[Senate Hearing 108-279]
[From the U.S. Government Publishing Office]
S. Hrg. 108-279
PENALTY FOR PUBLIC SERVICE: DO THE SOCIAL SECURITY GOVERNMENT PENSION
OFFSET AND WINDFALL ELIMINATION PROVISION UNFAIRLY DISCRIMINATE AGAINST
EMPLOYEES AND RETIREES?
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HEARING
before the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 24, 2003
__________
Printed for the use of the Committee on Governmental Affairs
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WASHINGTON : 2003
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COMMITTEE ON GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Michael D. Bopp, Staff Director and Chief Counsel
Jennifer A. Hemingway, Professional Staff Member
Priscilla Hobson Hanley, Professional Staff Member
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Larry B. Novey, Minority Counsel
Amy B. Newhouse, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 4
Senator Akaka................................................ 6
Prepared statement:
Senator Lautenberg........................................... 31
WITNESSES
Wednesday, September 24, 2003
Hon. Dianne Feinstein, a U.S. Senator from the State of
California..................................................... 1
Jo Anne B. Barnhart, Commissioner, Social Security Administration 8
Julia Worcester, Columbia, Maine................................. 19
Charles L. Fallis, National President, National Association of
Retired Federal Employees...................................... 21
Kenneth Rocks, National Vice President, Fraternal Order of Police 23
Alphabetical List of Witnesses
Barnhart, Jo Anne B.:
Testimony.................................................... 8
Prepared Statement........................................... 32
Fallis, Charles L.:
Testimony.................................................... 21
Prepared Statement........................................... 46
Feinstein, Hon. Dianne:
Testimony.................................................... 1
Rocks, Kenneth:
Testimony.................................................... 23
Prepared Statement........................................... 52
Worcester, Julia:
Testimony.................................................... 19
Prepared Statement........................................... 42
Appendix
Hon. Barbara A. Mikulski, a U.S. Senator from the State of
Maryland, prepared statement................................... 56
Maria M. Alamor and Leo R. Alamar, Social Security Administration
Decision submitted by Mr. Fallis............................... 59
Additional prepared statements submitted for the Record:
Ronald S. Dick, Silver Spring, Maryland...................... 70
Junita Drisko, Orrington, Maine.............................. 72
Carolyn T. Engers, Joliet, Illinois.......................... 73
Jane Nelson, Cleveland, Texas................................ 76
Sharon Richard, Sour Lake, Texas............................. 78
Suzanne Shaw, Penobscot, Maine............................... 81
Ralph White, President, Retired State, County and Municipal
Employees Association of Massachusetts, and Shawn Duhamel,
Legislative Liaison........................................ 87
Patricia Wolfe, President, Federally Employed Women (FEW).... 90
PENALTY FOR PUBLIC SERVICE: DO THE SOCIAL SECURITY GOVERNMENT PENSION
OFFSET AND WINDFALL ELIMINATION PROVISION UNFAIRLY DISCRIMINATE AGAINST
EMPLOYEES AND RETIREES?
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WEDNESDAY, SEPTEMBER 24, 2003
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 9:33 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins and Akaka.
Chairman Collins. The Committee will come to order.
Good morning. Today, the Committee on Governmental Affairs
is holding a hearing to examine the effect that the Social
Security government pension offset and the windfall elimination
provisions have on public employees and retirees.
I am going to go immediately to the distinguished senior
Senator from California, Senator Dianne Feinstein, for her
opening statement because of scheduling considerations. I will
then resume with my own opening statement and we will continue
with the hearing.
I want to welcome Senator Feinstein here this morning. She
has been such a leader in the Senate in remedying this inequity
that has affected so many of our constituents. I am very proud
to be the lead Republican cosponsor of the legislation that
Senator Feinstein has introduced. We work together on many
issues and it is a great pleasure to welcome her to the
Committee this morning.
Senator Feinstein.
TESTIMONY OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE
STATE OF CALIFORNIA
Senator Feinstein. Thank you very much, Madam Chairman. I
appreciate your holding this hearing, and even more than that I
appreciate your cosponsorship of this legislation which we
together have introduced, along with 21 others of our body.
The reason we have introduced it is because under current
law, public employees, whose salaries are often lower than
those in the private sector, actually find that they are
penalized and held to a different standard when it comes to
retirement benefits. The arbitrary reduction in their benefits
makes it more difficult to recruit teachers, police officers,
and firefighters, and it does so at a time when we should be
doing everything we can to recruit the very best and brightest
to these careers.
I am very delighted to have introduced you to Bill Lambert,
of the United Teachers of Los Angeles. He represents some
48,000 teachers, the dominant majority of whom lose benefits
under the present system that no one in the private sector
does, and that is what our bill seeks to remedy.
The current government pension offset provision reduces
Social Security spousal benefits by an amount equal to two-
thirds of the spouse's public employment civil service pension.
This can have the effect of taking away entirely a spouse's
benefits from Social Security, and as one might guess, this
provision disproportionately affects women. So as Mr. Lambert
just said to you, you had better hope if you are going to be a
teacher that you live a long time because if you don't, your
spouse is going to be disadvantaged because you chose a public
career rather than a private one.
The Social Security windfall elimination provision reduces
Social Security benefits for retirees who pay into Social
Security and also receive a government pension, such as from a
teacher retirement fund. Private sector retirees receive
monthly Social Security checks equal to 90 percent of the first
$561 in average monthly earnings, plus 32 percent of monthly
earnings up to $3,381, and 15 percent of earnings above $3,381.
Government pensioners, however, are only allowed to receive 40
percent of the first $561 in career monthly earnings. Now, that
is a penalty of $280.50. It is a big penalty for people who
really need those funds. To my mind, it is simply unfair.
Our legislation will allow government pensioners the chance
to earn the 90 percent to which non-government pension
recipients are entitled. I don't understand why we want to
discourage people from pursuing careers in public service by
essentially saying that if you do enter public service, your
family is going to suffer by not being able to receive the full
retirement benefits they would otherwise be entitled to.
Record enrollments in public schools and the projected
retirements of thousands of veteran teachers are driving this
urgent need for teacher recruitment. Efforts to reduce class
size also necessitate hiring additional teachers. It is
estimated that schools will need to hire between 2.2 and 2.7
million new teachers nationwide by 2009.
My State, California, currently has more than 285,000
teachers, but is going to need to hire an additional 300,000
teachers by 2010 to keep up with California's rate of student
enrollment, which is three times the national average. All in
all, California has to hire 26,000 new teachers.
Now, to combat the growing teacher crisis, 45 States and
the District of Columbia now offer alternative routes for
certification to teach in the Nation's schools. It is a sad
irony that policymakers are encouraging experienced people to
change careers and enter the teaching profession at the same
time that we clearly tell them we will reduce your Social
Security benefits for making such a change, benefits they
worked hard to earn.
Almost 300,000 government retirees nationwide are affected
by the government pension offset and windfall elimination
provisions, but their impact is greatest in the 13 states that
chose to keep their own public employee retirement systems,
including yours and mine.
According to the Congressional Budget Office, the
government pension offset reduces benefits for some 200,000
individuals by more than $3,600 a year. That is the loss; it is
tremendous. As I mentioned earlier, the windfall elimination
provision causes already low-paid public employees outside the
Social Security system, like teachers, firefighters and police
officers, to lose up to 60 percent of the Social Security
benefits to which they are entitled.
Sadly, the loss of Social Security benefits may make these
individuals eligible for more costly assistance, such as food
stamps. So we deny these workers the benefits and that entitles
them to food stamps. I am not sure this is the pride that we
want to take in public employees.
I am also very aware that we are facing extraordinary
deficits and that fixing the problem that we are talking about
here will be expensive. So I am open, and I know you are open
to considering all options that move us toward our goal of
allowing individuals to keep the Social Security benefits to
which they are entitled.
The reforms that led to the government pension offset
provision and the windfall elimination provision are almost 20
years old now. At the time they were enacted, I am sure they
seemed like a good idea. Now that we are witnessing the
practical effects of those reforms, I think it is time that we
pass legislation to address the unfair reduction of benefits
that make it even more difficult to recruit and retain public
employees.
What I want you and Senator Akaka to know is that I look
forward to working with this Committee as you work this issue
out. It is an expensive issue, but there is no question, on the
side of fairness, that fairness says we should remedy this
problem. So because on our bill we have some 23 Senators, and I
know Senator Mikulski has a bill that does half what we do and
I believe she has some 25 cosponsors, it seems to me that
between the two bills, we ought to be able to put something
together to get a fair conclusion to this in this session of
the Congress.
Thank you very much.
Chairman Collins. Thank you very much, Senator. I certainly
share your hope in that regard. I am proud to be a cosponsor of
Senator Mikulski's bill, as well. Like you, I am open to
compromises on this issue, but my hope is that by holding this
hearing today, the Committee can shine a spotlight on what is a
very troubling problem particularly for lower-income women
retirees, as your statement so eloquently has pointed out, and
that we will be able to prompt the Finance Committee to move
these bills.
So I thank you very much for taking the time out of your
busy schedule to be here with us today. I know this is of
enormous importance to you and I thank you for your leadership.
Senator Feinstein. Thanks, Madam Chairman. I appreciate it.
