Another Approach on WEP Offered

The head of the House Social Security subcommittee, Rep. Clay Shaw, R-Fla., has offered a plan to provide relief from those affected by the “windfall elimination provision,” an aspect of Social Security law that reduces benefits for those who put in fewer than 30 years of “substantial” Social Security-covered employment and who also draw a benefit from an annuity system that does not include Social Security–such as CSRS and the retirement systems of many state and local governments. Under the plan, Social Security benefits would be calculated as if all the worker’s earnings were subject to Social Security taxes, using the standard benefit formula, and the benefit would be adjusted by the percentage of earnings that actually were subject to Social Security taxes. The current provision reduces one of the multipliers used in the Social Security formula depending on years of “substantial” Social Security service (this year, Social Security-covered earnings of at least $16,275), yielding a maximum reduction of around $300 a month. Sponsors said that retirees, especially lower-income ones, would come out better under the proposed revised method.