House Ways and Means Committee Chairman Richard Neal, D-Mass, reintroduced legislation in early April to “fix” the Windfall Elimination Provision (WEP) for future retirees and “provide meaningful relief to current WEP retirees.”
WEP, which reduces benefits for recipients of government pensions, has generated controversy since its inception in 1983.
Neal’s legislation, the Public Servants Protection and Fairness Act of 2021, establishes what he called a new, fairer formula that will pay Social Security benefits in proportion to the share of a worker’s earnings that were covered for Social Security purposes.
This provision is coupled with a benefit guarantee “ensuring no benefit cuts relative to current law for all current and future retirees.” Current WEP retirees will receive $150 a month in relief payments.
Originally, the WEP was intended to equalize the Social Security benefit formula for workers with similar earnings histories, both inside and outside of the Social Security system. However, in practice, Neal argued it unfairly penalizes many public employees.
“The Public Servants Protection and Fairness Act garnered more support in Congress last year than any previous WEP reform bill,” Neal said in a statement. “This year, I look forward to building on that momentum to advance the bill even further, and we’re off to a running start with 139 original cosponsors.
“The WEP negatively affects nearly 2 million retired public servants across the country, including 83,000 in Massachusetts. Public employees like firefighters, teachers, and police officers should not miss out on the Social Security benefits they earned over decades of hard work. With this legislation, these valued members of our communities will have greater retirement security and peace of mind.”
The SSA’s take
The Social Security Administration describes WEP on its website:
If you are eligible for a pension based on work you did for a federal, state, or local government, a nonprofit organization, or in another country and you did not pay Social Security taxes, this pension can affect the amount of your Social Security benefits. This reduction is referred to as the Windfall Elimination Provision, or WEP.
WEP reduces your Eligibility Year (ELY) benefit amount before it is reduced or increased due to early retirement, delayed retirement credits, cost-of-living adjustments (COLA), or other factors.