Chairman Collins. Senator Akaka, we began the hearing by
hearing from Senator Feinstein because she has an
Appropriations meeting that she needs to go to. I am now going
to go to my opening statement and then I will call on you
shortly.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. Senator Feinstein has given an excellent
overview of the issue that we are looking at today. Individuals
affected by both the government pension offset and the windfall
elimination provisions are those who are eligible for Federal,
State, or local pensions from work that was not covered by
Social Security, but who also qualify for Social Security
benefits based on their own work in covered employment or that
of their spouses.
While the two provisions were intended to equalize Social
Security's treatment of workers, many of us are concerned that
they unfairly penalize individuals for holding jobs in public
service when the time comes for them to retire. These two
provisions have enormous financial implications not just for
Federal retirees and employees, but also for our teachers,
police officers, firefighters, and other public employees as
well.
Despite their challenging, difficult, and sometimes
dangerous jobs, these invaluable public servants often receive
far lower salaries than private sector employees. It is
therefore doubly unfair to penalize them when it comes to their
Social Security retirement benefits. These public servants or
their spouses have all paid taxes into the Social Security
system. So have their employers, and I think that is a very
important point.
Each of the people that we are talking about has paid
Social Security into the system, paid payroll taxes; the
employer has, too. So they earned these benefits. They have
worked the necessary quarters under covered retirement. Yet,
because of the way these two provisions work, they are unable
to collect all of the Social Security benefits to which they
otherwise would be entitled.
While the GPO and the WEP affect public employees and
retirees in virtually every State, their impact is most acute
in 15 States, including Maine, for the reasons that Senator
Feinstein explained. Those States have retirement systems that
do not have a Social Security component.
Nationwide, more than one-third of teachers and education
employees and more than one-fifth of other public employees are
affected by the GPO and/or the WEP. Almost one million retired
government workers across the country have already been
adversely affected by these provisions. Millions more stand to
be affected by them in the future.
Moreover, at a time when we should be doing all that we can
to attract qualified people to public service, this reduction
in Social Security benefits makes it even more difficult for
our Federal, State, and local governments to recruit and retain
the teachers, police officers, firefighters, and other public
servants who are so critical to the safety and well-being of
our families.
The Social Security windfall elimination provision reduces
benefits for retirees who paid into Social Security and also
receive a government pension from work not covered by Social
Security, such as pensions from the Maine State Retirement
Fund. While private sector retirees receive monthly Social
Security checks equal to 90 percent of their first $606 in
average monthly career earnings, government pensioners are only
allowed to receive 40 percent--a harsh penalty of more than
$300 per month.
The government pension offset reduces an individual's
survivor benefit under Social Security by two-thirds of the
amount of his or her public pension. It is estimated that 9 out
of 10 public employees affected by the pension offset lose
their entire spousal benefit, even though their spouses paid
Social Security taxes year after year.
What is most troubling is that this offset is most harsh
for those who can afford it the least, and that is lower-income
women. In fact, of those affected by the pension offset, 73
percent are women. According to the Congressional Budget
Office, as Senator Feinstein noted, the GPO reduces benefits
for more than 200,000 of these individuals by more than $3,600
a year. That is the difference between poverty and a
comfortable retirement for a lot of low-income retirees. Our
teachers and other public employees face difficult enough
challenges in their day-to-day work. Individuals who have
devoted their lives to public service should not have the added
burden of worrying about their retirement.
This issue is extraordinarily important in my home State of
Maine and it is one of the issues that I hear the most about.
People stop me when I am in the grocery store, at church,
wherever I am, even at my 30th high school class reunion a
couple of years ago. I guess all of us as we are getting older
are starting to finally think about what we are going to do
when we retire.
Many of my high school friends entered the teaching
profession. They are committed to living and working in Maine.
They love their jobs and the children they teach, but they
worry about their future and their financial security in
retirement.
I hear a lot about this in my constituent mail and I want
to share a couple of letters that I have received. One was from
Patricia DuPont, from Orland, Maine. She wrote that because she
had taught for 15 years under Social Security in New Hampshire,
she is living on a retirement income of less than $13,000,
after 45 years in education. Since she also lost survivor
benefits from her husband's Social Security, she calculates
that if we were to completely repeal the two provisions we are
discussing today, it would double her current retirement
income. And think how much better off she would be with $26,000
a year, still not exactly a fortune, versus $13,000.
Moreover, these provisions penalize private sector
employees who leave their jobs to become public school
teachers. At a time when we are trying to get more people to
come into teaching, I think this is another unfortunate effect
of these provisions.
Ruth Wilson, a teacher from Otisfield, Maine, wrote to me
as follows: ``I entered the teaching profession 2 years ago,
partly in response to the nationwide plea for educators. As the
current pool of educators near retirement in the next few
years, our schools face a crisis. Low wages and long, hard
hours are not great selling points to young students when
selecting a career. I love teaching and only regretted my
decision when I found out about the penalties I will unfairly
suffer. In my former life as a well-paid systems manager at
State Street Bank in Boston, I contributed the maximum to
Social Security every year. When I decided to become an
educator, I figured that because of my many years of maximum
Social Security contributions, I would still have livable
retirement wage. I was unaware that I would be penalized as an
educator.''
That is a perfect example of someone who thought that she
had planned well for her retirement years, had worked in the
private sector, then made the sacrifice to take a lower salary
and teach. And yet she finds out that she is going to lose the
benefit of those years in the private sector when it comes to
retirement.
Maine, like many States, is currently facing a shortage of
teachers. I just don't think that we can afford to discourage
people from pursuing important careers like teaching in the
public sector in this way, and that is why I have joined
Senator Feinstein in introducing her bill and have cosponsored
Senator Mikulski's bill as well.
Today's hearing will examine how these two provisions work,
why they were enacted, and what their effect has been on public
employees and retirees. We will also look at options for their
modification and repeal. We have heard from Senator Dianne
Feinstein. We will hear next from the Social Security
Commissioner, Jo Anne Barnhart, who will help us better
understand the history and reasons underlying the pension
offset and windfall elimination provisions, as well as the
impact that proposals to modify or repeal these two provisions
would have on the Social Security retirement and disability
funds.
Finally, we will hear from a panel representing public
employees and retirees, including Julia Worcester, who has
traveled all the way from Columbia, Maine, to tell us about her
work both in Social Security-covered retirement and as a Maine
teacher. We will also be hearing from other public employee
representatives, as well.
I look forward to hearing all the testimony today. My hope
is that this oversight hearing, which one of our witnesses
tells me is the first Senate hearing to delve into this issue,
will lay the ground work for action to resolve what is a very
troubling problem for far too many of our retirees.
I am very pleased to call on my colleague and friend,
Senator Akaka, for any comments that he might have.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Madam Chairman, for
holding this hearing. I commend you for highlighting this
troubling issue not only for women, but for people of our
country. I want to say good morning, also, to all of those who
are with us today.
I am pleased that Senator Feinstein was able to join us and
give her remarks. Senator Mikulski unfortunately could not be
with us. They are leaders in addressing problems associated
with the government pension offset, and also the windfall
elimination provision, both of which impact our Federal
employees and retirees.
As the Chairman noted, the general pension offset was
established to create a level playing field between government
and private sector workers who receive Social Security spousal
benefits when the individual also receives a pension for work
not covered by Social Security.
Under the GPO, those individuals are subject to a reduction
in their Social Security spousal benefits equal to two-thirds
of the amount of the government pension. Unfortunately, the
reduction has proved to be imprecise and has uneven results.
As of last December, there were 376,000 government
annuitants whose Social Security spousal benefits were affected
by the GPO. Approximately 73 percent of them were women. The
impact of the GPO is especially hard on women. The 2001 data
shows that the average monthly offset for women was nearly one-
third greater than that for men.
In addition, women are harmed because many may have taken
time off work to raise a family, resulting in a reduced
pension. The reduction in one's pension, combined with reduced
Social Security spousal benefits, put at risk many female
retirees who have dedicated their lives to public service.
This Committee has acted before to protect women and their
retirement benefits. Last year, we passed legislation I
introduced, the thrift savings plan catch-up bill, which allows
Federal employees age 50 and over to contribute additional
amounts to the thrift savings plan. Just like the GPO proposal
before us today, the TSP change will help those women who
return to the workforce after raising families and have not
been able to prepare adequately for retirement.
Due to the problems with the GPO and its aggravated impact
on women, I am pleased to again cosponsor Senator Mikulski's
legislation, S. 363. This bill would eliminate the application
of the GPO for those individuals whose monthly combination of
Social Security, spousal benefits, and non-Social Security
pensions is $1,200 or less. Senator Mikulski's legislation will
go a long way to minimize the harsh impact the GPO has on those
government retirees, particularly women, who depend heavily on
Social Security.
Today, we are also discussing the windfall elimination
provision. Although the WEP, like the GPO, was created to even
the playing field between public and private workers, it has
had the effect of penalizing those who had lower earnings in
their non-Social Security employment.
The problem has become so severe that last winter the CBS
Evening News ran a special feature on the WEP, depicting the
hardships faced by hundreds of thousands of Americans who
receive less than their full Social Security benefits because
of this provision. Congress must act now to mitigate the
financial strains placed upon our retired workers because of
the GPO and WEP.
Madam Chairman, I hope we can work together to find a
solution to the problems facing retired government employees
and their spouses, and help those who have dedicated their
lives to public service. You have been a great leader, Madam
Chairman, in this respect, too, and I thank you again for
holding this hearing.
Chairman Collins. Thank you very much, Senator.
