Shaw's WEP Compromise Falls

JULY 2004
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Short Of Needed Relief - As a result of the mounting pressure to take action on the GPO and
WEP, the Chairman of the House Subcommittee on Social Security, E. Clay
Shaw (R-FL) has proposed a compromise of sorts. Under the plan put
forth by Shaw in mid-May, the House would repeal the WEP and replace it
with a new means of calculating Social Security benefits.

According
to Shaw, "the bill replaces the WEP with an individualized calculation
of Social Security worker benefits based on an individual's entire work
history, his or her earnings subject to Social Security taxes, and the
same basic benefit formula used for all other workers."

Doesn't Come Close...

However,
after an extensive review, the Association has determined that this new
formula does not come close to replacing the reduction applied to one's
Social Security benefit under the current WEP law. Instead of using the
traditional formula to calculate the benefit, Shaw's plan uses a new
calculation that averages the wages over the course of one's entire
work history (including time as MA public employee). After applying the
standard benefit calculation to the average monthly total of one's
income, the actual benefit to be paid to the retiree is based on the
percentage of one's full-time work history that was spent under Social
Security.

For example, a retiree,
who averaged $20,000 annually during their 40 plus years of work,
earned 30% of that total under Social Security. If the WEP was
repealed, he would receive about $450 in Social Security each month.
Because of the WEP, he receives only $200 a month - a whopping 55%
reduction in his SS benefits. Under Shaw's proposal, the retiree would
only receive about $266, meaning that he still loses over 40% of his
Social Security (approximately $185 out of a potential $450).

Owe It To Our Members To Fight

"Congressman
Shaw is trying to take the pressure off the House Leadership by moving
a bill out of his Committee. The problem is that this bill does nothing
for folks living under the GPO and it falls far short of a meaningful
change for members hit by the WEP," said Association President Ralph
White. "We owe it to our members to fight for their best interests.
Everyone has been working too hard and have come too far for us to
settle for a pittance.

"A retiree,
who (like the one in the example above) spent their career not only in
public service but also in the private sector making an average living,
has lost over half their Social Security due to the WEP. Mr. Shaw's
plan restores less than a quarter of what has been taken away. I would
say this is a step in the right direction... a start, but certainly not
a solution that we can live with."

Members,
affected by the GPO, may be left wondering why a bill only changing the
WEP law has advanced. While the House Leadership seemingly has shifted
its focus to the WEP, there is no shortage of support within the House
and Senate for the GPO repeal.

"Congressional
leaders addressed the WEP first for a handful of different reasons.
First off, a compromise, like Shaw's, is less expensive than a GPO
repeal. Second, since the WEP affects the benefit based on a retiree's
own work history under Social Security, members of Congress have been
more willing to address the problem," explained Association Legislative
Liason Shawn Duhamel. "Don't get me wrong though, both issues are of
equal importance to the Association. One issue is not being favored
over the other."

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