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Testimony: 

Before the Subcommittee on Social Security, Pensions, and Family 
Policy, Committee on Finance, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:30 EST: 

Tuesday, November 6, 2007: 

Social Security: 

Issues Regarding the Coverage of Public Employees: 

Statement of Barbara D. Bovbjerg, Director: 

Education, Workforce, and Income Security: 

Statement of Barbara D. Bovbjerg, Director Education, Workforce, and 
Income Security: 

GAO-08-248T: 

GAO Highlights: 

Highlights of GAO-08-248T, testimony before the Subcommittee on Social 
Security, Pensions, and Family Policy, Committee on Finance, U.S. 
Senate. 

Why GAO Did This Study: 

Social Security covers about 96 percent of all U.S. workers; the vast 
majority of the remaining 4 percent are public employees. Although 
these noncovered workers do not pay Social Security taxes on their 
government earnings, they may still be eligible for Social Security 
benefits through their spouses’ or their own earnings from other 
covered employment. Social Security has provisions—the Government 
Pension Offset (GPO) and the Windfall Elimination Provision (WEP)—that 
attempt to take noncovered employment into account when calculating the 
Social Security benefits for public employees. However, these 
provisions have been difficult to administer and critics contend that 
the provisions themselves are often unfair. 

The Committee asked GAO to discuss the issues regarding the coverage of 
public employees under Social Security, the provisions to take 
noncovered employment into account, and the proposals to modify those 
provisions. 

What GAO Found: 

There are no easy answers to the difficulties of equalizing Social 
Security’s treatment of covered workers and noncovered public 
employees. About one-fourth of public employees—primarily state and 
local government workers—are not covered by Social Security and do not 
pay Social Security taxes on their government earnings. Nevertheless, 
these workers may still be eligible for Social Security benefits 
through their spouses’ or their own earnings from other covered 
employment. To address concerns with how noncovered workers are treated 
compared with covered workers, Social Security has provisions in place 
to take noncovered employment into account and reduce Social Security 
benefits for public employees, as described in the table below. 

Table: Provisions Affecting the Calculation of Social Security Benefits 
for Public Employees: 

The Government Pension Offset (GPO); 
When benefits are affected: When a public employee’s entitlement to 
Social Security is based on another person’s (usually a spouse’s) 
coverage; 
How benefits are affected: Benefits are reduced by two-thirds of the 
amount of the government pension. 

The Windfall Elimination Provision (WEP); 
When benefits are affected: When a public employee’s entitlement to 
Social Security is based on other covered employment, but the employee 
has had a lengthy career in noncovered employment; 
How benefits are affected: Benefits are calculated using a modified 
formula to reduce the amount of benefits received. 

Source: GAO analysis. 

[End of table] 

To be administered fairly and accurately, both these provisions require 
complete and accurate reporting of government pension income, which is 
not currently available. The resulting disparity in the application of 
the provisions is a continuing source of confusion and frustration for 
affected workers. Thus, various changes that would affect the GPO and 
WEP provisions have been proposed, such as: 

* Eliminate the GPO and WEP provisions. This would simplify 
administration and avoid concerns about unfair treatment among public 
employees. However, any reductions in the GPO or the WEP would widen 
Social Security’s financial gap and would raise concerns about unfair 
treatment of public employees compared with other workers. 

* Extend mandatory coverage. If all newly hired state and local 
government employees who are not currently covered were to become 
covered, the need for the GPO and WEP could be phased out over time. In 
2005, Social Security actuaries estimated that mandating coverage for 
these employees would reduce the 75-year actuarial deficit by about 11 
percent. While mandatory coverage could enhance retirement benefits for 
the affected workers, it could also result in significant costs to the 
affected state and local governments. 

As long as the GPO and the WEP remain in effect, it will be important 
to administer the provisions effectively and equitably based on 
accurate and complete information on both covered and noncovered 
employment. 

What GAO Recommends: 

GAO has previously recommended that the Congress consider giving the 
Internal Revenue Service the authority to collect the information that 
the Social Security Administration needs on government pension income 
to administer the GPO and WEP provisions accurately and fairly. GAO 
continues to believe that this important issue warrants further 
consideration by the Congress. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-248T]. For more information, contact 
Barbara Bovbjerg at (202) 512-7215 or bovbjergb@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the issues regarding Social 
Security coverage of public employees and the possible effects of 
reform. Social Security covers about 96 percent of all U.S. workers; 
the vast majority of the remaining 4 percent who are not covered are 
public employees. Moreover, 9 in 10 of the public employees not covered 
by Social Security are state and local government workers. Although 
these noncovered workers do not pay Social Security taxes on their 
government earnings, they may still be eligible for Social Security 
benefits through their spouses' or their own earnings from other 
covered employment. To address concerns with how noncovered workers are 
treated compared with covered workers, Social Security has provisions 
in place to take noncovered employment into account when calculating 
Social Security benefits for public employees, but the provisions have 
been difficult to administer. This situation poses difficult issues of 
fairness. It has also been a source of confusion and frustration for 
the workers these provisions affect. Thus, some have proposed 
eliminating these provisions. Alternatively, as part of Social Security 
reform, others have proposed extending mandatory coverage to all state 
and local government employees who are not currently covered; under 
mandatory coverage, the need for these provisions would be phased out 
over time. 