Senator Akaka. Madam Chairman, I am sorry that I have
another hearing to go to and I won't be able to stay for the
remainder of the hearing.
Chairman Collins. I understand. I have that hearing also,
so represent me well there.
Senator Akaka. Thank you.
Chairman Collins. This is a day with a lot of hearing
conflicts, but thank you very much for coming by.
The Committee would now like to welcome and call forward
the Hon. Jo Anne Barnhart, the Commissioner of the Social
Security Administration. I know that the Commissioner
rearranged her very busy schedule in order to be with us today,
and I want to express my appreciation for her efforts.
I also want to say that the Commissioner has done an
excellent job running the Social Security Administration. It is
an enormous task. My case workers in Maine tell me that you
have made real progress in cutting down on the backlogs and
processing claims and disputes, and I want to recognize that
good work.
Commissioner Barnhart's experience with Social Security
dates back to her service in 1981 as Deputy Associate
Commissioner of the Office of Family Assistance. I would note
that she also served as the Republican staff director for this
very Committee and that we had the pleasure of working together
decades ago.
We look forward to hearing your testimony this morning. You
may proceed.
TESTIMONY OF JO ANNE B. BARNHART,\1\ COMMISSIONER, SOCIAL
SECURITY ADMINISTRATION
Ms. Barnhart. Thank you, Madam Chairman. I appreciate those
kind comments about Social Security. Also, I must say that it
was something of a nostalgic trip for me to walk in here this
morning, because I don't think I have been in this hearing room
for 15 years since I did serve as Republican staff director.
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\1\ The prepared statement of Ms. Barnhart appears in the Appendix
on page 32.
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I want to thank you for inviting me to discuss the
government pension offset provision, or GPO, and the windfall
elimination provision, which is also known as WEP. These
provisions are extremely complex and they are not well
understood, so I appreciate this opportunity to briefly
describe their purpose, how they work, and issues that should
be evaluated when you are considering legislative changes.
I would like to begin with GPO which, as you have
indicated, affects government retirees who are eligible for two
benefits, a pension based on their own work in a Federal,
State, or local government job that was not covered by Social
Security and a Social Security spouse's or surviving spouse's
benefit based on their husband's or wife's work in Social
Security-covered employment.
If the GPO applies, the person's spouse or surviving
benefit is reduced by an amount equal to two-thirds of the
person's government pension based on work not covered by Social
Security. As of December 2002, about 367,000 beneficiaries had
their benefits fully or partially offset due to the GPO. Of
those, 73 percent were women.
In enacting the GPO, Congress intended to assure that
individuals working in non-covered employment would be treated
in the same manner as those working in covered employment.
Prior to GPO, a person who worked in a government job not
covered under Social Security could receive, in addition to the
government pension based on his or her own earnings, a full
Social Security spouse's or surviving spouse's benefit.
However, a person who works in a job covered under Social
Security is subject to the dual entitlement provision.
This provision, which has been applied since 1940, requires
that Social Security benefits payable to a spouse or a
surviving spouse be offset by that person's own Social Security
benefit amount. Therefore, GPO really acts as a surrogate for
the dual entitlement offset, ensuring that spouses and
surviving spouses are treated similarly regardless of whether
their jobs are covered under Social Security or not.
The impetus for enacting the GPO provision was a March 1977
Supreme Court ruling in Califano v. Goldfarb. That ruling
eliminated the dependency test that then applied to men but not
women in order to qualify for Social Security spousal benefits.
Essentially, it eliminated gender bias in the Social Security
programs. Because of the dual entitlement provision, men who
worked in covered employment still did not typically receive
spouse or widow benefits, but those who worked in non-covered
employment could. Therefore, Congress enacted the GPO in
December 1977.
While the GPO provision is intended to accomplish the same
purpose as the offset under the dual entitlement provision, the
amount of the reduction under the GPO is different. Under the
dual entitlement provision, dollar-for-dollar is reduced. Under
the GPO, there is a two-thirds reduction, and I would like to
give just a brief example to clarify the difference.
If we take Ms. Jones, who is receiving a Social Security
retirement benefit of $900 a month based on her own work, her
own employment, she is also potentially eligible for $900 as a
widow's benefit. So that would be a total of $1,800 if she were
allowed to receive both. Her Social Security retirement benefit
is subtracted from her widow's benefit, resulting in her
widow's benefit being fully offset. So her Social Security
benefit is subtracted from the $1,800 total and she receives
only $900 in Social Security benefits.
A second widow, Ms. Brown, is in a comparable situation.
She worked for the government and her pension is $900.
Potentially, she too could be eligible for a Social Security
widow's benefit of $900. However, the GPO provision reduces the
$900 widow's benefit by two-thirds of her pension, or $600. So
she receives a $300 Social Security benefit, in addition to her
$900 government pension. Therefore, she receives $1,200, while
the individual who worked in covered employment receives $900.
That is just a brief example to explain what, looking back
over legislative history, it appears was Congress' intent in
enacting the GPO--to create a situation comparable to the dual
entitlement provision.
I would now like to briefly address the WEP provision. In
1983, the Social Security Act was amended and included WEP as a
means to eliminate what were called and have been called
windfall Social Security benefits for retired and disabled
workers who were receiving pensions from employment that isn't
covered by Social Security.
Generally while the WEP applies to any pension based on
non-covered employment, it primarily affects government
workers. The WEP, I want to point out, though, does not affect
Social Security benefits that are payable to survivors of
workers.
The WEP removes an unintended advantage that the weighting
in the regular Social Security benefit formula would otherwise
provide for persons who have substantial pensions from non-
covered employment. This weighting is intended to help workers
who spent their whole lives in low-paying jobs. It provides
them with a relatively higher benefit in relation to their
prior earnings than the benefit that is provided for higher-
paid workers.
However, because Social Security benefits are based on
average earnings over a working lifetime, a worker who has
spent part of his or her career in employment not covered by
Social Security actually appears to have a lower lifetime
earning than he or she actually had. Without the WEP, such a
worker would be treated as a low-income worker for Social
Security benefit purposes and therefore receive the advantage
of the weighted benefit formula that was designed to help
lower-wage earners.
I would like to explain how the WEP is computed. The
primary insurance amount formula for determining Social
Security benefits for workers who reach age 62 in 2003 is, as
Senator Feinstein described in her testimony, 90 percent for
the first $606 in average monthly earnings, plus 32 percent of
the next $3,047, and 15 percent of average monthly earnings
above $3,653.
Under the WEP computation, the 90 percent factor is
reduced, so that the 90 percent of the first $606 becomes 40
percent of the first $606. Under the regular Social Security
benefit formula, a worker would get $545 of that $606. Under
WEP, the individual would receive $242 of the first $606. Under
both scenarios, the 32-percent and the 15-percent factors
remain the same. So the effect of WEP occurs at that first
level of calculation.
For a worker first eligible in 2003, the maximum WEP
reduction is $303 a month, because when you take 40 percent of
$606, that is the largest reduction that you have, the 50
percent, the difference between the 40 and the 90 percent.
Unlike the GPO, the WEP can never eliminate a person's Social
Security benefit.
For workers who have 30 or more years of substantial
covered earnings, the WEP does not apply at all. Substantial
earnings for 2003 are defined as $16,125 a year. The WEP is
phased out gradually for workers who have substantial earnings
for 21 to 29 years. There is a phase-out of the WEP from the
21st year down to the 30th year, where the total exemption from
WEP begins. As of December 2002, WEP reduced the Social
Security benefits of approximately 635,000 retired and disabled
workers, and of those affected workers, 66 percent are men.
The President's fiscal year 2004 budget includes a proposal
that would improve the administration of both WEP and GPO. It
is a change that would allow SSA to independently verify
whether beneficiaries have pension income from employment not
covered by Social Security. Right now, we rely largely on the
applicants who come into the office. We do have an ongoing
computer matching program with OPM that helps us as far as
Federal employees go. But with State employees, it is a much
more difficult situation.
A number of proposals have also been advanced to change the
WEP and GPO provisions, and Senator Feinstein's bill is one of
those. Senator Mikulski's, which you and Senator Akaka
referenced, is another, and there are several others. Some
would eliminate those provisions entirely. Others, like Senator
Mikulski's bill, have set a limit for the offset.
These provisions would be costly and would restore the more
favorable treatment afforded to many workers in non-covered
employment prior to the enactment of the GPO and WEP. I raise
that issue because I think it was Congress' intent to establish
equity in enacting these previsions. Since you are looking at
issues that would need to be addressed as you move ahead in
looking at the GPO and WEP, certainly that is one that would
warrant consideration. Further, if both WEP and GPO were
eliminated, the Social Security trust fund exhaustion date
would advance by 1 year, from 2042 to 2041, as would the year
of cash flow deficit advance from 2018 to 2017.
Most other proposals to modify the effects of WEP or GPO
provide higher Social Security benefits for government workers
whose pensions from non-covered employment, in combination with
Social Security benefits, are below certain levels. That would
be Senator Mikulski's bill. However, those bills do not address
the dual entitlement offset that applies to millions of
comparable beneficiaries who worked only in covered employment.
If you look at addressing the dual entitlement provision that
has been in effect since 1940, you find that the cost increases
substantially to over $500 billion.
