Democrats in Congress don’t want Republicans to be able to take credit or hogtie Social Security reforms that address inequities felt by some public employee pensioners. Thus Senate Majority Leader Chuck Schumer is saying there may be a vote as early as this week on the Social Security Fairness Act. The vote would take place before the Senate goes into Republican control in January, and the Senate will recess soon for the holidays, which gets them out of Washington Dec. 21-31.
The legislation would repeal two Social Security provisions: the Windfall Elimination Provision and the Government Pension Offset, which reduce Social Security benefits for millions of individuals who earned defined benefits pensions through public service jobs, particularly those in systems in which they did not pay directly into Social Security, such as many in Alaska who worked for the state or for school districts.
The cost to taxpayers is not insignificant. The Congressional Budget Office estimated the bill would cost nearly $190 billion over a decade. It also projected in a letter to Sen. Chuck Grassley last month that Social Security’s trust funds could “be exhausted roughly half a year earlier than it would be under current law” if the bill is passed into law.
Both Rep. Mary Peltola and Sen. Lisa Murkowski are co-sponsors of the legislation in their respective legislative bodies. If passed, it will bring hundreds of millions of dollars to the Alaska economy and encourage Alaska seniors to stay in state, as their benefits will somewhat offset higher costs of living. But the entire program is unfunded and adds to the $36 trillion national debt.
The bill is especially relevant for Alaska retirees who were part of the state’s old Public Employees’ Retirement System (PERS) and Teachers’ Retirement System (TRS).
Many of these retirees have seen their Social Security benefits significantly reduced due to current structure of Social Security. Under the WEP, individuals who worked in both Social Security-covered and non-covered employment often receive less than their full Social Security benefits. Similarly, the GPO affects survivors’ benefits, reducing spousal or widow’s benefits for retirees with a government pension.
Due to such a large state government workforce, Alaska has the highest percentage of WEP-affected beneficiaries of any state. Nearly 12% of all beneficiaries and 15% of all retired workers are impacted by the WEP.
If passed, the Social Security Fairness Act would eliminate these reductions, allowing public servants to collect both their earned pensions and full Social Security benefits.
Lawmakers supporting the bill say the existing provisions as punitive and outdated, penalizing workers who have contributed significantly to their communities.
If the Senate approves the bill, it will head to President Joe Biden for his signature.
What about those of us who paid into this and had our paychecks reduced? Why should those who did not contribute get benefits and further the debt. More and more are siphoning off this system who never contributed one dime to it!
To be affected by the “Windfall” deduction you have to have paid into social security enough to qualify. Those effected often worked a significant number of years in non-governmental jobs. It is infuriating to me that my husband (and myself through spousal benefits) can not collect what we were forced to pay into the so called “security” system.
That being said, I personally believe SS should be eliminated all together. It’s just a glorified reshuffle of wealth. And we sure don’t need to go it more debt!!
If they never paid into SS they still won’t get a benefit. This bill just removes the reduction on SS benefits from the jobs in which they did pay into SS.
These people DID pay into social security as well as into their pensions. Many government workers worked in the private sector before and after their government job, like my husband did. Also, many teachers paid into social security before they taught, during summers, and for years after they leave the teaching positions. How is this worse than a woman who chooses not to work and doesn’t pay ANYTHING or very little into SS, but drawing it off of their husband’s earnings?
Gail, there are millions of women who “chose” not to work because they supported their spouses and family wellbeing over being a two income earner family. Relying on one income often meant luxuries of a bigger home,$$$ vacations, etc. were denied and regular living expenses had to be more carefully managed. Aside from that I do agree with your comment about not penalizing those who worked in both government and private sectors.
Just a bit of a reminder. Anchorage teachers are impacted the most because in the 1980s when it was possible to opt out of Social Security the National Education Association (NEA) sold this to their members as the best thing for them. They chose this and it was stupid then and now four decades proved it. I was President of ACE/AFT at the time and we stayed in Social Security. So what happens to the alternative retirement they created and chose to pay into that was not SS. Bad decisions by NEA they what all of us to pay for now. Are they going to pay their part or is this another free ride for not taking responsibility for their Union’s and their own decisions?
