Work Continues on WEP Reform

Association Officials Visit Capitol Hill

JUNE 27, 2016: With just three weeks to go before the US Congress breaks for its summer recess prior to the national Republican and Democratic Conventions in July, work on a potential fix for Social Security’s dreaded Windfall Elimination Provision continues at a feverish pace on Capitol Hill.

Late last week, Association President Frank Valeri and Legislative Director Shawn Duhamel were summoned to Capitol Hill for high-level meetings with the bill’s main sponsors. Joining Mass Retirees were the Texas Retired Teachers Association, Ohio State Employees Retirement System and the Association of Texas Professional Educators. All are part of a nationwide coalition advocating for the reform of both the WEP and Government Pension Offset (GPO) laws.

In addition to meeting with members of the Massachusetts Congressional delegation, including the offices of Senators Elizabeth Warren and Ed Markey, Valeri and Duhamel also participated in a coalition meeting with Congressman Kevin Brady (R-TX). Brady, along with Mass. Congressman Richard Neal (D-Springfield), is the lead sponsor of H.R. 711.

More significant is the fact that Brady is Chairman of the powerful Committee on Ways and Means, of which the Subcommittee on Social Security falls under. With H.R. 711 now under the direction of Ways and Means, Brady has considerable influence over the further development and outcome of the proposal.

The meeting with Brady took place within the US Capital building, just steps removed from the House of Representatives Chamber. After updating members on the bill’s progress, Brady listened to thoughts on how the bill might be improved as it moves through the Congressional process.

Following the meeting with Brady, Association officials also met with Neal to further discuss the bill’s progress.

“While some details remain to be ironed out, H.R. 711 continues to work its way through legislative process. In fact, we might see the bill released from the Social Security Subcommittee prior to the July recess,” explains Duhamel. “We expect final details to emerge once the Congressional Budget Office (CBO) and Social Security Actuary complete their work, which we hope will be in early July.

“One complication in completing the final financial analysis is the difference in how the CBO scores a bill using a 10-year projection vs. how Social Security projects its findings over 40-years, which is typical in retirement funding.”

“We greatly appreciate the time, attention and committee resources Chairman Brady continues to devote to this issue. He and Richie Neal have been great partners on this issue. Hopefully, we will see a meaningful reform bill advance in the House in the near future.”

Among the issues under discussion as development of HR 711 continues are the following:

  • Amount of Rebate for Current Retirees: Once passed into law, H.R. 711 would adjust the Social Security benefits of existing retirees who have been subject to the WEP. CBO and Social Security actuaries are now conducting final analysis of the funding plan, with results due in early July. The financial structure of the rebate is largely dependent upon the savings generated by the new Social Security formula that will be used to calculate benefits for all new retirees once the law is changed.
  • Inclusion of GPO reform: Originally, WEP and GPO were being looked upon as two separate issues (personal Social Security benefit vs. spousal) and as such, were to be addressed in two different reform bills – the first focused exclusively on the WEP. However, following the inclusion of a quasi reform of the GPO within President Obama’s 2017 budget proposal, the Ways and Means Committee has explored options to include a GPO fix within H.R. 711. Coalition partners have yet to see a viable proposal that would reform the GPO to our satisfaction.
  • Continuation of “Thirty-Year Rule”: Current law exempts those retirees with 30 or more years of “substantial earnings” from the WEP. H.R. 711 would end this exemption for future retirees in order to treat all retirees fairly, based upon their actual contributions to Social Security vs. participation in another non-covered retirement plan (public pension). While the difference in Social Security benefits are said to be minimal, the Coalition, working with our union partners, has sought an extension of this exemption for today’s active employees.
  • Enforcement Provisions: One complicated aspect of H.R. 711 is a provision with the bill that calls upon Social Security to aggressively audit benefits to ensure payment accuracy and to pursue the collection of past overpayment. Because decades-old payroll records that predate computers are often incomplete, the ability of existing retirees to refute claims of overpayment would be difficult. Additionally, there are also questions regarding the ability of Social Security to implement such a widespread enforcement action, on top of the routine audits the agency already implements. Therefore, the coalition has asked Ways and Means to strike the new enforcement provisions from the bill.
  • Effect Date: When originally filed in 2014, the effective date of H.R. 711 was set at 1/1/17. Due to the time needed for passage and implementation, if passed into law in 2016 the WEP reform act would likely take effect in 2018.

Members should look to the September issue of the Voice, along with the weekly hotline update and our website breaking news for additional information on developments with H.R. 711 as they occur.