As indicated, the GPO and WEP are two highly technical
provisions of law that are not well understood by the public,
and we have therefore greatly increased our public information
efforts on these provisions. We have revised the annual Social
Security statement to attempt to make it clearer to people who
receive the statement that they could be affected by the
government pension offset or by the windfall elimination
provision.
We have individuals who conduct pre-retirement seminars. We
have a website with a calculator so workers can actually see
the individual effect of these reductions--actually put in
their figures. And we are obviously happy to walk them through
it if they come into our offices for an appointment because it
is complicated and difficult for people to understand.
We are in the process right now of putting up a special
website related specifically to WEP and GPO, in large measure
because of the increased emphasis and interest that this issue
has received; many people have expressed concern and a lack of
understanding about how these provisions operate. We felt it
was very important to make information accessible in every
possible form.
At this time, I would be happy to answer any questions that
you might have, Madam Chairman.
Chairman Collins. Thank you very much, Commissioner. Your
explanation of how the law works, which was very good,
demonstrates a problem, however, and that is its complexity.
What I have found is that many of the people who have come to
me about this issue were surprised to learn of the impact of
the pension offset and the windfall elimination provision on
their future Social Security benefits.
Ms. Worcester, who will be testifying on our next panel, is
one of those who found out about it only when she happened to
go to a retirement seminar. It is very common in my State that
people are surprised to learn of the impact. One teacher friend
of mine told me that he had worked every summer purposefully
during his teaching career in order to earn his Social Security
benefits, having no idea that they would be offset. I am glad
to hear about your efforts because I really think there is a
lack of understanding that compounds the problem for a lot of
retirees.
You mentioned the Social Security statements that we get
after a certain age on an annual basis. The last time I got
mine I specifically looked for mention of these provisions
because I am one of those who has employment under both the
public and private sector. I knew the amount that was listed
was not going to be the amount that I would be eligible for,
but I didn't see any warning or any caution to me.
Has that been changed recently?
Ms. Barnhart. Actually, it was, Senator. Thank you for
asking that question, Madam Chairman, because I did make
changes in the Social Security statement this past spring. So I
hope that you are not going to tell me you received your
statement since May of this year.
Chairman Collins. I did not. What does it say now?
Ms. Barnhart. We actually put in a highlighted area. It is
in bold print and it actually says, under your estimated
benefits, ``The law governing benefit amounts may change. Your
benefit amount may be affected by military service, railroad
employment, or pensions earned through work on which you did
not pay Social Security. Visit''--then we give the website--
``to see whether your Social Security benefit amount will be
affected.''
In addition, in the ``Some Facts About Social Security''
section, we list five publications that we have available and
one of those is ``The Windfall Elimination Provision: How It
Affects Your Retirement of Disability Benefits,'' and
``Government Pension Offset: Explanation of a Law that Affects
Spouse's or Widow(er)'s Benefits.''
This information had not been included prior to the changes
that were made last spring. I felt it was important because of
the increased concern that I was hearing that we include this
warning and advisory, basically, to individuals who might not
realize that their benefits could be affected.
When we put this statement out--and we do it for everyone
25 years of age and older--we estimate future earnings, and we
estimate your benefit; we have the posted earnings--but we
don't have a way to tell you at this point what the offset
would be because we don't know whether you will receive a
noncovered pension or the amount of your pension.
We are looking at ways to see if we could set some sort of
parameter for individuals who, on their statement, have many
years of covered work, but then they have years of noncovered
work, or they have years of noncovered work and then they are
working in covered employment. The feasibility of setting up
some sort of a computer alert, an automated alert, so we could
then put a special advisory in those statements--is something
we are investigating now to see if it is possible.
We still wouldn't be able to tell the individual the dollar
effect, but if we are able to accomplish this, we could give a
more direct advisory to the person that it appears, because of
``x'' years of non-covered employment, you may be affected by
this.
Chairman Collins. I think that would be extremely helpful.
I still believe the provisions themselves need to be modified
and, in practice, have become unfair. But the least we can do
is make sure that people realize the impact. And I think
because the law was changed, a lot of people are surprised.
In the case of Ms. Worcester, for example, her mother's
retirement was not affected. So I think it is incumbent upon
the Social Security Administration to do everything possible to
wave a red flag so that at least people can make appropriate
plans for their retirement until we can get this modified or
fixed.
Ms. Barnhart. I certainly appreciate that and if you or
other Members of the Committee have recommendations or the
panelists that are following me have other recommendations of
other activities we could undertake, I would certainly be
willing to take those under consideration.
Chairman Collins. Thank you. Some have criticized,
including myself, the windfall elimination provision for the
way that it actually works in practice; that it sounded fine,
perhaps, when it was passed--I wasn't a Member of the Senate at
the time and I want to make sure everybody in the room knows
that--but that, in practice, it creates inequities and
hardships.
For example, many would contend that the arbitrary 40-
percent factor in the formula does not reflect the actual
``windfall'' when it is applied in individual cases. The
current formula seems to over-penalize lower-paid workers with
shorter careers or with full careers that are fairly evenly
split between Social Security-covered and non-covered
employment. The current formula, in my judgment, also is
regressive because the reduction causes a relatively large
reduction in benefits for lower-wage workers.
Would it be appropriate to modify the formula, for example,
by perhaps including a means test--Senator Mikulski's bill does
that to some extent--to ensure that low-wage workers receive a
greater portion of the earned benefits?
Ms. Barnhart. One of the basic tenets of the Social
Security program has been the ``earned right'' nature of the
program, and that is that you pay into the system for the
benefits that you obtain. I do think that if Congress considers
the inclusion of a means test, it would be important to
recognize that could be viewed as a significant departure from
that ``earned right'' nature of the Social Security program.
Also, it may be helpful for you if I could provide some
information to you about the relative poverty status of
individuals who are affected by the WEP.
Chairman Collins. It would be helpful.
Ms. Barnhart. I would be happy to do that.
The information follows:
INFORMATION PROVIDED BY MS. BARNHART
Poverty Status of Beneficiaries Affected by the Windfall Elimination
Provision
Based on the most recent data available, approximately 3
percent of beneficiaries affected by the windfall elimination
provision have incomes below the poverty level ($8,628 for aged
individual in 2002 and $10,874 for aged couple). In contrast,
8.4 percent of all aged (age 65 or older) Social Security
beneficiaries have incomes below the povery level.
Chairman Collins. Thank you. You mentioned the ``earned
right'' feature of Social Security, but I think that is what is
so frustrating to teachers and firefighters and police officers
who have paid in personally into the system, worked for 10
years in the private sector, earned their benefits and can't
get the benefit--don't get them.
Ms. Barnhart. I certainly understand that. I think the
thing that is a very difficult aspect of the WEP to explain,
again, looking back at the comparability between individuals
working in covered and non-covered employment, part-time in
each of those or entirely covered employment--the Social
Security program benefit, structure provides a different
replacement rate depending on the lifetime amount of covered
wages of the individual.
For the low-income earner, the replacement rate is
approximately 56 percent of pre-retirement income. For the
average earner, it is around 42 percent and for the high-wage
earner it is somewhere around 27 to 30 percent. So the issue
here is if you have an individual who worked for 10 years in
covered employment at, say, $60,000 a year, when we calculate
the Social Security benefit, we do it over a 35-year work
history. So we take that $60,000 for 10 years and for the
remainder of the years, we put zeroes in for all those years.
So it presents in the benefit calculation a situation where
that individual has a much lower lifetime earning. In other
words, the $60,000 a year over 10 years gets averaged out over
that 35-year time period and it appears that the individual
worked for many years as a low-wage earner. If we had a person
who worked in Social Security and had the equivalent lifetime
earnings as the case that I just described, they would, in
fact, be a low-wage earner, and therefore entitled to the
progressivity of the replacement rate.
I think this is really the dilemma, Madam Chairman, when we
look at this in terms of how the Social Security benefit is
structured and the effect that changing the WEP would have on
the concern that low-wage workers receive a higher replacement
rate than higher-wage workers do.
Chairman Collins. But if you look at the CBO study about
the impact of these two provisions, it seems that they
disproportionately affect lower-income workers because of the
way the formula works. Since, as you mentioned, Social Security
is designed to replace more of the income for lower-income
workers than higher-income workers, in a sense it already has a
means test built in, in that it isn't an equal benefit as far
as the replacement of wages.
That is why it seems that, at the very least, a first step
ought to be to try to help those lower-income workers who are
particularly hard hit by these provisions, because I really
don't think that Congress intended that. It was an attempt, as
you said, to have equity in the system, to make sure the dual
eligibles were not treated differently or more harshly than
those with other pensions. But, in practice, it has created a
lot of problems.
Ms. Barnhart. I certainly understand, and I have read the
testimony of the panelists who are going to follow me.
Chairman Collins. I was going to ask you that. Good. I am
glad you did.
Ms. Barnhart. Yes, I absolutely did, last night. Let me
just take this opportunity to say, if I may, in the situation
that related to the overpayment, I read about that last night
and met with my staff this morning and have asked them to look
into that situation and find out the circumstances that created
it. I will contact your office to let you know if that
situation can be resolved in any way.
Chairman Collins. I appreciate that. That was an issue that
I was going to bring up to you.
For those in the audience who haven't read the testimony of
the next panel, the President of the National Association of
Retired Federal Employees brought to our attention the case of
a 79-year-old widow who worked for the Veterans Administration,
retired in 1994. No one ever told her about the impact of these
two provisions. As a consequence, she received both Social
Security and her pension without an offset and has now been
told that she owes more than $20,000.
