From: Mary Anne Berberich <Berberim@gwgate.nhlbi.nih.gov>
Subject: The last "old boys club"
As we discuss the issues associated with conserving Social Security for the future, we should continue to reference the elements of universality and fairness which, history indicates, was the functional goal for this workers social insurance program. In order to prevent the erosion of the idealistic basis of the Social Security System, the entire workforce, including federal, state and local government workers, is required. Hence, the interface between Social Security and government pension programs needs to be revised.
All government workers who are not covered by the FERS system, which began for federal new hires in 1983, share the burden of subsequent "corrections" such as the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP), which serve to identify a significant portion of a government pension as equivalent to Social Security. The mitigation of these corrections has become a mechanism for some politicians to ensure the votes of their interested constituency. Instead of focusing on short-sighted gains for some of its members, organizations of government workers could re-direct their efforts toward BONA FIDE reform, since these "corrections" were generated by the government's reluctance to properly administer that component of a government pension which is actually the Social Security Equivalent. The problem stems from the fact that the government pension system is all-inclusive, whereas other pensions, such as those provided by GM, GE, IBM, Xerox and FERS, are IN ADDITION TO Social Security.
Like the general workforce,government workers contribute a percentage of their salary, equal to the employee share of the Social Security tax, IN ADDITION TO their contribution toward the pension component earned for longevity of service. However, since, in their case, the government is the employer, no matching employer tax is collected up front. The government actually "shot itself in the foot" by failing to properly identify the Social Security Equivalent component of these retirement programs when it established the Social Security System in the 1930's. Latter day "corrections", like the GPO and WEP, only serve to muddy the waters concerning what is actually happening. The government's dirty little secret is that, because the Social Security Equivalent is paid out according to the rules which apply to the pension component, many healthy, able-bodied individuals are receiving this social insurance benefit as early as age 55!
Removing the Social Security Equivalent component of government pensions to the jurisdiction of the Social Security Administration is the only equitable solution to the problem of "double dipping". If the Social Security Equivalent were administered according to those rules, social insurance benefits would accrue to government workers at ELIGIBILIY only and would be cumulative with Social Security credits earned before, or after, government employment. Because the formula used to calculate the Social Security benefit includes factors which ensure that lower paid workers get a relatively higher return than highly paid workers, this act would benefit ALL low income workers. Political pressure to mitigate the effects of the GOP focuses only on those low paid workers who also qualify for spousal Social Security benefits. Likewise, mitigation of the WEP, another political football, disadvantages career government workers relative to those who might also qualify for Social Security from other work.
Most government workers are unaware of the interface between Social Security and a government pension until retirement, at which time they are confronted with some uncomfortable facts. The survivor benefit, which they must provide by accepting a reduced annuity, is equivalent to 55% of a self-only benefit. For most mid-level government workers, this amount would be equivalent to the survivor benefit which is automatically provided under Social Security, without prior reduction to the worker's annuity. Further, under Social Security, a spouse may elect their own earned Social security benefit or an amount equal to 1/2 of the spouse's earned benefit, whichever is greater. Social Security is sheltered from distribution in divorce, whereas an entire government pension, including the Social Security Equivalent component, is subject to marital distribution.
Removing the Social Security Equivalent component of a government pension to the jurisdiction of the Social security Administration will enrich the Social Security program and promote its universality. The relevant government agencies would continue to administer the pension benefit component. the GPO and WEP will no longer be relevant and fairness would be served.
Mary Anne Berberich, Ph.D.
Legislative Representative
Bethesda Chapter of
Federally Employed Women
