NEA statement on the Government Pension Offset
September 24, 2003
Madam Chairperson and Members of the Committee:
On behalf of the National Education Association's 2.7 million members, we would like to thank you for the opportunity to submit comments on the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP), and on the issue of mandatory Social Security coverage. We commend the Committee for holding this important hearing on a matter of great concern to educators and other public employees.
NEA strongly supports complete repeal of the Government Pension Offset and the Windfall Elimination Provision, which unfairly reduce the Social Security and Social Security survivor benefits certain public employees may receive.
The Government Pension Offset: A devastating loss of benefits for widows and widowers
The Government Pension Offset reduces Social Security spousal or survivor benefits by two-thirds of the individual's public pension. Thus, a teacher who receives a public pension for a job not covered by Social Security will lose much or all of any spousal survivor benefits she would expect to collect based on her husband's private-sector earnings.
Congress and the President agreed in 1983 to reduce the spousal benefits reduction from a dollar-for-dollar reduction to a reduction based on 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 GPO penalizes individuals who have dedicated their lives to public service. 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.
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.
NEA receives hundreds of phone calls and letters each month from educators impacted by the GPO. Many are struggling to survive on incomes close to poverty, fearing they will be unable to cover their housing, medical and food expenses on their meager incomes. For example, consider the following stories:
From NEA member Dorothea in Ohio:
"When my husband and I were planning our retirement, we knew that I would not be able to receive full retirement credit from the years I was able to teach. However, with my share of his Social Security, and a small annuity, we felt that we were adequately covered. [A]fter I started teaching, the Offset Penalty was voted into effect and the Social Security he contributed to for over 35 years is not available to me. Currently I receive $203 a month as my share of his Social Security. It just is not fair —if he could rise from to grave in protest, I'm sure he would. One goes to college, marries, raises a family and, in this country, expects to be able to retire in a comfortable situation. I'm only asking for benefits which my husband and I have earned — it's time to correct this injustice."
From NEA member Patricia in Texas:
"I am a retired teacher…who chose to say at home and be with my four children during those most important early development years. I did not begin teaching until I was 40 years old and left at 55 because my husband had retired…. My retired pay is $517 per month. Next year when I am 65 and the GPO is used to calculate my Social Security benefits, I will be lucky if I can get enough to pay for my Medicare costs."
The Windfall Elimination Provision: A shocking loss of earned benefits
The Windfall Elimination Provision reduces the earned Social Security benefits of an individual who also receives a public pension from a job not covered by Social Security. Congress enacted the WEP ostensibly to remove an advantage for short-term, higher-paid workers under the original Social Security formula. Yet, instead of protecting low-earning retirees, the WEP has unfairly impacted lower-paid retirees such as educators.
The WEP penalizes individuals who move into teaching from private-sector employment, or who seek to supplement their often insufficient public wages by working part-time or in the summer months in jobs covered by Social Security. Educators enter the profession often at considerable financial sacrifice because of their commitment to our nation's children and their belief in the importance of ensuring every child the opportunity to excel. Yet, many of these dedicated individuals are unaware that their choice to educate America's children comes at a price — the loss of benefits they earned in other jobs.
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 a significant portion of the Social Security benefits they earned in other jobs. Like the GPO, the WEP can have a devastating impact on educators' retirement security. For example:
NEA member Lytell from California reports:
"This offset makes my life a financially insecure one. Down the road, I will be desperate. I had always wanted to be a teacher. … I worked as a medical secretary for 10 years. As I matured, I decided to go back and fulfill my earlier dream. It took four years of financial hardship and other lifestyle sacrifices but I persevered. …. Finally, I was able to get a job in a remote Idaho town, leaving my family, friends and worn-out car behind. And so began a wonderful and rewarding career. …As the second half of my working life [in California] came to a halt, I learned that I would be financially penalized for teaching here in California…. I have to work to supplement my retirement, having experienced a 50 percent penalty in my Social Security benefits…. When I can no longer work, I am afraid that I will lose my home…. It's a very frightening thought."
From NEA member Marilyn in Ohio:
"In June of 1956 I graduated from high school and began working as secretary to the president of Dime Bank in Akron, Ohio. ... I worked there for a little over seven years, leaving to raise three children. I worked [in retail] during the hours the children were in school (still paying into SS). In February of 1985 I took a part-time position at the University of Akron, which later turned to full-time. In March of 2000, I reported to my Social Security Office in Akron, Ohio to make plans for my retirement. …. I was retiring with 15 years of service. For several years prior, I had been receiving information by mail from the Social Security Office that I would be receiving $1,022 a month in Social Security benefits upon retirement. [However, I was told] 'since you retired from the University of Akron, you will only receive $220 per month.' I was angry, astonished, upset and I cried. I … was absolutely amazed that I had been put into such a position. Consequently, I am still working through a temporary job placement company, pouring my money into Social Security coffers, for which I will only receive $220 a month until the day I die. Is this fair?"
From NEA member Theresa in Illinois:
"Currently, I am a guidance counselor at Lockport Township High School. I also have experience teaching special education in low-income and inner-city high schools. Prior to entering the education field, I was working in the business world and paying into Social Security. I am a single person with no other income. I decided to leave the business world and teach. I never realized this move would jeopardize my social security money when I retired. … [B]ecause I did work in the business world for years I do not have an opportunity to put in the full amount of years to receive a full teacher's pension. I will not receive a full teacher's pension either. Since I have never married, I will not receive any spouse benefits. … I find it appalling that teachers are bearing this burden. Teachers who changed careers should not be penalized from receiving full social security benefits."
The "double whammy": Educators impacted by both the GPO and WEP
Many NEA members report that they are subject to double penalties — losing both their own benefits and spousal benefits due to the combined impact of the GPO and WEP.
For example NEA member Mary from Ohio reports:
"I became a teacher at the age of 41 after working at various jobs under Social Security for 20+ years. I'm 64 years old and retired now. Little did I know the financial impact my decision to become a teacher at midlife would have on my retirement. I can only collect 40 percent of the Social Security I worked for and paid into for many years — a whopping $189 a month. Worse yet, if my husband dies before me, I will collect NONE of the Social Security benefits he paid into for 30 years. I didn't teach long enough to receive a full teacher's pension — silly me, I always thought Social Security would help fill the gap. After all, I worked for it, didn't I? Wrong! … I feel betrayed. What a terrible way to treat someone who dedicated half her work life to the education of children. I know the $250 (approximately) a month I'm missing due to the WEP is small change to [Congress], but it would help me tremendously to get through the month, especially with the cost of health care for my husband and me through the State Teachers' Retirement System. I don't know how much I will lose in Social Security benefits if my husband dies first, but I'm sure however much it is, I will miss it dreadfully."
The national impact of the GPO and WEP: Undermining teacher recruitment efforts
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 services 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 GPO/WEP solution: Total repeal
NEA commends the Chair for sponsoring the Social Security Fairness Act of 2003 (S. 349), along with Senator Feinstein. This bipartisan legislation would eliminate the GPO and WEP, thereby allowing public employees, like all other employees, to collect the benefits they earned and need.
While other proposals would address the GPO and WEP by making changes to the formulas or setting minimum benefit levels, NEA strongly believes that total repeal is the best solution. The change in the GPO formula enacted in 1983 has still left thousands of retired educators in desperate financial circumstances. Only a complete repeal will ensure the financial security our nation's public servants deserve.