Thank you and well said
Well said NBSR. No contribution, no benefits. Go ask your union to care for you, not the taxpayers problem. Sounds like a case for DOGE.
The state employees back in the day were benefitted by SBS and the money that they would have paid into SS was instead invested in their INDIVIDUAL SBS account. That was their retirement plan. To put those people on SS now, without any additional payroll taxes subsequent to their leaving the state is grossly unfair to the people who paid into SS all those years. I am FOR privatization of retirement, similar to the intent of the SBS program, as a MEANS to be rid of payroll taxes and the government manipulation of the people on a constant basis. So NO to this bill and YES to an individual account for each US citizen similar to TSP or SBS.
When the charade eventually concludes it is the property owners stuck with the bills. And more often than not, property owners with no pensions. If Marxist Mary and the wicked witch support it__ you understand
Would the change be retroactive on WEP? In other words would the WEP reduction be eliminated if already receiving social security payments?
Truth–the bill, as written, would be retroactive only for 2023,
Social Security is going broke why don’t they do something real and protect it?
We paid into it. It’s not entitlement.
If they don’t do something and we get a portion of our Social Security instead of the whole thing, it’s gonna be held to pay. Politicians better run, and hide because the general public is not gonna take it too late forced to have money taken out for Social Security and then told you can’t have it ain’t gonna work
Actually it is an entitlement.
“3: a government program providing benefits to members of a specified group “
‘https://www.merriam-webster.com/dictionary/entitlement
From what I know, the Windfall Elimination Provision affects those people who paid into SS during their working careers and later worked in the public sect where they became eligible for a public pension. When they apply to get the SS benefit they are entitled to, they are told it will be reduced merely b/c they receive a state pension. This is unfair b/c those folks paid into the SS system and should get the benefit they are entitled to. Instead, they get a substantially reduced benefit just because they worked in the public sector and have a state/municipal pension. Those folks who receive a state/municipal pension but have never paid into SS are not impacted by the elimination of the WEP. No one who did NOT pay into SS is getting a SS benefit. Rather, it is the opposite: for 40 years, b/c of the WEP, thousands of public employee pensioners who paid into SS (before their public sector careers) have been denied a substantial part of their SS benefit. Fundamentally unfair.
Ed,
You’ve explained it well. Did those people who opted into the public sector retirement system know at the time that they would receive reduced SS benefits? I think the answer is “yes.” Did those public sector workers contribute to traditional or Roth IRAs, perhaps using the cash they did not pay into the SS trust through payroll tax? They should have. Did other payroll taxpayers shoulder the burden of paying benefits for every year those public sector employees did not pay into the SS trust? Again, yes. I see the unfairness of reducing the payout of SS benefits to public sector employees who worked for many years outside the public sector. But they moved into the public sector with open eyes, and the public sector pensions are quite generous. Should everyone else now relieve those public sector retirees of the cost of their decision?
Schumer, Murkowski, & Peltoldya says it all. As always, the “Fairness” title of this means the opposite. True reform would eliminate paying illegal aliens, drunks & druggies, six year olds on ritilan etc. It’s already a broken system and Biden brain changes will accelerate the crash.
So the folks that knew about the reduction and worked around it or accommodated for it get nothing while those that did nothing get a windfall? This is not “fairness” – this is a give-away to the mostly undeserving.
Even though I receive these benefits I do not support this. Once again public sector workers get more than most other retirees
from the private sector. As a blessed Tier 1 retiree I have great retiree benefits. Private sector retirees deserve any changes that would increase SS benefits.
Perhaps union workers will think of their fellow retirees who struggle greatly to survive! It has not been my experience they will not! Not only do they want a return to defined benefits they want more like this regardless of the cost to others and our country!
