On Thursday, the Public Servants Protection and Fairness Act of 2021 (HR-2337) was reintroduced in order to reform Social Security’s Windfall Elimination Provision (WEP) for future retirees.
Congressman Richard Neal (D-MA) is spearheading the movement to pass this act, and in a recent news release Neal said that he hopes it would establish “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,” The bill was also led by Neal in 2019.
The WEP reduces or removes Social Security benefits for those who are covered by a government (federal, state or local)-sponsored guaranteed pension plan, for example, federal employees who are covered by the Civil Service Retirement System (CSRS). Social Security taxes are withheld for workers under the Federal Employees’ Retirement System (FERS). Federal Employees covered by FERS will not see a reduction in their benefit amount.
“The Public Servants Protection and Fairness Act garnered more support in Congress last year than any previous WEP reform bill,” Neal said. “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.”
Right now, around 1.9 million Social Security beneficiaries are affected by the WEP. This proposed reform is much needed WEP relief to current retirees as well as public employees.
Current Retirees: Immediate Relief Payments
The bill provides immediate help to current Social Security beneficiaries affected by the WEP. Current beneficiaries (and those turning 62 before 2023) who are affected by the WEP due to their own public service work will receive an extra $150 a month, with a starting time of nine months after enactment, and continues for as long as the eligible individuals are receiving Social Security benefits. This relief amount is not allowed to exceed the size of each person’s current WEP reduction.
Future Retirees: New Formula and Benefit Guarantee
Future retirees (those turning 62 in 2023 and later) will be eligible for a new, better benefit formula called the Public Servant Protection (PSP) formula. The PSP formula will calculate benefit amounts based on the proportion of lifetime earnings covered by Social Security.
The Public Servants Protection and Fairness Act of 2021 includes crucial protections that guarantee no one will receive a lower benefit as a result of this legislation. The bill maintains the current WEP exemptions and extends them to the PSP as well (individuals are exempt from both the PSP and the WEP if they have at least 30 or more years of coverage or if they do not receive any pension based on their state or local employment).
The bill would also provide active retirees under the WEP to receive $150 a month in relief payments. Additionally, it would create a benefit guarantee ensuring no benefit cuts relative to current law for all current and future retirees.
While this bill may not apply to all federal employees, it is important that legislation such as this gets the support it needs, so a large portion of the federal workforce may benefit and receive proper treatment in the future. Whether you are covered by CSRS or FERS, please be sure to read the links and reach out to us at Federal Benefits Service in order to learn more about your retirement benefits.