Legislature(2021 - 2022)SENATE FINANCE 532
02/24/2022 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB151 | |
| SB173 | |
| SJR12 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 151 | TELECONFERENCED | |
| + | SB 173 | TELECONFERENCED | |
| + | SJR 12 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE JOINT RESOLUTION NO. 12
Urging the United States Congress to repeal the
Windfall Elimination Provision and Government Pension
Offset of the Social Security Act.
10:09:44 AM
Co-Chair Bishop relayed that it was the first hearing of
SJR 12.
10:10:13 AM
Senator Bill Wielechowski, Sponsor, explained that SJR 12:
SJR 12 urges Congress to repeal the Windfall
Elimination Provision (WEP) and Government Pension
Offset (GPO) of the Social Security Act. The WEP cuts
the Social Security benefits of public employees in
Alaska if they plan to switch between the public
sector and private sector or military. In 2021, this
loss could be as much as $498 per month, or about
$6,000 a year. The GPO cuts spousal or widows'
benefits for public employees for no reason other than
their work in the public sector. This cut could amount
to as much as 2/3rds the value of the individual's
government pension.
Because Alaska is one of few states that does not
offer a defined benefit plan or coverage for social
security, the WEP and GPO affect more Alaskans per
capita than any other state. Public employees in
Alaska are being punished for choosing to work in
public service. The WEP and GPO negatively impact
recruitment and retention of Alaska public employees
such as firefighters, police officers and especially
teachers. Those who do not want to be subject to these
provisions will simply look elsewhere for employment.
Punishing individuals for choosing public service runs
counter to retaining dedicated Alaskan workers and
recruiting the best of the best to Alaska.
Passage of SJR 12 will demonstrate that the Alaska
Legislature opposes arbitrary and unfair cuts to the
rightfully earned Social Security benefits of
Alaskans.
Alaskans deserve to retire with dignity. I urge your
support of SJR 12.
10:12:29 AM
Co-Chair Bishop asked about the Windfall Elimination
Provision (WPE).
Senator Wielechowski explained that the WPE would be
further discussed in the presentation.
10:12:52 AM
KEEGAN FARONE, STAFF TO SENATOR WIELECHOWSKI, discussed a
presentation entitled "Senate Joint Resolution 12, Senator
Wielechowski, 24 Feb 2022," (copy on file).
Mr. Farone showed slide 2, "Windfall Elimination
Provision:
• The Windfall Elimination Provision (WEP) was enacted
in 1983 by the Social Security Administration.
• The WEP reduces Social Security benefit payments to
beneficiaries whose work histories include both
Social Securitycovered and non-covered employment,
with the non-covered employment also providing
pension coverage.
• WEP reductions could amount to nearly $75 million
annually for affected Alaskans.
• In Alaska, the WEP potentially affects any public
employee who is also eligible for Social Security.
Mr. Farone addressed slide 3:
• For the first bend in average annual earnings,
the WEP reduces the replacement rate from 90
percent to as low as 40 percent, depending on the
quantity of years of qualified substantial
earnings under Social Security coverage.
Mr. Farone estimated that WEP reductions could result in a
$75 million reduction annually for affected Alaskans.
10:13:32 AM
Co-Chair Bishop asked whether the $75 million figure had
been provided by the sponsor or the Social Security
Administration.
Mr. Farone replied that the estimate was based on the $498
per month, multiplied by the number of Alaskans affected
by the WEP.
Co-Chair Bishop added that the number included direct
payments and not indirect payments.
Mr. Farone agreed.
10:14:41 AM
Mr. Farone reiterated that the first bend from slide 3.
10:15:10 AM
Mr. Farone relayed that the Three Bend Formula constituted
the primary insurance amount (PIA), which was the amount
paid to a retiree at full retirement age. He said that
under the WEP there would be no reductions in the second or
third bend of the formula, only the first bend.
10:15:32 AM
Mr. Farone spoke to slide 4, "Windfall Elimination
Provision":
• The WEP affects more Alaskans per capita than
any other state.
• Reductions under the WEP may equate to as much
as $498 per month, or approximately $5,976
annually.
Mr. Farone shared that there were 12,000 retired workers
affected by the WEP, 60 of which were disabled, 478 were
spouses and children, which combined constituted 11.6
percent of all Alaskan social security beneficiaries
affected by the WEP.
10:16:03 AM
Co-Chair Stedman went back to slide 3. He shared that he
supported the resolution. He thought the issue was
surprising to many who did not realize it existed until it
was directly affecting their social security payout. He
asked Mr. Farone to explain Table 3 on slide 3, without
acronyms.
Mr. Farone explained that the Social Security
Administration had a chart that indicated what the
considered to be substantial earnings, which increased
yearly. He said that if a person did not have at least 30
years of what the social security administration considered
to be substantial earnings, for every year below that
number 90 percent of the first $996 was reduced by 5
percent.
Co-Chair Stedman believed that the practice was called a
social security offset.
Mr. Farone clarified that the practice was called the WEP.
10:17:52 AM
Co-Chair Bishop asked about slide 4. He wondered about
Alaskas anomalous number of per capita workers.
Mr. Farone agreed that Alaska had the most workers, per
captia, affected by the WEP.