I want to tell you, Commissioner, that this is not
uncommon, that my case workers in my six State offices deal
with exactly this kind of overpayment case all the time. As you
can imagine, it imposes a tremendous hardship on elderly people
when they all of a sudden are presented with this huge bill
because of an overpayment.
I did want to ask you what the Social Security
Administration's general policy is in dealing with overpayments
and whether there is any procedure for waiving or lessening
them when it is clear it would impose a considerable financial
hardship, and it is also clear that the individuals involved
had no idea and were not at fault.
Ms. Barnhart. Yes, let me say we do have procedures. First
of all, the law would allow us technically to withhold the
entire benefit check. We most times do not do that,
particularly in cases where it is evident that the individual
was not at fault and it certainly was an unintended situation.
Generally what we do, first of all, is offer to sit down
and negotiate and look at the person's financial status and
withhold a much smaller amount over time, so that we do not
expect to be paid back immediately. We actually try to work
with the individual to do something that will not financially
penalize them even further.
We are allowed to grant waivers, and there are special
circumstances. I would be happy to provide a description of
that waiver process for you for the record, if you would like.
Chairman Collins. That would be helpful.
The information follows:
INFORMATION PROVIDED BY MS. BARNHART
The following outlines the Social Security Administration's process
for determining if an overpayment can be waived:
The Social Security Act (Section 204(b)) provides that
recovery of an overpayment can be waived if the person from whom we are
seeking recovery is without fault in causing the overpayment and
recovery would either defeat the purpose of title II of the Act or be
against equity and good conscience.
To make a fault/without fault finding, we consider all of
the circumstances surrounding the overpayment in each case. We take
into account any physical, mental, educational or linguistic
limitations the person has. If the person caused or helped to cause the
overpayment, he is found at fault. If he is blameless in the creation
of the overpayment, he is without fault.
To determine if recovery would defeat the purpose, we
look at the person's current financial condition, that is, his
situation at the time the waiver decision is being made. Current
financial information is defined as no more than 1 year old when the
waiver decision is made. Financial information must be provided to make
a defeat the purpose determination.
If a person does not wish to pursue the defeat the
purpose criteria by providing current financial information, he may
still pursue waiver by showing that recovery is against equity and good
conscience. As defined by Social Security regulations, this means that
the person changed his position for the worse or relinquished a
valuable right because of reliance on a notice that a payment would be
made or because of the overpayment itself. Financial circumstances are
not material to a finding of against equity and good conscience.
A decision by SSA regarding a request for waiver of an
overpayment is an initial determination and a decision that is
unfavorable to the beneficiary may be appealed through all levels of
administrative appeals within SSA (i.e., reconsideration, hearing
before an Administrative Law Judge, and review by the Appeals Council.)
When all administrative appeals have been exhausted, the beneficiary
may file a civil action with the appropriate United States District
Court.
Ms. Barnhart. That is precisely what I have my staff
looking into to see if this would be one of those cases where
such a waiver might be appropriate. I would point out to you
this is one of the reasons--the fact that this situation occurs
is one of the reasons that the President's budget includes the
proposal I described in my testimony. Because we have
situations where we don't know whether a claimant is receiving
a pension from non-covered work, even though our workers are
trained to ask. I am sure that doesn't happen a hundred percent
of the time. Although we have very dedicated workers, there are
a lot of things they must attend to when someone comes in to
apply for retirement.
By the same token, I am sure in some cases individuals
don't necessarily understand what that means, even if an
attempt is made to describe it, or they may not be receiving a
pension at that time and the situation may change later. In
fact, they may be eligible fully for Social Security at one
point, but not for the other pension because of different
rules, and so forth.
That is one of the reasons that we wanted to have the
ability to do independent verification so that we wouldn't have
people in these situations where they receive Social Security
and then get this overpayment notice. It really is an
administrative issue for us.
Chairman Collins. One of the challenges in tackling this
problem is the cost. You mentioned in your statement that if we
enacted the various legislative proposals, the Social Security
trust fund would be depleted a year earlier. I have two
questions in that regard.
One is, either today or for the record, could you give us
an estimate of the Feinstein-Collins bill and the Mikulski-
Collins bill so that we do have a sense of what we are dealing
with?
Second, is the administration open to working on this issue
to try to come up with some sort of approach that would lessen
the burden particularly for lower-income retirees? I realize
that, much as I would like to see outright repeal, that may not
be feasible this year or next year, but surely we can start
down the path of remedying some of the problems that are
described by our next panel of witnesses.
Ms. Barnhart. I do have some estimates that were developed
by our independent chief actuary's office. First of all, to
eliminate the GPO and the WEP, as the Feinstein-Collins
legislation provides, it would cost $22.5 billion over 5 years
and $61.9 billion over 10 years. In the Mikulski-Collins
legislation, which modifies the GPO, as has been described
earlier, the cost is estimated at $10.1 billion over 10 years.
So we are talking, if we look at it from a 10-year
perspective, for either the Mikulski or Feinstein bills, about
a range of $10 to $60 billion-plus in cost.
Chairman Collins. Thank you. And not to press you, but will
the administration continue to work with us to try to see if
there is a way that we can start to remedy this?
Ms. Barnhart. I wrote that down because I knew I would
forget the second part of that question. I have my 35th high
school reunion coming up.
Certainly, we at the Social Security Administration would
be very happy to work with you and the Committee and any other
Members in terms of providing any analysis that we can on the
effect that various provisions would have. I would say this,
that due to the cost, and certainly if we look at the $10 to
$60 billion-plus, and then looking at the dual entitlement--the
cost of eliminating the dual entitlement should be somewhere
around $500 billion, not that you suggested that, but if we get
into those kinds of equity issues, I would say that I do think
that one could make a real case for waiting until the entire
Social Security program has been strengthened and protected to
entertain these kinds of costly changes.
As you know, and as we have discussed and alluded to in the
hearing earlier, it is projected by our actuaries that the
Social Security trust fund will move into a negative cash flow
basis in 2017 and that the trust funds will be entirely
exhausted by 2042, which, absent any action, would necessitate
that only 73 percent of benefits would be able to be paid. So
it would be my hope that as we undertake changes to benefits--
and clearly this would affect the benefit program into the
future--that it could be done in that context.
Chairman Collins. I want to thank you very much for your
testimony today which has been very helpful to the Committee as
we consider this important issue. Your testimony was very
helpful in giving us a better understanding of how it works,
and I salute you for your efforts on the education front to
make sure that people understand the impact.
I still feel very strongly that we do need to act, that we
can't wait on this issue, because every day it creates a
hardship for people who are struggling to live on their
retirement income. Every day, it discourages another would-be
teacher, firefighter, Federal employee, or police officer from
going into public sector employment. So I hope we can come up
with a creative approach and work together to see if we can
remedy this problem, and I very much appreciate your being here
today.
Ms. Barnhart. Thank you, Madam Chairman, and in that spirit
of cooperation that you have just expressed, let me say that we
stand ready, as I say, to provide any information and analysis,
and to answer any questions for the record you or your
colleagues may have, and certainly any questions that arise as
a result of the panel that is going to follow me.
Chairman Collins. Thank you very much.
Ms. Barnhart. Thank you.
Chairman Collins. We now will call forward our next panel.
I would like to extend a special welcome to Julia Worcester, of
Columbia, Maine. Ms. Worcester worked for 20 years in Social
Security-covered employment before deciding at the age of 49 to
go back to school to pursue her dream of becoming a teacher.
I think it is a wonderful story, Ms. Worcester, and I
admire you so much for doing that.
After teaching full-time for 15 years, Ms. Worcester
retired and now her monthly income is substantially reduced
because of the government pension offset and the windfall
elimination provisions. As a result, she is still substitute-
teaching to make ends meet.
Again, Ms. Worcester, we very much appreciate your
willingness to share your story with the Committee today. I
want to mention that you were brought to our attention by Sue
Shaw, who has been a very strong advocate in the State of Maine
on this issue, and she will be submitting some testimony which,
without objection, we will enter into the record as well.
The Committee is also delighted to welcome Charles Fallis,
who will testify on behalf of the 400,000 members of the
National Association of Retired Federal Employees. Since 1921,
the association has focused on improving the retirement
benefits of Federal retirees, employees, and their families. I
know that elimination of both the GPO and the WEP provisions
are top legislative priorities for the National Association of
Retired Federal Employees, and the Committee thanks you for
your work on this issue and for being here today.
Finally, I would like to welcome to the Committee Kenneth
Rocks, the National Vice President of the Fraternal Order of
Police. Due to the physical demands of their jobs and the
number of law enforcement officers who augment their income
with second and third jobs, law enforcement officers are
particularly affected by the provisions we are discussing
today.
In fact, Mr. Rocks, my most recent constituent to contact
me on this issue stopped me at a convenience store in Bangor,
Maine. He was a Bangor police lieutenant who told me that he
had been working two jobs for years to try to ensure that he
would have sufficient retirement income and had only just
learned of what the impact of these provisions would be on his
retirement as well. So we very much appreciate your being here
today on behalf of your members.
Ms. Worcester, because you are from Maine, we are going to
start with you on this panel today.
Ms. Worcester. Thank you, ma'am. It is nice to know
influential people.
Chairman Collins. Thank you.
