English for Congress Position Paper  (February 2022)


The Windfall Elimination Provision

 

The Windfall Elimination Provision (WEP) is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits or certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to to the Social Security payroll tax.  Its purposed is to remove an unintended advantage or "windfall" that these workers would otherwise receive as a result of the interaction between the regular Social Security benefit formula and the workers' relatively short  careers in Social Security-covered employment. About 6% of all workers in paid
employment or self-employment are not covered by Social Security. In December 2020, about 1.9 million people were affected by the WEP. Those workers mainly include state and local government employees covered by alternative staff- retirement systems as well as most permanent civilian federal employees hired before January 1, 1984, who are covered by the Civil Service Retirement System.
 
WEP's supporters argue that the formula is a reasonable means to prevent "overgenerous payments" and unintended benefits to people not who have earnings not covered by Social Security and receive pensions from noncovered work, Opponents argue that the provision substantially reduces a benefit that workers may have included in their retirement plans, and it reduces disproportionately for lower-earning households. Depending on each individuals personal employment history, a substantial reduction in individual monthly pension income could occur if the 40% instead of 90% allowance of the first $996 dollars of income is included along with the $161.28 or 32% through the next $6,000 15% beyond that for the total monthly income. As an example, for a worker whom had an average monthly income of $1,500 that had 20 years of substantial coverage and became eligible for benefits  in 2021 the difference between both examples is substantial: a monthly income of $1,057.60 for the regular formula pensioner and $559.60 for the WEP formula recipient.
 
The severe penalty for a friend whom had achieved more than the full forty quarters of covered benefits from non governmental employment and then was employed by a Colorado state agency was a reduction of $600 in her monthly income, That was pension money she rightly earned that was taken from her.  She and others (about 3% of all beneficiaries)  have forced to subsidize the Social Security System by the WEP because of Ronald Reagan's resentment toward government employees whom wouldn't 'violate procedures and laws. He referred to them as "Double Dippers". The WEP was intended to place affected workers in approximately the same position had all their earnings been covered by Social Security.  Thus those whose incomes exceeded the norm were penalized by reductions in their monthly benefits, which is de facto indirect form of income taxation in addition to the taxation of the benefits they do receive from their monthly Social Security checks.  This is unacceptable and despicable given the fact that few of the super wealthy and only half of the corporations pay income taxes. It is no wonder that the top one percent of our populace now own ninety percent of the national wealth while millions more are now becoming poorer.  As I learned first day in Econ 101 class, the 1929 Depression was caused by "too much money going into too few hands" not the 1929 stock market crash.  And history is now repeating itself with even greater suffering!
 
Several legislative bills have been proposed.  Some would repeal the WEP. Others would replace the WEP with a new proportional formula hat would allow the higher of their benefit under the current law and make other adjustments,
but would only but to individuals whom become eligible for benefits in 2023 or later. Still others would repeal the WEP, but only for benefits payable during 2022 through 2026. The unfairness of the WEP will still haunt our workers,
 
In conclusion, I would attempt to include the massive tax exemptions now given to the wealthy a the corporations in an total overhaul of the Federal governments financial sources as part of the Social Security System revisions,

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