July 7, 2016
Representative Kevin Brady
Chairman, Committee on Ways and Means
301 Cannon House Office Building
Washington, D.C., 20515
Dear Mr. Chairman:
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to express our concerns about certain aspects of your bill, H.R. 711, the “Equal Treatment of Public Servants Act of 2015.” While this bill reflects good intentions with regard to simplifying and improving the accuracy of the computation of Social Security benefits for retirees who are subjected to the current-law Windfall Elimination Provision (WEP), we are concerned these benefit improvements are being paid for with cuts in benefits to other Social Security retirees who are not currently affected by the WEP.
We understand that the Social Security Administration’s (SSA) Chief Actuary has projected that more than 10 retirees will experience a reduction in benefits under H.R. 711 in the future for every retiree who will see an increase. Overall, the bill is a net reduction in Social Security benefits, and takes away benefits from one group of retirees in order to give additional benefits to a different group of retirees. As drafted, the National Committee cannot support this bill. What follows is a brief discussion of those aspects of the bill that concern us.
In all, SSA’s Chief Actuary estimates that about 15 million individuals will lose money under the new WEP formula. They include individuals who worked in non-covered employment but are not receiving a pension based on those earnings. Under current law, these individuals are exempt from the WEP because they do not receive both a pension from non-covered work and Social Security. However, under the new formula, they would have a reduction in their Social Security benefits, because actual receipt of a public pension would no longer be required to trigger a benefit reduction.
Then there are those who have spent extensive periods of their careers in both covered and non-covered earnings. Under current law, the effect of the WEP formula is phased out for workers who have more than 20 years of substantial covered earnings; for those with 30 or more years of substantial covered earnings, the WEP no longer applies. Unfortunately for these workers, the new formula will result in an unavoidable reduction in their Social Security retirement benefits.
We are also concerned that the winners and losers under the legislation are not well understood. To our knowledge, there has been no beneficiary impact analysis, and no one seems to know what types of earnings and pension-receipt patterns will lead to higher or lower benefits.
What’s more, H.R. 711 would place a very heavy burden of proof on certain current retirees with regard to establishing whether or not they receive a pension based on non-covered earnings. As we understand the intent of the bill, SSA would be required to identify all individuals currently receiving retirement benefits who (1) have had non-covered earnings reported to their Social Security earnings record and (2) who are not subject to the current WEP computation. Each such individual would receive a notice from SSA informing them of the agency’s intent to impose the WEP both prospectively and retroactively unless the retiree submits statements from all former employers attesting to the fact that the retiree is not receiving a pension based on those non-covered wages.
In many instances, the non-covered wages in question may have been paid as long as 30 years ago. The employer, invariably an entity of a state or local government, may have been renamed, consolidated or dissolved many years ago. What once might have been the Santa Barbara Soil Conservation District might have become the Southern California Conservation Bureau. Changes like these go on all the time, which is one reason SSA has found it difficult to develop independent sources for verifying the receipt of pensions based on non-covered earnings. What is difficult for a large bureaucracy with a staff of over 65,000 employees and a nationwide system of over 1,200 local field offices will be an enormously difficult if not an impossible task for a retiree. The fact that many of the individuals who will receive these notices will be extremely elderly or infirm only compounds the problem.
Finally, behind the notice that retirees will receive from SSA will be the possibility of huge overpayments — the recovery of which may compromise the financial security of many elderly families. In too many cases, benefits will be lost and overpayments created just because retirees could not find the evidence to prove they were not receiving a pension based on non-covered earnings.
As I stated at the outset, we are deeply concerned about a number of aspects of this bill. We are troubled that many retirees will lose benefits while a relative handful will see their benefits increased. And we are equally concerned about the welfare of those retirees who will be put through the bureaucratic complexities this bill creates to prove they are not, in fact, receiving a pension from a long-ago employer, or who are in their 80s or 90s but will be asked to repay a substantial, unanticipated overpayment at the same time their monthly income is significantly reduced, as a result of a confusing provision of law that has not always been effectively administered by SSA.
While the National Committee welcomes your efforts to reform the WEP, we cannot support H.R. 711 in its current form because of the objections I have made in this letter. We would be happy to work with you to improve this bill.
President and CEO
Cc: Representative Sander M. Levin, Ranking Member
Committee on Ways and Means