Now we can get all of our SS too.
No way. You signed an agreement live by it. Get your hand out of our wallets. FGF
What agreement? Some folks had a SS earning job before they went into public service. When they retired, they found their SS part was reduced because the government didn’t want you to get 2 full amount retirement checks. Now, the game has changed. You still with me?
Yeah I’m with you. Enjoy your reduced bennies. If you didn’t fully contribute, you do not deserve full bennies. Plain and simple, go cry to you union
It’s all about qualified employment. Don’t worry, i have enough. I had a life before Alaska like most.
As a wife of a public employee who this would affect, please remember that most of the workers in public service are earning far less in wages than the same work with a private contractor. This has been my husband’s experience, he had been recruited by several contractors to do similar work but he chose to stay with the state because of the benefits and retirement. Then about 10 years before he retired they stopped offering health insurance for retiree’s spouses which was a BIG hit for our family. Then about 2 years before he retired they stopped offering health insurance for the actual retired employee, instead giving them a stipend towards ‘Obamacare’- which sucks. Huge deductibles and very costly premiums. So yes- these retirees who paid into social security enough quarters before, after, or during their public work should get back the benefits that they contributed WITHOUT reduction!
So, your husband knowingly turned down better paying jobs for benefits and retirement perks. Now, he is upset that the people who worked in private sector jobs are getting something he knowingly turned down?
.
Decisions have consequences. And, when those consequences are distasteful to you, you petition the government to lessen the consequences? Not exactly generating a lot of sympathy here.
Gail,
While this is a goid talking point “most of the workers in public service are earning far less in wages than the same work with a private contractor” it’s simply not true.
The only group that is compensated less than the private sector is the highly educated those with a professional degree or doctorate…about 10% of the federal workforce. The vast majority of federal workers are in fact compensated at a higher amount than similar private-sector employees.
From the CBO:
Comparison of Total Compensation
As with its components (wages and benefits), total compensation for workers in both sectors differed by varying degrees in 2022 depending on those workers’ educational attainment.
Among workers with a high school diploma or less education, total compensation costs averaged 40 percent more for federal employees than for their private-sector counterparts.
Among workers whose education culminated in a bachelor’s degree, the cost of total compensation averaged 5 percent more for federal workers than for similar workers in the private sector.
Among workers with a professional degree or doctorate, by contrast, total compensation costs were 22 percent lower for federal employees than for similar private-sector employees, on average.
Overall, the federal government would have decreased its spending on total compensation by 5 percent if it had adjusted the cost of pay for its employees to match the compensation of their private-sector counterparts.
‘https://www.cbo.gov/publication/60235’
The same holds true for State of Alaska employees and local government employees, while SOME are no doubt compensated less, MOST are compensated at a higher rate.
What state did your husband work for? Alaska state retirees get free health insurance for themselves and their dependents once they retire. I know because I retired from the State of Alaska and have never paid one cent for my retiree health insurance, which also covers my wife.
Are you tier 3 though?
I know personally the effect of the WEP. It initially made sense, except the fact that it affects older individuals who previously worked under other employers and had paid into Social Security before 1983. Initially, I had understood that the WEP would only take effect on new federal employees after 1983, so never really paid any attention to it. For 9 years prior to retirement, I received notice from Social Security annually of what my benefit would be. When I retired and sat a couple hours at the Social Security office in Anchorage with their employee and presented all my retirement papers, they also verified what my benefits were going to be and it was exactly what had been stated earlier on their flyers. 3 years into retirement, they stated WEP had not been applied to my account and I had been overpaid? I still contend, WEP was made to be applied to Federal employees that came into the system after 1983. If it was/is to be applied to federal employees before 1983, is that what was meant when the law was passed?
