The Congressional Research Service has published a new analysis of recently reintroduced legislation that would do away with the "windfall elimination provision" coded into the Social Security benefit formula.
As explained in the CRS analysis, the Social Security Fairness Act would terminate the Windfall Elimination Provision and the Government Pension Offset included in the Social Security benefit calculation formula. Broadly speaking, these provisions can reduce Social Security benefits for certain public workers who did not pay Social Security taxes during substantial portions of their working lives.
While the bill analyzed in the new report was passed out of committee in the House of Representatives in September, it died with the close of the 117th U.S. Congress at the end of last year. In January, however, the bill's co-sponsors reintroduced the legislation, and they called on the current 118th Congress to pass it in full. As the report notes, the much-debated Social Security 2100 legislation would have a similar effect.
Supporters of the bills argue the "WEP" unfairly punishes certain public sector workers who may have included more generous anticipated Social Security payments into their retirement plans. They also say the WEP reduces benefits disproportionately for lower-earning households who have spent decades committed to public service.
What's at Stake
As explained in the CRS report, the windfall elimination provision is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security — and thus not subject to the Social Security payroll tax.
Its purpose is to remove an unintended advantage or "windfall" that these workers sometimes receive as a result of the interaction between the regular Social Security benefit formula and the workers' relatively short careers in Social Security-covered employment.
"Although participation in Social Security is compulsory for most workers, about 6% of all workers in paid employment or self-employment are not covered by Social Security," the report states. "In December 2022, about 2 million people (or about 3% of all Social Security beneficiaries) were affected by the WEP."
According to the CRS, these workers mainly include state and local government employees covered by alternative staff-retirement systems as well as most permanent civilian federal employees hired before Jan. 1, 1984. This latter group is generally covered by the Civil Service Retirement System.
