation would restore equity to public employees, would prevent public servants from facing poverty in retirement, and would eliminate the need for the so-called "loophole" addressed by Section 418 of the legislation before the Subcommittee today.

We thank you for your consideration of these comments.