Another issue with SS that needs to be questioned is when your spouse dies and benefits. The benefits paid to you are for the previous month. However, when a person dies in the new month, SS goes into your bank account and takes back those funds for the previous month with a message that if they were due, a check will be sent back to your account? Why? First, the person was rightfully due those funds for the previous month. SS just created another unnecessary process to have to do a check back to the family that was rightfully theirs in the first place. And, this process can take up to three months or more? Suppose the family really needed this money which was rightfully theirs? There is no way that SS should be allowed into anyone’s account since the funds are always issued for the previous month! Is SS money used for other issues other than what is was meant for? Probably time for a thorough audit of the SS system also.
Are u sure about $ being issued for the previous month? The month I turned 65 I received my first check in that month. I do agree the whole system is messed up and needs DOGE to fix it!
A person has to be entitled “throughout the month” to get a benefit for that month. If you become deceased, you are not entitled for that month. Instead a survivor benefit can go to an eligible spouse/child. The bank is required to return to SSA any benefits paid to a deceased beneficiary. If a survivor wants to claim benefits, contact SSA
I feel I have “contributed significantly to their communities” but I don’t get a break. Add that Peltola and Murkowski support the bill, means it is garbage.
MRAK did not make clear that only people who paid into SS will get their benefit restored. In the private sector your 401k transfers, the same should be true for public service
Unless I am missing something, the tax deferred retirement savings account (401(k) and they numerous variations) are yours. Any company saying you cannot transfer the money you have in that account is not a 401(k) or similar.
So… aside from demonstrating ignorance, what is your point?
Wow, it’s not just me, you talk down to everybody.
No one is asking what was windfall was referred to in the Windfall Elimination Provision.
It’s simple. When public employees were allowed to opt out of Social Security in favor of another retirement plan, they got immediate relief from the 6.2% Social Security tax the rest of us have to pay. That’s the windfall. That’s 6.2% more that went in their pockets immediately. Why didn’t they throw that money into other retirement savings if they were concerned about retirement?
I would be happy to strike down the WEP and let them earn full SS benefits provided these public employees return the 6.2% they got plus the interest and/or earnings they should have earned over the time by investing that money.
For public employees, this is another “heads they wind, tails we lose” proposition.
They didn’t keep the 6.2%. It went into their pension system just as if they were contributing to an IRA.
Nicely presented
Yes, they didn’t have to pay. This is security tax on that earned money With the social security money that they will claim is based on other monies.That was taxed prior to public employment.
And should reflect what they paid in. Anyone who decided to go into public service should not be able to claim full ssi benefits plain and simple.
Nope. I could be drawing SS, come up and being pers in Alaska, and get 2 checks. Just like my grandma gets her SS, and her dead husband’s railroad pension check. Just like if I croak, my wife gets mine and hers.
Instead of paying into SS as a State of Alaska employee I paid into PERS and SBS. There was no increase in my paycheck by not paying in SS. The money just went elsewhere. But I did pay into SS for 40 years but I didn’t have the 30 years of “substantial earnings” that gets you your full SS. I only have 23 years of “substantial earnings” so my SS has been reduced by hundreds of dollars every month ever since I started drawing SS.
Yeah, you got to qualify. It’s so many quarters. I cashed in pera and draw full SS. Win win
So you are proud of being a leach to the system you didn’t invest in?
You know it. I paid hundreds of thousands of dollars in taxes, glad to cash in.
Well said, Pete B. Another issue is how SS benefits are calculated. It is weighted to give more SS back to people whose earnings record shows low SSA covered wages all their work career. The WEP rule just removes that favorable method. After WEP is applied, their SS benefits are figured the same as everyone else that paid into Social Security system 30 or 40 years and is based on actual SS wages earned without the favorable “kickback.”
Oh, my big ” windfall” that theyeliminated. The little bit I get back from paying into SS for over 20 years in the private sector. And the YUGE money I get from paying a goodly chunk of every paycheck into the Texas Teachers Retirement System. Oh, I guess im a one-percenterNow and they should keep nibbling away at what I get. Even before they take Buydung’s Ukraine kickbacks out of it!
