Government workers eligible for both a federal pension and Social Security and who turn 62 next year would have their monthly Social Security benefits reduced under legislation cleared yesterday by a House subcommittee.
The Social Security unit, on a straight party vote, endorsed the Democratic alternative to a more drastic proposal offered by the Reagan administration to eliminate "windfall" Social Security benefits to federal bureaucrats, state and local government workers and employes of nonprofit organizations.
Under the proposal, federal and public employes retiring next year who are eligible for Social Security benefits would get payments that are reduced as much as 12 percent below what they would now get under current law. That reduction is a maximum cut. It would apply only to persons with short periods of full-time jobs under Social Security. The actual amount of the reduction would depend on the number of years the person spent working under Social Security. The more years of Social Security coverage, the lower the actual reduction.
The provision would also reduce benefits over the long term for workers eligible for pensions under both systems (government staff retirement and Social Security) by a formula based on combining earnings under both system. Purpose of the legislation is to cut back, but not eliminate, Social Security benefits to people also eligible for a pension for government service. Nobody would lose their entire Social Security benefit. But most people retiring in the future would take some reduction. Many persons become eligible for Social Security benefits on the basis of relatively few years in non-covered jobs. They are the ones who would be most affected in the future.
Subcommittee aides say the larger cuts would normally apply only to high-pensioned civil servants who work short periods under Social Security in nongovernment jobs, persons sometimes unkindly called "double dippers."
The reductions do not affect anyone currently retired and drawing both federal pensions and Social Security. It applies only to persons retiring on or after Jan. 1, 1982.
The proposal also applies the Social Security benefit formula to a combination of both Social Security earning (for a private sector job) and for non-covered employment, such as working in the federal government. Nobody would lose any part of his or her federal pension. But Social Security benefits would be reduced on a gradually increasing basis as more "non-covered" earnings are taken into account into the formula after 1984.
The reduction will be increasingly large for persons retiring 10, 20 or 30 years down the road. For those with only a short number of years under Social Security-covered jobs, and with long-time federal service the reduction when they retire after the year 2010 could be as much as 50 percent below the amount they would get under present law. The committee proposal would save an estimated $200 million a year whereas the Reagan plan would have cut "double dipper" benefits in the future by $600 million over a five year period.