I hope I can help clarify and provide some perspective on the complex 
relationship between Social Security and public employees. Today, I 
will discuss Social Security's coverage of public employees, Social 
Security's current provisions affecting noncovered public employees, 
and proposals to modify those provisions or make coverage mandatory for 
all public employees. My testimony is based on a body of work we have 
published over the past several years.[Footnote 1] 

In summary, about one-fourth of public employees are not covered by 
Social Security for various historical reasons. As a result, these 
employees do not pay Social Security taxes on earnings from their 
noncovered jobs. Nevertheless, these employees can still be eligible 
for Social Security benefits based on their spouses' or their own 
earnings from covered employment. Currently, Social Security has two 
provisions in place that attempt to ensure these workers' noncovered 
employment is taken into consideration when calculating their Social 
Security benefits: (1) the Government Pension Offset (GPO), which 
affects spouse and survivor benefits, and (2) the Windfall Elimination 
Provision (WEP), which affects retired worker benefits. Both provisions 
reduce Social Security benefits for those who receive noncovered 
pension benefits. However, the Social Security Administration (SSA) 
cannot effectively and fairly apply these provisions because it does 
not have access to complete and accurate information on noncovered 
earnings and receipt of noncovered pensions. Implementation of some of 
our recommendations has improved the availability and tracking of key 
information for federal retirees, and we have estimated that this 
tracking will save hundreds of millions of dollars. However, 
congressional action is still needed to improve access to information 
on state and local government pensions. 

In recent years, various Social Security reforms that would affect 
public employees have been proposed. Some proposals specifically 
address the GPO and the WEP and would either revise or eliminate them. 
While we have not analyzed these proposals, we believe it is important 
to consider both the costs and the fairness issues they raise. Other 
proposals would make Social Security coverage mandatory for all state 
and local government employees. In 2005, Social Security actuaries 
estimated that mandating coverage for all newly hired state and local 
government employees would reduce the 75-year actuarial deficit by 
about 11 percent. It could also enhance inflation protection, pension 
portability, and dependent benefits for the affected beneficiaries, in 
many cases. Also, the GPO and the WEP would no longer apply to newly 
hired public employees and so could be phased out over time. However, 
mandatory coverage could increase retirement costs for state and local 
governments. 

Background: 

Social Security provides retirement, disability, and survivor benefits 
to insured workers and their dependents. Insured workers are eligible 
for reduced benefits at age 62, and full retirement benefits between 
age 65 and 67, depending on the worker's year of birth.[Footnote 2] 
Social Security retirement benefits are based on the worker's age and 
career earnings, are fully indexed for price inflation after 
retirement, and replace a relatively higher proportion of wages for 
career low-wage earners. Social Security's primary source of revenue is 
the Old Age, Survivors, and Disability Insurance (OASDI) portion of the 
payroll tax paid by employers and employees. This Social Security tax 
is 6.2 percent of earnings up to an established maximum, paid by both 
employers and employees. 

One of Social Security's most fundamental principles is that benefits 
reflect the earnings on which workers have paid Social Security taxes. 
Thus, Social Security provides benefits that workers have earned, in 
part, due to their contributions and those of their employers. At the 
same time, Social Security helps ensure that its beneficiaries have 
adequate incomes and do not have to depend on welfare. Toward this end, 
Social Security's benefit provisions redistribute income in a variety 
of ways--from those with higher lifetime earnings to those with lower 
ones, from those without dependents to those with dependents, from 
single earners and two-earner couples to one-earner couples, and from 
those who live shorter lives to those who live longer. These effects 
result from the program's focus on helping ensure adequate incomes. 
Such effects depend, to a great extent, on the universal and compulsory 
nature of the program. 

According to the Social Security trustees' 2007 intermediate (or best 
estimate) assumptions, Social Security's cash flow is expected to turn 
negative in 2017. In addition, all of the accumulated Treasury 
obligations held by the trust funds are expected to be exhausted by 
2041. Social Security's long-term financing shortfall stems primarily 
from the fact that people are living longer and having fewer children. 
As a result, the number of workers paying into the system for each 
beneficiary has been falling and is projected to decline from 3.3 today 
to 2.2 by 2030. Reductions in promised benefits and/or increases in 
program revenues will be needed to restore the long-term solvency and 
sustainability of the program. 