Seems only fair that if you paid in, you should get something for it.
And if you didn’t, zip.
I paid in for decades in my first job,for a couple Years, in my second. I finally landed another job( working for a state,with a Defined Contribution plan) now,I’m getting bored on what I paid in for the first time. And somehow , its a ” Windfall” to get what I paid into. I’m sure they’d be more than happy to take from the defined benefit plan from the first job and TAX it to boot, and tax the pittance I have remaining in my 403(b) I’m not quite old enough to draw from that without penalty. The WEP and GPO are a ripoff.
Yes I agree I been paying SS since I was 13yrs old even though I worked for the Navy as a civilian for 38 yrs and still worked part time outside and paid into SS and being penalized I only collect $ 64.00 per month with no cost of living raise.
If this was to be enacted and signed into law it would have a very positive and measurable impact on the Alaska economy. For that reason we need Senators Sullivan and Murkowski to see it makes it to the floor and passes in this lame duck Congress.
The 2023 PERS and TRS annual reports show that total active and retirees as of 6/30/22 was 81,710. If 2/3 of those active and retirees live in Alaska then that is about 55,000. If my personal Windfall Elimination arithmetic is average (and I would guess it quite possibly is) then the total for those 55,000 will be just over $1 billion per year coming to Alaska in additional Social Security payments, about the same dollars into the state if all Alaskans received a PFD of $1,500.
A true calculation would require more analysis. I believe the numbers are available to do that. An example of an additional factor is that according to what I have been told the City & Borough of Juneau has been paying into SS for its professional service (non-union) employees in order to protect them from this Windfall Elimination: so presumably those people now receive the same SS amount they will receive if this is passed by Congress and signed into law. The numbers in this example might not be very large. There may be other PERS and TRS employers for which this is true.
President Trump intends to have Social Security payments to beneficiaries made exempt from federal income tax liability. However, unless or until that happens, something between 15 and 20 percent of the Windfall Elimination would go to the IRS, a smaller percentage than the haircut the IRS gives the PFD but still significant to the state economy.
Another complication to the arithmetic would be that part of our PFD goes to pay an additional amount for Alaskans on welfare so that they are “held harmless” in that the PFD will not make them ineligible for welfare. Nothing like that will come from this Windfall Elimination going away so the Alaska welfare roles would very likely be reduced for many Alaskans by this Windfall Elimination legislation.
If it becomes law this should take much, or at least some of the pressure off legislators to come up with a new defined benefit tier for PERS and for TRS in 2025. However in the 2024 election the unions used the call for new DB tiers to rally union members, attract campaign money into the state, bring votes favoring Ballot Measure 1 and opposing Ballot Measure 2, and help assemble incoming House and Senate majorities. Therefore I would not expect union business agents(aka lobbyists) to discard this matter when it proved to be such a great battle flag. The existing DB tiers have an unpaid, outstanding and unpaid liability of $7 billion even though those tiers became closed to new members on July 1, 2006, and the liability continues to grow because the actuarially assumed rate of return on the PERS and TRS trust funds is 7.25%, and the actual earnings rate is short of that.
Lots of moving parts, political and mathematical in retirement matters. It’s not my area of expertise (if I actually have one of those) so many Must Read readers know more about this and should (please) weigh in to correct and clarify anything I have written.
Great, intelligent summary Kubota. Knowles gamed the system by hiring a company that said the earnings were way higher than they would be in order to keep the DB system going longer- without fixes- than it should have. The result was a massive, multi-billion dollar unfunded liability.
Any of the legislators that now want a new, unaffordable DB system should first have to address the $7 billion dollar shortfall from the old system. It would take a massive income tax- for more than a decade- to pay it off.
I hope all of you send messages to Senators Murkowski and Sullivan stating your opinions either way. Commenting on here doesn’t register your wishes to them at all.
I’ve written both Senators more than once on this bill, Sullivan responds with typical non-committal political B.S., at least Murkowski stands up to be counted.
