Key points for CSRS staff

We have reported on Civil Service Retirement System (CSRS) Reform of social security for several years here at Serving Those Who Serve. And for good reason, as the latest proposed legislation — called the Social Security Fairness Act — could affect benefits for 2.8 million US recipients.

Should the bill pass, it would repeal two provisions that currently limit Social Security benefits for certain employees who work for federal, state and local governments. According to a 2020 study, the city institute estimates that repealing these two provisions alone could add an average of $7,300 annually in Social Security benefits to affected beneficiaries.

Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)

The two provisions which the Social Security Act proposes to repeal are Exclusion clause (WEP) and Public pension offset (GPO). When WEP was introduced in 1983, it was intended to improve Social Security fairness by preventing workers who received pensions (such as CSRS employees) from also receiving full Social Security benefits if they did not contribute to the Social Security program. It aimed to promote retiree equity by preventing “double dipping.”

The problem with WEP is that it reduces social security benefits for workers who have worked in both the public and private sectors during their careers. Despite paying into Social Security as part of their private jobs, about 2 million retirees see their Social Security benefits reduced because of the way the WEP is calculated.

Similarly, the GPO provision also reduces benefits, but this time the impact is felt by spouses and widows or widowers of people receiving pensions from government jobs not covered by Social Security. The GPO calculation – which affects almost 800,000 pensioners – reduces Social Security benefits by two-thirds of the public pension.

Who would be affected by the reforms?

Police officers, firefighters, postal workers, educators and other public sector workers with jobs not covered by Social Security are among the groups that could see a significant increase in benefits from the Social Security Fairness Act. It is common for these workers to have other careers or part-time jobs where they have contributed to the social security system. If the reforms are passed, they could see a significant boost in their benefits.

Likewise, there are many Feds who are part of CSRS who have earned Social Security credits through other employment and could also see an increase in benefits. The Urban Institute estimates that eliminating WEP and GPO could increase social benefits anywhere from $3,600 to $8,900 each year for affected retirees.