TESTIMONY OF JULIA WORCESTER,\1\ COLUMBIA, MAINE
Ms. Worcester. Good morning, Senators. Thank you for the
chance to tell you how the changes in the way Social Security
retirement benefits are calculated for public service employees
has affected me.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Worcester appears in the Appendix
on page 42.
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I am 73 years old and my husband of 54 years, Oswald, will
be 88 in December. I am one of seven children, all born in
Downeast Maine. I was not raised to expect something for
nothing. I live a modest life, I work hard, and I do not spend
time fretting about things I cannot change, but this law has
had a tremendous effect on me.
I was fortunate to be raised in a family that respected
education. My father insisted on good grammar and corrected our
speech when we strayed. My mother's family was college-educated
and my mother went to what was then Machias Normal School in
the 1920's and received a lifetime teaching certificate, which
she updated toward the end of her career by taking courses by
television. She taught school for many years and retired in the
mid-1960's. She was able to collect both Social Security
retirement, earned from work she did during summers and after
she retired, and her State of Maine pension from her teaching.
She was not bad off.
I have worked 20 years outside of my teaching career. As a
young woman, I worked in a herring cannery factory and in a
string bean factory. While Oswald and I had two young children,
a son and a daughter, I persuaded him that we should move to
Connecticut, since the school system in our town at that time
was very small. There was a two-teacher grade school and a two-
teacher high school.
We lived in Branford, Connecticut, for 13 years, and Oswald
worked in a stone quarry. At first, I waitressed full-time so
that I could work nights when Oswald could be home with the
children. When the children were teenagers, I found a day job
in a factory, as I discovered that teenagers needed their
mother paying close attention to where they were in the evening
and their father was not very good at saying no.
In 1968, when I was 37, we had another child. We decided to
come home to Maine when she was 6 years old. The other children
were out of school and on their own, and even though we had
another young child, the school system had improved greatly. My
parents were getting older and my husband's brothers and
sisters were also reaching elder years, and it was time for us
to come home.
When we got back to Columbia, I worked part-time for a
while. Oswald was approaching retirement age, as he is 15 years
older than I, and I thought seriously about our future. I
decided to become a teacher, like my mother. It was something I
always wanted to do. So at the age of 49, with the help of Pell
grants and federally-subsidized loans, I started at the
University of Maine, in Machias. I went to school year-round
and completed my degree in 3 years, completing the degree in
December 1982. I did some long-term substitute teaching right
away and was hired full-time in the fall of 1983, which turned
out to be an ominous year for my retirement benefits, but I
loved it.
This is where the problem comes in: Four or 5 years after I
started teaching, I went to a seminar put on by Horace Mann and
learned of the new law that meant all those years of working in
factories and waitressing were not going to count for much in
my retirement years, and that I was not even going to be able
to collect much on Oswald's work record if that should be the
case. That was when I learned that the life I had carefully
planned wasn't going to work out quite the way I thought it was
going to. I was nearly 60 years old, much too late to start
over with a new plan.
With my working, we are all right. Last year, I subbed 125
days out of the 175-day school year. The year before that, I
substitute-taught 140 days out of the 175 days. It certainly
makes a big difference in our income. We are not big spenders.
Oswald is a bear about debts. We have long since paid off our
mortgage and we don't charge things on credit cards.
But I have to face facts. I will not be able to teach
forever and Oswald is getting on in years. I should have what I
rightfully earned. My family is a family that has accepted life
as it has been handed. You do what you can with what you have.
I am not bitter about the situation. I just believe I have
earned this benefit through years of honest work and I should
be able to receive it.
I also have an addendum of my monthly income, if you would
like me to continue with that.
Chairman Collins. Certainly.
Ms. Worcester. My monthly retirement is $814. I pay $418 a
month for companion plan insurance for my husband and I out of
my retirement, which is a necessity in this day and age. I
receive from Social Security $107 a month, which is the 40-
percent area, and my husband receives $716 a month, and both of
those Social Security benefits are calculated after the Part B
Medicare is taken out.
I thank you.
Chairman Collins. Thank you very much for your testimony.
You so embody the Maine values of independence, hard work,
thrift, and integrity, and I really appreciate your being here
today to help us put a human face on what is a serious problem
not only for you, but for so many others. So I appreciate your
speaking out and your willingness to be here.
For all of those years that you worked so hard waitressing
and in other jobs, to receive only $107 a month in Social
Security after paying into the system for so long seems just so
unfair to me.
Ms. Worcester. Well, it is kind of like an insurance policy
that the company is not paying off on.
Chairman Collins. That is a good way to put it, and yet you
paid the premiums--i.e. payroll taxes--year after year, as did
your employer, too. So thank you for that testimony.
Mr. Fallis, can you beat that? [Laughter.]
TESTIMONY OF CHARLES L. FALLIS,\1\ NATIONAL PRESIDENT, NATIONAL
ASSOCIATION OF RETIRED FEDERAL EMPLOYEES
Mr. Fallis. I can't beat that.
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\1\ The prepared statement of Mr. Fallis appears in the Appendix on
page 46.
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Madam Chairwoman, I am Charles Fallis, President of NARFE,
the National Association of Retired Federal Employees. I am
testifying today on behalf of 400,000 retirees, employees,
spouses, and survivors who are NARFE members.
I would like to commend you, Senator Collins, for paving
the way and holding the first ever Senate hearing on GPO and
WEP. These atrocious laws have for many years destroyed the
quality of life of a significant number of our members. We
can't afford to wait any longer for corrective action to repeal
or reform these onerous offsets--corrective action, by the way,
that has a lot of support in the 108th Congress in the House
and the Senate.
NARFE has worked for repeal of GPO and WEP from the very
beginning, well over 20 years. Throughout the course of those
years, the pernicious provisions of these two offsets have
denied many thousands of our older members, particularly women,
of the economic dignity that they thought they would have in
retirement.
So I appreciate your invitation to come here today. I
humbly ask for this Committee's assistance in the repeal of GPO
and WEP, and I reiterate NARFE's continuing support for changes
that would restore earned benefits to women and other deserving
retirees.
The GPO law targets government retirees who were first
eligible to retire after December 1982, preventing them from
collecting Social Security benefits based on their spouse's
work record while at the same time they are collecting
government annuities based on their own work. This law requires
that two-thirds of a non-exempt public sector retiree's annuity
must be used to offset whatever Social Security benefits are
payable to him or her as a spouse, widow, widower, or survivor.
By all accounts, this two-thirds offset against Social
Security income is an arbitrary figure and, as such, we believe
it should be reexamined. Of all the affected GPO beneficiaries,
about 80 percent are fully offset, which translates into no
benefits at all. I believe it is important to recognize, also,
that almost 70 percent of those affected are low-income women,
many of whom exist either in or on the fringes of poverty.
Turning to WEP, current law greatly reduces the earned
Social Security benefit of a retired or disabled worker who
also receives a public sector annuity based on his or her own
earnings. It applies to anyone who becomes 62 or disabled after
1985 and becomes eligible for a government annuity after 1985.
This windfall reduction can reduce the worker's earned monthly
Social Security income by up to $303.
Madam Chairwoman and Members of this Committee, I have
stated before that the harshness of GPO and WEP as they exist
today causes both fears and tears among thousands of older
retirees. They fear for their financial survival and their
tears come from deep frustration that Congress, despite
widespread congressional support to do so, has not acted to
ameliorate their suffering.
There are several bills pending before the Senate today
that would offer relief to hundreds of thousands of former
teachers, policemen, firefighters, cafeteria workers, postal
workers, VA nurses, Social Security employees, and others who
work long and hard for their benefits. There are 40 Senators of
this 108th Congress, including you, Madam Chairwoman and
several Members of this Committee, who have indicated their
support for a change in GPO and WEP. They have cosponsored one
or more of the pending bills introduced by Senator Feinstein
and Senator Mikulski. We applaud you and we thank all of you
for your continuing efforts to change or eliminate these Social
Security offsets.
I would like to share with you today a sad and compelling
account of a situation concerning a NARFE member who contacted
us early last week and described the details of her case. This
NARFE member is 79 years old and is widowed. We have received
documentation substantiating the facts in her case and, with
that member's permission and upon your request, Madam
Chairwoman, we would provide the documents to you.
Chairman Collins. Without objection, those documents will
be part of the record.\1\
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\1\ The information referred to appears in the Appendix on page 59.
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Mr. Fallis. This unfortunate lady originally filed for
divorced spousal benefits in 1989 while still working for the
Veterans Administration. Her divorced spouse died in 1991, thus
converting her claim to an application for surviving divorced
spousal benefits. She became sick in 1993 and subsequently
retired in early 1994 and began receiving her government
annuity soon thereafter.
She asserts that no one ever explained GPO or WEP to her,
or the effect these offsets would have on her annuity and
finally on her total income. Upon her retirement, and with no
thought that retribution would follow, she began receiving both
her government pension and Social Security survivor benefits.
Then, in July 1997, this very unlucky lady received a
letter from Social Security requesting repayment of $20,737
because of an erroneous overpayment. It had been determined
belatedly, they said, that she was not exempt from GPO. She
began an immediate appeals process that has been denied at
every stage, culminating in a very recent final denial from an
administrative law judge in Chicago.
Madam Chairwoman, it is clear that this elderly lady with a
meager pension from the VA of only $752 a month has no
financial means of repaying this tremendous amount of money,
money that she had no idea that she was not entitled to. Hers
is not the only case such as this. There have been many, but
this is a recent one and it is one of the worst that we have
seen. But there are thousands of others in this same situation.
