Detailed Summary

Social Security Fairness Act of 2007 - Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act to repeal: (1) government pension offset requirements applicable to husband's and wife's insurance benefits, widow's and widower's insurance benefits, and mother's and father's insurance benefits with respect to OASDI payments; and (2) windfall elimination requirements with respect to computation of an individual's primary insurance amount.

Status of the Legislation

Introduced by Sen. Feinstein, with Sen. Collins, Lautenberg, and Snowe; had 35 sponsors and co-sponsors as of 9/07/07. Referred to Committee on Finance.

Senator John Kerry has scheduled a hearing on 11/06/07 of the Senate Finance Subcommittee on Social Security, Pensions, and Family Policy. Typewritten submissions for the record must state your full name and address and the title and date of the hearing ("GPO and WEP: Policies Affecting Pensions from Work Not Covered by Social Security" November 6, 2007). Statements must be mailed before 11/20 to:

Senate Committee on Finance
Attn. Editorial and Document Section
Rm. SD-203
Dirksen Senate Office Bldg.
Washington, DC 20510-6200b

Points in Favor

Current GPO and WEP rules take away Social Security rights that people earned because someone in their family served in public service jobs outside of the system. For example, a wife who never worked would get 50% of her husband's retirement benefits. However, if she worked as a librarian in many states, she would get none of these benefits. In another case, a coal miner turned fire fighter might be denied most of his own Social Security retirement benefits earned in the mines, because his later employer chose not to participate in Social Security.

Overall, it discourages people from taking a career in public service, or tracks them between covered and non-covered employers. Former teachers in one school district cannot afford to serve in another district, making it harder to fill needed positions everywhere.

Points Against

Social Security benefits are intended to replace only a percentage of a worker's pre-retirement earnings. The way Social Security benefit amounts are figured, lower-paid workers get a higher return than highly paid workers. For example, lower-paid workers could get a Social Security benefit that equals about 55 percent of their pre-retirement earnings. The average replacement rate for highly paid workers is about 25 percent.

Before 1983, people who worked mainly in a job not covered by Social Security had their Social Security benefits calculated as if they were long-term, low-wage workers. The effect of this was that their record looked like that of a person who had worked most of their life at lower paying jobs. This gave them an advantage because they received a Social Security benefit representing a higher percentage of their earnings than was intended, plus a pension from a job where they did not pay Social Security taxes. For that reason Congress passed the Windfall Elimination Provision to remove that advantage.

For those who have worked at both Social Security covered jobs and non-covered jobs there is a provision to reduce the offset. For every year of substantial Social Security covered earnings in excess of twenty years the offset is reduced. It is entirely possible for an individual to have enough Social Security earnings to completely eliminate the offset. The table for substantial earnings can be found at:

www.ssa.gov/pubs/10045.html#exceptions

A detailed explanation and chart showing the maximum amount of the offset is at:

www.ssa.gov/retire2/wep-chart.htm

This is a fair and equitable way to reduce the unfair advantage that some individuals gained prior to the enactment of the Windfall Elimination Provision, while still providing some measure of coverage under Social Security.