10:18:15 AM
Mr. Farone showed slide 5, "Government Pension Offset":
Government Pension Offset
• The Government Pension Offset (GPO) reduces Social
Security benefits paid to spouses or survivors when
the spouse or survivor earned a pension from a
government job that was not covered by Social
Security.
• Unlike the WEP, which can apply to any non-covered
employment, the GPO applies specifically to
government workers' retirement benefits.
• Although pensions mitigate the effect of the WEP
adjustment to Social Security benefits, pensions
from noncovered employment trigger the GPO
adjustment, which reduces the spouse and survivor
benefit.
10:18:53 AM
Mr. Farone spoke to slide 6, "Government Pension Offset":
Under the GPO, the reduction may equal up to two-
thirds of the value of the pension in noncovered work
and may wipe-out the spouse or survivor benefit
entirely.
Mr. Farone spoke to the chart on slide 6, noting that it
was a hypothetical example of the GPO reduction. He
explained that if there was a covered worker with an $1,800
benefit, the spousal benefit before GPO would be $900. If
the spousal benefit included a $1000 non-covered pension,
the two-third reduction of the $900 would leave a remaining
benefit of $233. This was called a partial offset. In a
full offset if the GPO was larger than the spousal
benefit, no benefit would be paid.
10:20:00 AM
Mr. Farone addressed slide 7, "Government Pension Offset":
• In 2020, 3,322 Alaskans were subject to GPO
reductions, 2,419 of which were fully offset,
meaning those affected received no Social
Security spousal or survivor's benefit because
the reduction was greater than the benefit
itself.
Mr. Farone added that 43 percent of those affected were
widows or widowers.
10:20:52 AM
Mr. Farone referenced slide 8, "Conclusion":
SJR 12 is designed to protect employees whose work was
contracted under the premise that their dedication to
public service would be rewarded upon their
retirement.
Although the WEP and the GPO were enacted to address
one inequality, they inadvertently created
another. Legislators must right this wrong and
ensure that individuals are not forced to choose
between serving the public good or retiring with
financial stability.
10:21:14 AM
Senator von Imhof wondered whether the United States
Congress would pay attention to the resolution should the
legislature pass the bill.
Senator Wielechowski thought many Alaskans were concerned
about the issue. He relayed that President Biden had
expressed support for eliminating the GPO and the WEP. He
believed that legislation had been introduced on the
federal level.
Co-Chair Bishop commented that the state legislature
advocating a position helped guide state representatives on
the federal level.
10:23:00 AM
Senator von Imhof thought it would be helpful to see the
status of the related federal legislation.
Senator Wielechowski agreed to provide the information.
10:23:37 AM
Co-Chair Bishop OPENED public testimony.
10:24:03 AM
AT EASE
10:24:12 AM
RECONVENED
DAVID GUTTENBERG, FORMER LEGISLATOR, FAIRBANKS (via
teleconference), wanted to share his experience with the
WEP. He had experienced a $500 per month penalty after
retirement, which was a significant amount of his monthly
retirement. He felt that it was fair to receive the
benefits one had already paid into. He thought that the
underlying factor was the management of social security. He
reiterated that the WEP took away money that people had
paid into the system. He urged support for the resolution.
10:27:31 AM
Co-Chair Stedman wanted to clarify that the testifier had
paid into social security for 25 years.
Mr. Guttenberg affirmed he had paid into Social Security
for 25 years.
Co-Chair Stedman understood that Mr. Guttenbergs penalty
had been $500 per month.
Mr. Guttenberg replied in the affirmative.
10:28:13 AM
Co-Chair Bishop CLOSED public testimony.
Senator Hoffman asked whether the benefits of the
legislation would be applied retroactively. He thought it
was known that the Social Security fund was underfunded and
wondered whether Congress would address the solvency of the
fund.
Senator Wielechowski responded that retroactivity and
enforcement would be determined by Congress. He hoped that
the benefits would be retroactive. He did not think back
payment. He agreed that Social Security solvency was an
issue he hoped would be addressed by Congress.
10:30:14 AM
Co-Chair Stedman thought it would be important to have 30
or more years in Social Security. He believed it was
reasonable for people to expect to be paid out by the fund
they had paid into during their working lives.
Co-Chair Bishop set an amendment deadline for 1pm, Monday,
February 28, 2022.
SJR 12 was HEARD and HELD in committee for further
consideration.
Co-Chair Bishop discussed housekeeping.
10:31:18 AM
AT EASE
10:31:30 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SJR 12 Sponsor Statement.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SSTA 5/4/2021 3:30:00 PM |
SJR 12 |
| SJR 12 GPO Explainer 2.8.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Letter of Support 5.5.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 Presentation.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP GPO Key Points 2.9.22.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SJR 12 WEP Explainer 11.16.21.pdf |
HL&C 3/21/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM |
SJR 12 |
| SB 151 Sponsor Statement.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Audit Summary.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 151 Supporting Document - 2021 Complete Audit.pdf |
HL&C 4/13/2022 3:15:00 PM SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 151 |
| SB 173 Sponsor Statement.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SB 173 Sectional Analaysis version I.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SB 173 Written Testimony Received as of 1.31.22.pdf |
SFIN 2/24/2022 9:00:00 AM SL&C 2/9/2022 1:30:00 PM |
SB 173 |
| SJR 12 Responses to SFIN Committee Questions.pdf |
SFIN 2/24/2022 9:00:00 AM |
SJR 12 |