About One-Fourth of Public Employees Are Not Covered by Social 
Security: 

About one-fourth of public employees do not pay Social Security taxes 
on the earnings from their government jobs. Historically, Social 
Security did not require coverage of government employment because some 
government employers had their own retirement systems. In addition, 
there was concern over the question of the federal government's right 
to impose a tax on state governments. However, the remaining three- 
fourths of public employees are now covered by Social Security, as well 
as virtually all private sector workers. 

The 1935 Social Security Act mandated coverage for most workers in 
commerce and industry; at that time, such workers comprised about 60 
percent of the workforce. Subsequently, the Congress extended Social 
Security coverage to most of the excluded groups, including many state 
and local employees, military personnel, members of Congress, and 
federal civilian employees hired after January 1, 1984. 

In 1950, Congress enacted legislation allowing voluntary coverage to 
state and local government employees not covered by public pension 
plans, and in 1955, extended voluntary coverage to those already 
covered by plans as well. Initially, public employers could opt in and 
out of the Social Security program under these provisions. Since 1983, 
however, public employers have not been permitted to withdraw from the 
program once they have opted in and their employees are covered. Also, 
in 1990, Congress made coverage mandatory for most state and local 
employees not covered by public pension plans. Nevertheless, the most 
recent data from SSA indicates that in 2005, about 6.8 million state 
and local government employees were still not covered by Social 
Security. Coverage varies widely across states. In some states, such as 
New York and Vermont, virtually all government employees are covered; 
in other states, such as Massachusetts and Ohio, less than 5 percent of 
government employees are covered. Seven states--California, Colorado, 
Illinois, Louisiana, Massachusetts, Ohio, and Texas--account for nearly 
70 percent of the noncovered state and local government payroll. 

In addition, SSA estimates that about half a million federal government 
employees are not covered. These are civilian employees hired before 
January 1, 1984, who continue to be covered under the Civil Service 
Retirement System. 

Most full-time public employees participate in defined benefit pension 
plans. Minimum retirement ages for full benefits vary, but many state 
and local employees can retire with full benefits at age 55 with 30 
years of service. Retirement benefits also vary, but they are generally 
based on a specified benefit rate for each year of service and the 
member's final average salary over a specified time period, usually 3 
years. For example, plans with a 2 percent rate replace 60 percent of a 
member's final average salary after 30 years of service. State and 
local government workers also generally have a survivor annuity option 
and disability benefits, and many receive cost-of-living increases 
after retirement. In addition, in recent years, the number of defined 
contribution plans--such as 401(k) plans and the Thrift Savings Plan 
for federal employees--has been growing. There has been little movement 
toward adopting defined contribution plans as the primary pension plans 
for state and local workers, but such plans have become fairly 
universally available as supplemental voluntary tax-deferred savings 
plans.[Footnote 3] 

Current Provisions Seek Fairness but Pose Administrative Challenges: 

Even though noncovered employees may have many years of earnings on 
which they do not pay Social Security taxes, they can still be eligible 
for Social Security benefits based on their spouses' or their own 
earnings in covered employment. According to SSA, nearly all noncovered 
state and local employees become entitled to Social Security as 
spouses, dependents, or workers. However, their noncovered status for 
the bulk of their earnings complicates the program's ability to target 
benefits in the ways it is intended to do. 

To address the fairness issues that arise with noncovered public 
employees, the Congress has enacted two provisions: (1) the Government 
Pension Offset (GPO) regarding spouse and survivor benefits, and (2) 
the Windfall Elimination Provision (WEP) regarding retired worker 
benefits. Both provisions apply only to those beneficiaries who receive 
pensions from noncovered employment. However, the provisions have been 
difficult to administer because they depend on having complete and 
accurate information on noncovered earnings and pensions--information 
that has proven difficult to get. Also, the provisions are a source of 
confusion and frustration for public employees and retirees. 

Under the GPO provision, enacted in 1977, SSA must reduce Social 
Security benefits for those receiving noncovered government pensions 
when their entitlement to Social Security is based on another person's 
(usually a spouse's) Social Security coverage. Their Social Security 
benefits are to be reduced by two-thirds of the amount of their 
government pension. Spouse and survivor benefits were intended to 
provide some Social Security protection to spouses with limited working 
careers. The GPO provision reduces spouse and survivor benefits to 
persons who do not meet this limited working career criterion because 
they worked long enough in noncovered employment to earn their own 
pension. 