Senator Collins, over the past two decades we have received
thousands of letters from NARFE members, from Maine and
elsewhere, describing in detail the anguish and economic
hardships they experience every day because of GPO and WEP. For
hundreds of thousands of Federal, State, and local government
retirees, repeal of both of these offsets would ease or
eliminate the devastating financial burdens they endure because
of the effects of these onerous laws.
Social Security Administration actuaries have determined
that repeal of GPO and WEP would increase the size of the OASDI
actuarial deficit by an amount estimated at .11 percent of
taxable payroll. Now, the amount is not negligible, of course,
but returning this income to long-suffering and deserving
retirees would help restore their financial independence,
provide them with increased purchasing power, and return to
them a measure of self-esteem and economic dignity that was
taken from them over 20 years ago with the enactment of this
pair of insidious laws.
Senator Collins, your hearing advisory today says, ``The
individuals affected by GPO and WEP are individuals who are
eligible for Federal, State, or local pensions from work that
was not covered by Social Security.'' Yes, these affected
individuals' work was not covered by Social Security, but they
and/or their spouses worked in other jobs outside of the
government that were covered long enough to make them eligible
for Social Security benefits. But they still are being denied
unfairly the Social Security benefits to which they are
entitled and they still are being punished for having worked
another full-time or part-time job in a different venue.
I want to thank and commend you, Madam Chairwoman and
Members of this Committee, for recognizing the need for change
in GPO and WEP, and for addressing that need in this hearing
today. I ask that you convey the urgency of this need to your
colleagues on the Senate Finance Committee. Please ask them to
recognize the significance of these issues, as well, so that we
can get a bill out of the Senate, passed in the House, and on
to the President's desk for his signature, a bill that would at
long last allow Federal, State, and local government retirees
in this country some relief from these terrible offsets.
Finally, on behalf of the 400,000 members of NARFE, I
commit to you today that we stand ready to work with you and
the Members of the Senate for the expeditious resolution of
these issues. I thank you.
Chairman Collins. Thank you very much for your excellent
testimony. Mr. Rocks, we are pleased to welcome you here today
as well.
TESTIMONY OF KENNETH ROCKS,\1\ NATIONAL VICE PRESIDENT,
FRATERNAL ORDER OF POLICE
Mr. Rocks. Good morning, Madam Chairman. My name is Kenneth
Rocks and I am a Philadelphia police officer and the Vice
President of the National Fraternal Order of Police, the
largest law enforcement labor organization in the United
States, representing more than 310,000 rank-and-file officers
in every region of the country.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Rocks appears in the Appendix on
page 52.
---------------------------------------------------------------------------
I am here this morning at the request of Chuck Canterbury,
National President of the Fraternal Order of Police, to share
with you the views of the members of the Fraternal Order of
Police on the windfall elimination provision and the government
pension offset provisions in current Social Security law.
The Fraternal Order of Police has designated the repeal of
the windfall elimination provision and the government pension
offset as one of its top legislative priorities, and we
strongly advocate the passage of S. 349, the Social Security
Fairness Act. The Social Security Fairness Act, introduced by
Senator Dianne Feinstein, would repeal both the windfall
elimination provision and government pension offset. This bill
already has 23 cosponsors, drawing strong support from both
sides of the aisle.
It is our hope that Congress will take a serious look at
the manifest unfairness of the windfall elimination provision
and the government pension offset, and act to correct them by
passing this bill. Ultimately, this legislation is about
fairness to the State and local employees who paid for and
ought to receive their Social Security benefits.
Let me begin by explaining the impact of the windfall
elimination provision on retired police officers. Simply put,
law enforcement officers who serve communities which are not
included in the Social Security system may lose up to 60
percent of the Social Security benefits to which they are
entitled by virtue of secondary or post-retirement employment
which required them to pay into the Social Security system.
This 60 percent is a lot of money, especially when you consider
the officer and his family were likely counting on that benefit
when they planned retirement.
The FOP contends that this provision has a disparate impact
on law enforcement officers for several reasons. First of all,
law enforcement officers retire earlier than many other
professions. Owing to the physical demands of the job, a law
enforcement officer is likely to retire between the ages of 45
and 60.
Second, after 20 or 25 years on the job, many law
enforcement officers are likely to begin second careers and
hold jobs that do pay into the Social Security system. Even
more officers are likely to moonlight and to hold second or
third jobs throughout their law enforcement careers in order to
make ends meet.
This creates an unjust situation that too many of our
members find themselves in. They are entitled to a State and
local retirement benefit because they worked 20 or more years
keeping their streets and neighborhoods safe, and also worked a
job or jobs in which they paid into Social Security, entitling
them to a benefit as well. However, because of the windfall
elimination provision, if their second career resulted in less
than 20 years of substantial earnings, upon reaching the age
they are eligible to collect Social Security they will discover
that they lose 60 percent of the benefit for which they were
taxed.
Actuarily speaking, I doubt many officers will live long
enough to break even--that is, to collect the money they paid
into the system--let alone receive any windfall. These men and
women earned their State or local retirement benefit as public
employees and they paid Social Security taxes while employed in
the private sector. How is this a windfall?
I think it is clear that Congress did not intend to reduce
the benefits of hard-working Americans who choose to serve
their States and communities as public employees and then went
on to have second careers or worked second jobs to make ends
meet. When the windfall elimination provision was enacted in
1983, it was part of a large reform package designed to shore
up the financing of the Social Security system.
The ostensible purpose was to remove a windfall for persons
who spent time in jobs not covered by Social Security, like
public employees, and also worked other jobs where they paid
Social Security taxes long enough to qualify for retirement
benefits. However, we can now clearly see that the windfall
elimination provision was a benefit cut designated to squeeze a
few more dollars out of a system facing financial crisis. The
fallout has had a profoundly negative impact on low-paid public
employees outside the Social Security system, like law
enforcement officers.
This is a matter of fairness. The arbitrary formula in
current law, when applied, does not eliminate windfalls because
of its regressive nature. The reduction is only applied to the
first bracket of the benefit formula and causes a relatively
larger reduction in benefits to low-paid workers. It also over-
penalizes low-paid workers with short careers or, like many law
enforcement officers, those whose careers are split inside and
outside the Social Security system. Simply put, this provision
has not eliminated a windfall for any individuals who did not
earn it. It has resulted in a windfall for the Federal
Government at the expense of public employees.
Let me now discuss the aspects of the bill which would
repeal the government pension offset. Like the windfall
elimination provision, the government pension offset was
adopted in 1983 to shore up the finances of the Social Security
trust fund. This provision reduces the surviving spouse's
benefit from Social Security by two-thirds of the monthly
amount received by the government pension.
For example, the spouse of a retired law enforcement
officer who at the time of his or her death was collecting a
government pension of $1,200 would be eligible to collect a
surviving spouse benefit of $600 from Social Security. Two-
thirds of $1,200 is $800, which is greater than the spouse's
benefit of $600. Thus, under the law, the spouse is unable to
collect a single dime of it. If the spouse's benefit were $900,
only $100 can be collected because $800 would be offset by the
officer's government pension.
In 9 out of 10 cases, this completely eliminates the
spousal benefit, even though the covered spouse paid Social
Security taxes for many years thereby earning the right to
these benefits. It is estimated that approximately 349,000
surviving spouses of State and local employees have been
unfairly affected by the government pension offset.
The present system creates a tremendous inequity in the
distribution of Social Security benefits. The standard for this
narrow class of individuals, retired public employees who are
surviving spouses of retirees covered by Social Security, is
inconsistent with the overall provisions of the Social Security
Act and does not apply to persons receiving private pension
benefits. This imbalance exists even though Congress, through
ERISA standards and tax code provisions, has more direct
influence over private employers than public employers.
Clearly, this is an issue that Congress must address.
Previous Congresses sought to save money for the Social
Security system by cutting benefits earned by State and local
employees. The windfall elimination provision and government
offset pension provision do not eliminate a windfall for
workers. Rather, they have provided a windfall for the Federal
Government at the expense of public employees. This is not
right and it is not fair. This Congress has a chance to set
things right by passing S. 349.
Madam Chairman, I want to thank you and the Members of this
distinguished Committee for the chance to appear before you
today. It is my hope that this hearing will bring greater
attention to the issue and increase the chances that S. 349,
the Social Security Fairness Act, will be considered in this
Congress.
Thank you for inviting me to testify before you this
morning and I would be pleased to answer any questions that you
may have.
Chairman Collins. Thank you very much, Mr. Rocks. You have
very ably represented your members and we appreciate your being
here.
I am going to start with a question for Mr. Fallis and Mr.
Rocks and then go back to Ms. Worcester.
You heard Ms. Worcester testify that she was not aware of
the windfall elimination provisions or the government pension
offset until she had been teaching for a number of years. At
that point I think she testified she was about age 60 and it
was a little hard to come up with a new plan, in her words.
Do you think that her situation is unusual, or have you
found with NARFE members that there is also a lack of
information and that a lot of your members, retired Federal
employees, are also shocked to learn of the impact?
Mr. Fallis. Yes, too many of them are unaware. I think we
probably have a better communications system than in other
areas. I think school teachers have been especially hard hit. I
have two sisters-in-law in Florida who, until they retired and
were hit with GPO and WEP, had never heard of these two
terrible laws. So, yes, there is a problem here.
