Reforming the Social Security WEP Exposes Weaknesses in State and Local Pensions

Research Report

Reforming the Social Security WEP Exposes Weaknesses in State and Local Pensions

Abstract

The Windfall Elimination Provision (WEP) reduces Social Security benefits for retirees who also draw pension benefits from government employment not covered by Social Security. The Equal Treatment of Public Servants Act, a recently introduced congressional bill, would change how benefits are reduced. In this brief, we explore how the bill would improve the fairness of the adjustment for many beneficiaries, but also reduce Social Security benefits for millions more retirees. Under the proposal, benefits for certain workers could be reduced by more than 30 percent and in some cases, by more than the amount of their noncovered pension benefit. The largest reductions would affect those who work in government employment for shorter periods, the same workers who already get the least benefit from their state and local government pension plans. Policymakers could consider shoring up protections for these workers in conjunction with reforming the WEP.

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