The House Ways and Means Committee may act today on a compromise affecting the size of future Social Security benefits for 60 percent of the federal work force, including nearly 200,000 federal workers here.
At issue is a plan adopted by the committee's Social Security subcommittee to allow U.S. workers to escape Social Security benefit cuts by switching to the Federal Employees Retirement System. The subcommittee would allow workers who join and stay in the FERS plan for at least five years collect full Social Security benefits when they retire.
The subcommittee plan exempts workers under FERS from the so-called windfall benefits law. That law requires a reduction in Social Security payments to any individual who also gets a federal, state or local government pension. Six of every 10 federal workers qualify for Social Security usually based on private sector work performed either before they joined the government or after they retired from it.
Now the windfall benefit law cuts Social Security payments as much as $1,500 a year for government retirees with less than 30 years of Social Security coverage. The reduction is smaller for those with up to 26 years of coverage, but increases for those who spent less time paying into the Social Security system.
Key members of the Ways and Means Committee are concerned that the subcommittee proposal, which would allow workers switching to FERS to escape the windfall benefit cutback, would be costly to the Social Security system, and unfair to the more than 10 million state and local government workers who would still be subject to it. They see it is an expensive "lure" to attract workers into the FERS pension program.
Federal and postal union leaders have worked hard to have the windfall benefits provision eliminated or modified. They argue that it is unfair to reduce the Social Security checks of people just because they get a government pension, too.
Congress enacted the windfall benefit proposal because the Social Security system provides a "tilt" in favor of low-income employes. It gives those who spend relatively short careers under Social Security-covered employment, and those whose lifetime earnings are low, a bigger percentage of their preretirement income, in the form of a Social Security benefit, than it does for workers who spend a lifetime paying into Social Security. Federal workers covered by the old retirement program pay only the Medicare portion of the Social Security tax.
To rectify the situation, Congress passed legislation that said that federal workers eligible to retire after 1985, even if they continued to work, would be subject to the complex windfall benefit reduction.
One compromise the committee may consider, according to lobbyists following the situation, would eliminate the reduction in whole or in part for workers who have less Social Security-covered employment. If approved, that would mean most people getting a federal pension would still be subject to a partial Social Security benefit reduction. But it could modify that reduction or allow employes with less Social Security coverage to escape the windfall altogether.Fairfax Meeting
County Board Chairman John F. Herrity will speak at 10 a.m. today at a meeting of the Northern Virginia Caucus of the National Association of Retired Federal Employees. Other speakers include Virginia Federation President Robert Halpin and NARFE Regional Vice President James Mong. The meeting is at the Vienna Community Center.