This article appeared in the Fall 2019 edition of The Classroom Teacher

Over the past several years, Congress has attempted to advance legislation to alter the Windfall Elimination Provision (WEP), a bill that modifies retirement benefits for certain workers who are entitled to both Social Security benefits and pension benefits from employment not covered by Social Security. The intent of the WEP legislation was to remove an unintended advantage that workers might receive when they retire, as they will appear to Social Security to have a lower income and, in turn, qualify for a larger, progressive benefit. This scenario typically impacts teachers who have two or more employment histories. 

In 1983 when the WEP was enacted, the Social Security Administration lacked the data it needed to make a customized benefit adjustment under a proportional formula for those employees who receive both Social Security benefits and a government pension. Instead, Congress adopted the current WEP formula that reduces the first tier of Average Indexed Monthly Earnings (AIME) from 90% to 40%. This approach assumes that a non-covered job accounts for a significant portion of total income. 

Using the past 36 years of data, a recent analysis of benefits reapplying a revised proportional formula found that 69% of current WEP affected workers would have received a higher benefit through Social Security. Further analysis suggested that a proportional formula applied to new beneficiaries would generate program savings, signaling that a proportional formula is now a more feasible option for Congress to consider. 

Over the past several years, federal legislation has generally proposed either to repeal the Windfall Elimination Provision for all or some affected beneficiaries, or to replace the current-law provision with a new proportional formula. 

Three bills introduced this session

In the current 116th Congress, three bills have been introduced in the House that address both these proposals. The Social Security Fairness Act (HR 141), reintroduced by Rep. Rodney Davis (R-Illinois), is a straight repeal of the WEP (as well as the Government Pension Offset — the other federal provision that reduces or eliminates spousal benefits for most Texas school employees). Two other bills, the Public Servants Protection and Fairness Act (HR 4540), sponsored by Rep. Richard Neal (D-Massachusetts), and the Equal Treatment of Public Servants Act (HR 3934), introduced by Rep. Kevin Brady (R-Texas), offer different variations of a proportional formula along with a monthly rebate to current Social Security beneficiaries. 

The addition of a monthly rebate would further improve benefits for those negatively impacted under a proportional formula. Both bills are structured so that most retirees will see an increase in benefits and no retirees will see their income reduced, which was a flaw in previous legislative attempts to repeal or replace the WEP. 

Davis has championed his repeal legislation for the past three sessions of Congress, and while this bill has not received a floor vote, the number of cosponsors is growing. Davis stresses that the unintended consequences of WEP can discourage qualified, talented individuals from entering public service, specifically the teaching profession. As of press time, there are 224 co-signers to his bill, about half of the House of Representatives. Opponents argue that a straight repeal would over-correct the system, allowing for higher retirement benefits to those who may not have fully contributed to Social Security. 

Working to overcome objections

Since 2015, Brady and Neal have worked together to overcome concerns about replacing the current WEP with a new proportional formula. Their current bills are nearly identical, but take different approaches to the monthly rebate component. 

Brady’s bill (HR 3934) would provide an additional monthly payment of $100 to current beneficiaries subject to the WEP and $50 to dependents. It would cost $23.1 billion, including $1.5 billion for the proposed proportional formula and $21.6 billion for the additional monthly payments.

Neal’s bill (HR 4540) would provide beneficiaries, but not dependents, an additional monthly payment equal to the lesser of $150 or the current WEP reduction amount. It would cost about $34.3 billion, including $1.5 billion for the proposed proportional formula and $32.8 billion for the additional monthly payments. Neal is pushing Democratic House leaders to move his bill this session, but it currently lacks enough support to get to the floor for a vote. 

There is a possibility that either HR 4540 or HR 3934 could move out of the House, as both have lower price tags than the full repeal bill (HR 141). However, the Senate is unlikely to take up the Windfall Elimination Provision as a stand-alone bill or if attached to a large end-of-year tax package. Opponents point to the overall cost of legislation and the added stress rebate checks would place on the Social Security trust fund as obstacles that proponents are still working to overcome.

This article is provided by Van Scoyoc Associates, TCTA’s retained lobby firm in Washington, D.C.