If I might say so, I think GPO and WEP were enacted in a
stealthy kind of way. The GPO first passed in 1977 and was not
implemented until January 1983, thus sort of low-keying the
whole thing in my mind. The arbitrariness of these two bills is
really striking. In my own situation, I was eligible first to
retire in 1982, in September, and if you come right on up to
WEP, if you were eligible to retire on December 31, 1985, you
were OK. But if you were eligible to retire on January 1, 1986,
1 day later, the sky fell. That is arbitrary. You know, what
happened to equal protection of the law here, while one is
victimized and the other escapes harm? This sort of thing is
terribly unfair.
Chairman Collins. I think you are right that there was not
a lot of discussion about what the impact would be, as we have
gone back and studied this issue. I think these changes caught
a lot of public employees by surprise, particularly because it
was such a dramatic change without a lot of discussion and
debate.
Mr. Rocks, are some of your members surprised to learn
about the impact of these provisions when they go to retire and
file for Social Security benefits?
Mr. Rocks. Yes. Much of it, Senator, is usually the lack of
information at the local Social Security offices to be able to
articulate to our members the adverse impact of the government
pension offset and the windfall elimination provision. Many of
the counselors in Social Security clearly don't understand the
application of the law, because our members will go in there
and represent that they worked for 20 years and when they
retired from their police departments, they continued to work
in other secondary jobs, performing security work in their
communities.
So they felt that because they worked a substantial amount
of time, but unfortunately less than 30 years of substantial
earnings, and therefore they were adversely impacted by the
windfall elimination provision. It clearly is a shock when you
have planned for something because in many cases, as a previous
speaker said, you will work with another officer who is
eligible to retire on December 31, 1985, and this officer next
to him was eligible to retire on January 3, 1986. One was
offset and affected by the windfall elimination and the other
wasn't, and therein is the confusion.
If you got it, then I must be able to get it, and therefore
the confusion actually came into the local Social Security
offices. And it is still present, with the information being
requested not really being articulated in a manner which our
members would understand it.
Chairman Collins. Ms. Worcester, you decided to become a
teacher relatively late in life, at age 49. I suspect, though I
would be interested in your views on this, that you probably
would have gone into teaching regardless because you enjoyed it
so much. But do you think that had you known of the impact that
it might have made a difference in your career choices?
Ms. Worcester. Not in my case, I don't think, the
circumstances being what they were and it being something I
always wanted to do and something I could do at that age. It
was definitely a boost financially to be able to go into the
teaching profession where I was, and because of several other
considerations concerning my family, it probably would have
still happened.
Chairman Collins. Do you think that these provisions
discourage other people from changing professions later in life
and deciding to become teachers at a time when we really need
teachers?
Ms. Worcester. I am sure it will. As a matter of fact, a
young lady who graduated in my graduating class and ended up
teaching in the same school I taught in worked 14 years under
the teaching profession and then chose to leave and withdraw
her State retirement, invest it privately, and seek other
employment, mainly because of this law. She felt, as a young
person, she had to make a decision whether to continue or to
change professions and she chose to change professions.
Chairman Collins. I hear that, as well, and I think that is
one of the problems. In addition to creating hardship and
inequities for the individuals who are affected, the provisions
also discourage people from going into careers like teaching,
like police work, like firefighters, like Federal employees,
where we really need talented people to be willing to enter
these careers. So I think that disincentive is an issue as
well.
Ms. Worcester. There is one other thing that I might add
which has been brought up by these other gentlemen. My lifetime
girlfriend retired last year, and because of all I had been
through and all of the publicity, because of Sue Shaw's
enthusiasm, she understood this a little better than anybody
that might not have had that advantage.
It required four telephone calls and dogged pursuit to
convince the Social Security Administration that they were
overpaying her. When her Social Security checks started coming,
she put them in a separate account because she knew she was
being grossly overpaid, and it took her almost 9 months to sort
this out and to convince somebody to do the work that needed to
be done to settle the issue and come up with the right sums.
Because she had put her Social Security checks in a
separate account, she ended up, of course, just writing a check
and sending it back. But had she not known that this existed,
she is one of those people that would have been eventually in
this sort of a repayment situation.
Chairman Collins. I am so glad that you mentioned that
because I know the case workers in my State offices deal with
overpayments all the time, and very few people would have the
knowledge that your friend did to actually argue the case with
Social Security and withhold the money. And then they get into
terrible problems, just like the case that Mr. Fallis described
to us.
I am going to pass on all of your comments to the Social
Security Administration about people still not being aware and
the local workers not necessarily being fully aware of how
these complex laws work. I think that is an excellent point.
Mr. Fallis, I would like to ask you to respond to the
argument that the commissioner made that if we correct this
problem, we create other inequities. I disagree with her about
that, but do you or Mr. Rocks have any comments about the
argument regarding dual-eligibles and that if we correct the
pension offset and the windfall elimination provisions that we
will create an inequity for the dual-eligibles?
Mr. Fallis. Well, I disagree with some of the things she
said, as well. I think there were unintended consequences of
both these laws when they were passed and, as I say, the
chickens are coming home to roost now and have been for some
time.
I think the truly outrageous and bizarre twist in all of
this is, with WEP, those people retire and find out that they
have been penalized to the point that they have to go back to
work and are working in a Social Security-covered job and are
paying premiums into Social Security with no hope of ever
getting any kind of return because WEP has eliminated it.
Of course, the Social Security payments were designed to
favor low-income people. But you take a person who takes a
fairly low-income job with the Federal Government or any public
sector job and it is totally objective; they get no
consideration because of the low wage, and so forth, in that
retirement. And then this thing in Social Security, which is
designed to take care of them, comes back and hits them and
takes it away, too.
So this individual is penalized, even though we have in our
system a provision to take care of those low-income people.
They get no benefits from their government job or their public
sector job and because of WEP, they get none from Social
Security either. So it is a double whammy here and it is so
atrocious that I think these other considerations pale in
comparison.
Chairman Collins. I want to clarify that I understand that
the commissioner is correct in saying why the Act was passed in
the first place, but I think the impact has not been what was
anticipated.
Mr. Rocks, do you have any comments on that?
Mr. Rocks. I think from an actuarial standpoint, the
commissioner's argument was very sound in that with the members
I represent, they may retire early due to the rigors of the
job, the rotation of shift work, working 24 hours, 7 days a
week, which is the case in some of our departments, and the
stressful nature of the law enforcement profession.
But our members do not live based on the actuarial
standards set down by the Social Security Administration. So in
many cases, we will not, like I said in my testimony, reap the
benefits of even the monies that we put in, to recoup them. So
I don't think from looking at the actual dollar amounts from
the actuarial standards that argument can carve out certain
groups. You don't have any basis for an argument. It is easy to
throw around billion-dollar figures, but when you get into
reality the actuarial tables of the life expectancy of law
enforcement officers, you will find it significantly reduces
and would reduce that figure.
Chairman Collins. Thank you. I want to thank all of you for
testifying. This is the first Senate hearing to review the
impact of these two provisions. It is my intention to share our
hearing record with every single member of the Finance
Committee, in the hope of giving them the information that they
need.
They deal with so many different issues, but I feel this is
a very important issue. It is important to school teachers, it
is important to public employees, it is important to our public
safety officers, and I am going to continue my efforts to get
this law changed. To me, this is a matter of simple fairness.
If you are paying into the Social Security system, if your
spouse had paid into the Social Security system, if you have
earned those benefits, then as Ms. Worcester said, it is like
an insurance policy. And if you are paying in the premiums,
when the time comes to collect, you should be able to do so
when you have met the other requirements and otherwise would be
eligible.
So I thank you for giving us a better understanding today.
I want to thank all of our witnesses and I want to assure you
of my personal commitment to keep working to rectify this
inequity. I also want to thank my staff, which worked very hard
on this hearing and all others who have contributed to it.
The hearing record will remain open for the submission of
additional materials and statements for 15 days, and a special
thank you to my constituent, Ms. Worcester, who came from Maine
today. Thank you.
[Applause.]
You do deserve that applause. We don't usually allow that,
but this is well deserved. Thank you.
This hearing is now adjourned.
[Whereupon, at 11:22 a.m., the Committee was adjourned.]
A P P E N D I X
----------
PREPARED STATEMENT OF SENATOR LAUTENBERG
Madam Chairman, I believe the Government Pension Offset (GPO) and
the Windfall Elimination Provision (WEP) are good examples of the law
of intended consequences.
While these provisions were designed to shore up the financing of
Social Security they have instead hurt close to one million public
service employees.
I have always supported strengthening Social Security and ensuring
the programs fiscal solvency. However, I support the repeal of both the
GPO and the WEP, and I have cosponsored Senator Feinstein's bill that
will do just that.
We have an Administration that has its priorities way off the mark.
The President is giving away huge tax cuts to the wealthy and
neglecting our teachers, our police, our firefighters, and our Federal
employees--people who we rely upon more and more in the post-September
11 world.
These are not individuals who are counting on stock options or
extremely generous corporate retirement plans. They are public
servants--individuals who dedicated their careers to making our
communities better.
The current policies penalize those employees least able to afford
it. I believe we need to fix this inequity.
I look forward to hearing the views of all our witnesses and making
progress to identify ways to improve Social Security's fairness for all
workers.
Thanks you, Madam Chairman.
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