Congress' decision to exempt thousands of elderly women public workers and retirees from the new Social Security "offset" rule may result in a court test that could put those women under the same pension-reduction plan as men.
The new Social Security financing law says that (as of Dec. 1) public retirees applying for benefits as either the department or survivor of a spouse under Social Security will have those auxiliary benefits reduced, or "offset." Offset means that the auxiliary Social Security benefits of the public retiree would be reduced dollar-for-dollar based on the amount of his federal, state or local government pension. The bigger the public pension, the smaller the auxiliary benefit the retiree could collect on the basis of a spouse's Social Security entitlement. Idea behind the offset formula was, as the Senate said, to eliminate future "double dipping" by federal and public retirees who get their own pension, all of their own earned Social Security benefits, and also benefits worth either $101 a month as a dependent, or up to $400 a month as the survivor of a spouse who worked under Social security. The Senate felt it was unfair for retirees, who generally have relatively good retirement incomes, to qualify for full benefits based on a spouse's contributions to Social Security.
The offset plan doesn't cut into anyone's earned public pension. And it does not reduce the Social Security that an individual has earned for him or herself. It applies only when a public employee tries to "reach over" and qualify for benefits from the Social Security earnings of a spouse.
The original Senate plan was to begin the offset for retirees who applied for dependent or survivor benefits after Dec. 1, 1977. In November, this column advised eligible retirees to apply before the Dec. 1 cut-off. Thousands did. And, if they meet the eligibility requirements, they will receive full lifetime benefits from their spouse's Social Security.
At the last minute, Senate-House conferees decided it would be unfair to apply the Dec. 1 cut-off to women. Reasoning was that women generally earn less than men, and get smaller pensions and that an immediate "offset" change for them would be unduly burdensome.
What Congress did was to say that women who are now qualified and eligible to retire from their government jobs, or will be eligible in the next five years, can draw the full amount of their husband's Social Security entitlement either as his dependent or survivor. Only a few men will be able to qualify during the five-yea grace period, since they must meet what amounts to a dependency test.
That means that thousands of women have five years to qualify for the full auxiliary Social Security benefits, while their male counterparts in federal, state and local governments are subject to the offset rule as of Dec. 1.
The conferees, in granting the five-year grace period to women, said they (and their spouses) had counted on collecting full Social Security and full public pensions as part of their total retirement package. Congress decided that men, who will be hit by offset are better able to afford the reduction or elimination of auxiliary benefits.
Earlier this year the Supreme Court (Goldfarb vs. Califano) ruled, in effect, that it is unconstitutional for the Social Security system to force men to meet an income dependecny test when women do not have to meet the same standard.
The same situation could be said to apply now. Congress has said that all women public employees will have five years to qualify for the full Social Security benefits, while men will not unless they meet a tough dependency standard. Government insiders expect the case will go to court, both on constitutional and discrimination grounds.
Meanwhile, of course, eligible women public employees can and should continue to apply for full Social Security auxiliary benefit entitlement as the survivor or dependent of their husband. Men cannot do it any longer, since the Dec. 1 cutoff date applies to them. You can bet somebody is going to sue and, if the Supreme Court declares it unconstitutional, both women and men would be on the wrong side of the Dec. 1 deadline.