Senators Sherrod Brown, D-Ohio, and Susan Collins, R-Maine, re-introduced the Social Security Fairness Act on Thursday. The bill would repeal the Windfall Elimination Provision and Government Pension Offset, which currently combine to reduce the Social Security benefits paid to retirees who collect a public pension and were not paying into Social Security while working for that public employer.
The WEP was enacted in 1983. It has the effect of reducing Social Security benefits for those receiving a non-covered pension, meaning a pension sponsored by an employer that does not deduct Social Security payroll taxes.
The WEP comes into play for retirees who were employed by at least one public employer not covered by Social Security and another employer who does collect Social Security taxes.
Since Social Security accounts for the payments into Social Security for the years of covered employment in a progressive method, those who worked for both covered and non-covered employers are viewed by Social Security as if they had made a low income their entire life, which may not be true in light of their non-covered employment. This has the effect of Social Security paying progressive benefits to those with another source of retirement income.
But as the senators highlight, the WEP also has the effect of providing these retirees with lower benefits than their lifetime payments into Social Security would otherwise entitle them if they did not have a non-covered pension.
The Social Security Administration explains how the WEP is calculated here.
The GPO serves a similar purpose to the WEP and was enacted in 1977. The WEP applies to surviving spouses of public pensioners who did not pay into Social Security while earning that pension. The GPO reduces the Social Security benefits that the surviving spouse receives by two-thirds of the monthly value of the non-covered pension.
Since the bill would simply repeal both provisions, retirees collecting non-covered pensions would collect Social Security from their covered income using the standard method.
Brown and Collins previously proposed this legislation in 2021 and 2019. It failed in both instances. The bill is sponsored by 21 other Senate Democrats, as well as Independents Bernie Sanders of Vermont and Angus King of Maine. Collins is the lone Republican sponsor.
The Brown-Collins bill is the second bill proposed this Congress that would reform the manner in which Social Security benefits are calculated. But unlike the Social Security Expansion Act, proposed by Sanders and Elizabeth Warren, D-Massachusetts, in February, which seeks to make Social Security solvent through 2075, the Social Security Fairness Act does not have any tax provisions that would pay for the increased benefits.
The Social Security Fairness Act is endorsed by the American Federation of Teachers and the National Education Association.