Like Murkowski listens to her constituents
I already have,representation contacting senators on my behalf. Th Texas retired Teachers Association has been lobbying for ths,change. They helped draft it. I pay them a,small annual fee to help with my interests. I wasn’t a teacher, nust””sraff” for a university laboratory so I’m under the Teachers system..
Murkowski, Peltola, Schumer, are in on it, Good luck people They will do NOTHING for you unless they benefit
While I have no dog in this hunt, the fact that Alaska’s two RCV winners are sponsoring this bill makes me suspect there is much more to this issue than simple fairness.
If these people voluntarily opted out of Social Security, then why in the world should they get a do over now that, many years later, it didn’t work out so good for them. What about the millions of 401k’s out there that made bad investment decisions – do they all get a Mulligan, also?
It’s not the people who opted out of SS, it was their employer.
I should have been clearer – if you, your union representative or your employer , acting on your behalf, voluntarily opted out of SS….
Not how it works….. Lets says you worked at the cannery for a few years and paid into Social Security. Then you get a job driving the road grader for the state, which pays into PERS. But you also are in the Air Guard doing your weekends and 3 weeks a year. Maybe with a couple year long deployments over 20-25 years.( all the military time is paying social security out of your paychecks.)
Then you retire from the state and and go to work at the local grocery store, still paying into Social Security. Then one day in your late 60s, the Social Security people tell you that you will NOT BE receiving anything for all the years you also paid into Social Security, just because you also worked for the State for 20 years.
You still draw SS at a reduced rate. Now, payday arrives.
No they don’t. 401 is a gamble. I cashed mine in, paid the penalty, and draw full SS. A win win.
I paid into three retirement systems. One of those was Social Security, one being the State of AK and another. All because I worked MULTIPLE JOBS since age 15. Social Security took my payments from my paychecks for 40 years without asking and I was OK with that. HOWEVER,,, when I turned 65 the Social Security people said that they were keeping almost all of my SS Retirement because of the Windfall clause. Basically I was being punished for being an over-achiever.
If you have 30 or more years of “substantial” earnings under Social Security you are not affected by the WEP.
Please visit ‘https://www.ssa.gov/pubs/EN-05-10045.pdf before commenting again.
Social security is essentially a welfare program for low income workers. The WEP prevents “over-achievers” from taking advantage of that fact. More than a few folks in the ED business have learned how to game the system. One common ploy is to have a friend or relative place you on a private sector payroll to “earn” the 120 quarters of “substantial earnings.” Another avoidance technique is to take SS early and defer other government pensions or taking distributions from tax-deferred retirement plans until RMDs kick in.
Now you may get that check.
Most individuals don’t know why the WEP was put in place. That is evident from most of the comments above.
You are exactly correct David H.
Must be terrible. Marsha Blackburn, John Kennedy, Rick Scott, and JD Vance (Mr Vice President) are all co sponsors. Very liberal bunch.
I offer 3 “friendly amendments” to this SS bill. (1) Require ALL state, local govt and school district employees to pay into Social Security starting now; (2) Remove the cap on income taxed by Social Security. Now all income made after approximately $160,000 is not taxed by SS; (3) Require ALL SS employees report back to work-unlike President Biden’s “gift” that they can “work” from home until 2029.
Thoughts?
I’ve been paying into the SS system for 56 years, most of it paying double for the privilege of self employment, yet I get credit for only 35 years when calculating benefits. Is it fair that the double dippers get to speed the depletion of the already underfunded system?
Oh!, but according to the likes of Schumer, Peltola and Murkowski, this is “free” money like all federal giveaways. After all, no one is more deserving than government employees, who, as a group, are the most likely to advocate for big government.
Words of wisdom in this whole threat from David Boyle. Remove the threshold tax cap of 168,000 on Social Security . Solvency and future of SS saved.
The house just passed. Payday!
Let’s keep working towards relieving old folks in the May-Su of the need to pay property taxes.
Americans First!
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