Committee on Ways and Means, Subcommittee on Social Security, 2-28-02 Testimony

Statement of Frank G. Atwater, National President and Chief Executive Officer,
National Association of Retired Federal Employees

Before the Subcommittee on Social Security,
House Committee on Ways and Means

Hearing on Social Security Improvements for Women, Seniors and Working Americans

February 28, 2002

Mr. Chairman and members of the Subcommittee, I am Frank G. Atwater, National President and CEO of the National Association of Retired Federal Employees (NARFE). I am testifying, today, on behalf of the more than 400,000 federal retirees, employees, spouses, and survivors who are NARFE members.

I would first like to commend you, Chairman Shaw, for stepping up to the challenge of making serious proposals for reforming Social Security. Although your bill, HR 3497, is so comprehensive that there are surely aspects of it that will not be resolved in this Congress, I do agree with you that we cannot afford to wait any longer to address some changes which have considerable support for reform now.

One of the issues, which your bill addresses, is the Government Pension Offset (GPO). NARFE has long sought to reform this provision of law which has denied many of our older members the economic dignity they had been led to expect in retirement. I, therefore, appreciate your invitation to appear here before you today both to reiterate NARFE’s support and to urge this Subcommittee’s immediate action on reform of the GPO and provisions which would enhance benefits for women and other retirees.

In 1935, when the Social Security Act was originally enacted, it provided the same benefits to workers, with and without spouses, and provided no survivors’ benefits. The Social Security Act amendments of 1939 added spousal and survivor benefits to provide extra protection to workers with families. But in the past two decades, some spouses and survivors have been shortchanged on this “extra protection”.

The GPO Social Security Act amendment, originally enacted in 1977, went into effect in 1983, and since then has affected over 340,000 federal, state, and local retirees. This figure grows by approximately 15,000 each year. The GPO reduces or eliminates the Social Security spousal or survivor benefit to which an affected retiree may be eligible. Two-thirds of the amount of the monthly government annuity that a public servant has earned, is applied as an offset against whatever Social Security spouse/ survivor benefit might be payable. By all accounts, the use of two-thirds of the public retirement income as offset against the social security income is an arbitrary percentage. As such, we believe it can and should be reexamined and relaxed.

Of the approximately 340,000 affected beneficiaries, about 80 percent are fully offset, which translates into no benefit at all. It is worth noting that about 40 percent of the total number of affected beneficiaries are widowed individuals, and roughly 70 percent of that number are fully offset. But I think it is crucial to recognize that almost 70 percent of the 340,000 affected beneficiaries are women.

Mr. Chairman, and members of this subcommittee, I know—as I’m sure some of you do—that the harshness of the current GPO causes both fears and tears among hundreds of older retirees. Fears for their financial futures, and tears of frustration that Congress has not acted to reform this provision despite widespread support for doing so.

There are today several bills pending before Congress which would offer relief to the hundreds of thousands of former teachers, cafeteria workers, postal workers, VA nurses, social security employees, and others who worked long and hard to help support their families. In fact, more than 300 members of this 107^th Congress have indicated their support for change in the GPO by cosponsoring one or more of the pending bills. The Chairman’s own Social Security reform bill proposes reducing the current two-thirds offset amount to a one-third offset.

I’d like to cite examples of what this change might mean to an affected widow.

Example One - Current 2/3 GPO affect:

Mary, a widow, retires from her government job with a gross monthly annuity of $900. She is eligible for a Social Security widow's benefit of $600. The combined amounts total $1500. She has not worked under Social Security long enough to qualify on her own account. The $600 Social Security widow's benefit is reduced by two-thirds of the $900 annuity, because of the GPO, which is $600. She gets no Social Security because the $600 is totally eliminated. Her gross monthly widow's benefit is therefore $900 instead of $1500.

Example Two – Proposed 1/3 GPO affect:

Jane, a widow, retires from her government job with a gross monthly annuity of $900. She is eligible for a Social Security widow's benefit of $600. The combined amounts total $1500. She has not worked under Social Security long enough to qualify on her own account. The $600 Social Security widow's benefit is reduced by one-third of the $900 annuity, because of the GPO, which is $300. Combine the $300 Social Security widow’s benefit with the annuity and her gross monthly widow's benefit is therefore $1200 instead of $900.

At the June 27, 2000 hearing, on the issue of the Government Pension Offset (GPO), Mrs. Ruth Pickard, a longtime NARFE member and a constituent of yours, Chairman Shaw, was with me. She spoke of raising her children and working to make ends meet, twenty-four (24) years in civil service with the United States Postal Service (USPS) and twenty-four (24) years in the private sector. She continues to work today, at 75 years of age, because she says that she cannot afford to stop. And, she continues to pay social security taxes on her wages, but she will never reap the benefits of her current payments.

The current GPO prevents her from getting her spousal benefit because two-thirds (2/3) of the amount of her pension totally eliminates that Social Security benefit. She gets her own benefit, but even that is much less because another offset, the Windfall Elimination Provision (WEP), also affects her. Your proposal, Mr. Chairman, with the reduction from a two-thirds (2/3) to a one-third (1/3) GPO, could quite possibly allow her to receive her spousal social security benefit, which could provide her with a higher benefit than she currently receives from her own work. She expresses her gratitude to you, Chairman Shaw, for addressing the need for GPO reform in your legislation.

Social Security Administration actuaries have determined that implementation of the one-third (1/3) GPO provision would increase the size of the OASDI actuarial deficit by an amount estimated at 0.02 percent of taxable payroll. This amount is not negligible but included in a total Social Security reform package, it will help significantly in alleviating some of the hardships that retired government employees have to endure with the current GPO.

The Social Security system has endured and will continue to endure some serious challenges and concerns over the next century. None of us can predict what this program or our economy will be like seventy-five years from now. Nor will any of us here today be around to know. One thing is certain, some changes are inevitable. And since we know that some of our seniors need help right now, I believe that we must make some changes right now.

In the advisory announcement of this hearing, Chairman Shaw , you stated, “Information about Social Security’s benefits and its future is out there, but some question whether such information is sufficient or widely understood. We should begin now to improve women’s benefits, reassure seniors that their promised benefits are secured, and better educate Americans about Social Security.”

On behalf of the over 400,000 members of the National Association of Retired Federal Employees, I am offering to assist in the effective dissemination of factual information about Social Security, its benefits and it’s future. Our association stands ready to use our varied communication resources to better educate and reassure our members and others about Social Security—its benefits, its funding and its future.

Mr. Chairman, again, I thank and commend you and this panel for recognizing the need for change in the GPO and for addressing it as part of this hearing today. We know individuals like Ruth Pickard can’t wait until Congress agrees on comprehensive Social Security reform. Towards that end, NARFE urges that today’s hearing be used to initiate House action so that GPO and other reforms for women can be enacted before this 107^th Congress adjourns.