A group of bipartisan lawmakers is advancing a plan that would increase Social Security payments for some Americans who receive pensions.
Reps. Abigail Spanberger, a Democrat from Virginia, and Garret Graves, a Republican from Louisiana, filed a delisting petition this week that could potentially force a vote on the Social Security Fairness Act. The bill seeks to repeal two rules that currently reduce Social Security benefits for some workers and their spouses and widows if they also receive pensions.
If the petition reaches 218 signatures, a vote would be forced, and experts predict the bill has a chance of passing because of its bipartisan support.
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Currently, retirees, including those who work for the government as police officers, firefighters, teachers and postal workers, sometimes see their Social Security benefits reduced, even though they pay into the system like other Americans.
Although most Americans work in jobs covered by Social Security, some pensions could result in reduced payments if they are not “covered” because their employers did not withhold Social Security taxes.
“If your pension comes from what Social Security calls ‘covered’ employment, for which you paid Social Security taxes, it has no effect on your benefits. The vast majority of Americans work in jobs covered by Social Security,” AARP said on its website.
“But let’s say you worked and received a pension from a “non-covered” employer, an employer that doesn’t withhold Social Security taxes, but you also did enough work in covered jobs to qualify for benefits.”
In these cases, the Windfall Elimination Clause (WEP) may reduce your monthly payment.
“Contact your representative or senator to take care of this, because this is part of a broken system,” Sen. Mike Braun, an Indiana Republican, said at a hearing on Social Security this week. “This is an injustice that needs to be corrected.”
Both the WEP and the Government Pension Offset (GPO) can result in lower payments for Americans.
The WEP reduces benefits for retirees who work for a company that doesn’t require them to contribute to the program. More than 2 million workers are seeing their monthly benefits cut as a result.
At the same time, the GPO affects more than 745,000 Americans and sees benefits similarly reduced for spouses and widows who also receive a pension.
“It’s really high time we provided some support to the small but important group of beneficiaries that this measure is intended to serve,” said Alex Beene, a professor of financial education at the University of Tennessee at Martin. News week. “There are situations where a person may be receiving benefits from a pension that belonged to their spouse or another family member, and by law that reduces the benefits they can receive from Social Security.”
Beene said that for a select few, the rules wipe out virtually their entire monthly Social Security check, which could be an “income shock” in retirement.
Older people affected by the rules have long complained that reduced benefits are forcing them to delay retirement or continue working.
However, not everyone supports eliminating the WEP and GPO altogether, as some argue that doing so would disproportionately support those who only pay Social Security part of the time.
It would also be costly for the Social Security Administration, which is already facing a funding crisis that would result in reduced payments by the mid-2030s.
The additional cost could accelerate the timeline for beneficiaries across the country, as the Congressional Budget Office has predicted that repealing the GPO and WEP would cost $196 billion over a decade.
Despite these reservations, many lawmakers believe a major update of the rules is needed.
“Helping this group by allowing them to access the full amount of Social Security to which they are entitled would go a long way to helping them in their post-working years,” Beene said.
