The controversy over WEP and GPO repeal has heated up on both sides of the aisle in Congress, with greater involvement from the public sector workers and retirees. Proponents insist that the results of a repeal would significantly increase Social Security payments to millions of Americans who are grossly penalized under these rules. This article examines what some expected changes might be afforded by the repeal of these provisions, whom such changes in legislation would affect demographically, and what some of the potential financial ramifications are.
Understanding WEP and GPO
The WEP and GPO are provisions that reduce the Social Security benefits of individuals who had pensions from jobs not covered by Social Security.
- WEP: Established in 1983, this provision affects people working in covered and non-covered jobs, which cuts as much as 50% off their Social Security benefits from what they would normally get. Mainly, this change affects employees who have spent parts of their career working in public service jobs, like teachers and first responders.
- GPO: This was also enacted in 1977, and this affects the spouses and survivor benefits of those with a pension from non-covered work. In addition to reducing the amount of their Social Security benefit, if the pension amount is too high, it wipes out any Social Security benefit for spouses and widows/widowers of government employees.
Together, these two provisions affect about 2 million under WEP and nearly 700,000 under GPO, bearing most heavily on women and public service workers.
The case for repeal
Supporters of repealing WEP and GPO illustrate that these provisions are outdated and unduly punish people who have otherwise contributed to Social Security through other employment. Advocates will say it would do the following:
- Increase Social Security payments: As is well documented, there are many public sector employees who, through WEP and GPO, have seen a great reduction of their Social Security payments. These situations could be reversed to provide full benefits after repealing both provisions by lending significant financial support to retirees who have dedicated their careers in public service.
- Promote equity: The current law disparate treatment of public and private sector workers is fundamentally unfair. Congress can achieve a fairer balance by repealing WEP and GPO for a more equitable system that considers the contributions of all workers, regardless of their employment history.
- Support economic security: Increased Social Security payments could go toward enhancing the financial security for retirees, allowing them to invest more in their communities and help local economic growth.
This could be especially true for communities that have high portions of public sector employees, such as teachers and first responders as they could see an increase in their Social Security payments and benefits.
Possible financial impacts
However, despite these strong cases for appeal, opponents note concerns regarding the fiscal consequence to the Social Security system. Repealing WEP and GPO is estimated to cost $8 to $10 billion annually; some have said this would increase the existing funding shortfall in Social Security, depleting the trust fund reserves sooner than projected, thus affecting all beneficiaries.
Further, some opponents of repeal indicate that reform could be done by changing the benefit calculation for those caught by WEP and GPO by one of several types:
- Proportional calculations: Which would factor into the benefit formula how much of a worker’s career was spent in covered and non-covered work.
- Phase-out gradually: This would allow WEP and GPO penalties to be implemented in consideration of the financial health of the Social Security system.
The WEP and GPO repeal debate is an important debate, as it underlines a critical juncture in the elements of equity and financial sustainability within the Social Security system.