Under the WEP, enacted in 1983, SSA must use a modified formula to 
reduce the Social Security benefits people receive when they have had a 
lengthy career in noncovered employment. The Congress was concerned 
that the design of the Social Security benefit formula provided 
unintended windfall benefits to workers who had spent most of their 
careers in noncovered employment, as the formula replaces a relatively 
higher proportion of wages for low earners than for high earners, and 
those with lengthy careers in noncovered employment appear on SSA's 
records as low earners. 

Provisions Are Difficult to Administer: 

To administer the GPO and WEP, SSA needs to know whether beneficiaries 
receive pensions from noncovered employment. However, SSA cannot apply 
these provisions effectively and fairly because it lacks this 
information. In a report we issued in 1998, we recommended that SSA 
perform additional computer matches with the Office of Personnel 
Management to get noncovered pension data for federal 
retirees.[Footnote 4] In response to our recommendation, SSA performed 
the first such match in 1999 and planned to continue to conduct the 
matches on a recurring basis. We estimated that correcting the errors 
identified through such matches will generate hundreds of millions of 
dollars in savings.[Footnote 5] However, SSA still lacks the 
information it needs for state and local governments, and therefore, it 
cannot apply the GPO and the WEP for state and local government 
employees to the same extent it can for federal employees. The 
resulting disparity in the application of these two provisions is yet 
another source of unfairness in the calculation of Social Security 
benefits for public employees. 

In our testimony before the Subcommittee on Social Security, House 
Committee on Ways and Means, in May 2003 and again in June 
2005,[Footnote 6] we recommended that the Congress consider giving the 
Internal Revenue Service (IRS) the authority to collect the information 
that SSA needs on government pension income, a task that could perhaps 
be accomplished through a simple modification to a single form. Earlier 
versions of the Social Security Protection Act of 2004 contained such a 
provision, but this provision was not included when the final version 
of the bill was approved and signed into law.[Footnote 7] As long as 
the GPO and WEP remain in effect, we continue to believe that the IRS 
should be given the authority to collect the information that SSA needs 
on government pension income to administer these provisions accurately 
and fairly. 

Provisions Cause Confusion and Frustration: 

The GPO and the WEP have been a continuing source of confusion and 
frustration for the more than 7.3 million government workers affected. 
Critics of the measures contend that the provisions are basically 
inaccurate and often unfair. For example, critics of the GPO contend 
that the two-thirds reduction is imprecise and could be based on a more 
rigorous formula. According to a recent analysis conducted by the 
Congressional Research Service, the GPO formula slightly overestimates 
the reduction that some individuals (particularly higher earners) would 
otherwise receive if they worked in Social Security-covered employment, 
and greatly underestimates the reduction that others (particularly 
lower earners) would receive.[Footnote 8] In the case of the WEP, 
opponents argue that the formula adjustment is an arbitrary and 
inaccurate way to estimate the value of the windfall and causes a 
relatively larger benefit reduction for lower-paid workers. 

Some Social Security Proposals Would Affect Public Employees: 

In recent years, various proposals to change Social Security have been 
offered that would affect public employees. Some proposals specifically 
address the GPO and the WEP and would either revise or eliminate them. 
Other proposals would make Social Security coverage mandatory for all 
state and local government employees. 

Some Proposals Focus on the GPO or the WEP: 

A variety of proposals have been offered to either revise or eliminate 
the GPO or the WEP. While we have not studied these proposals in 
detail, I would like to offer a few observations to keep in mind as you 
consider them. 

First, repealing these provisions would be costly in an environment 
where the Social Security trust funds already face long-term solvency 
issues. According to current SSA estimates, eliminating the GPO 
entirely would cost $41.7 billion over 10 years and increase the long- 
range deficit by about 3 percent. Similarly, SSA estimates that 
eliminating the WEP would cost $40.1 billion, also increasing Social 
Security's long-range deficit by 3 percent. 

Second, in thinking about the fairness of the provisions and whether or 
not to repeal them, it is important to consider both the affected 
public employees and all other workers and beneficiaries who pay Social 
Security taxes. For example, SSA has described the GPO as a way to 
treat spouses with noncovered pensions in a manner similar to how it 
treats dually entitled spouses, who qualify for Social Security 
benefits on both their own and their spouses' work records. In such 
cases, spouses may not receive both the benefits earned as a worker and 
the full spousal benefit; rather, they receive the higher amount of the 
two. If the GPO were eliminated or reduced for spouses who had paid 
little or no Social Security taxes on their lifetime earnings, it might 
be reasonable to ask whether the same should be done for dually 
entitled spouses who have paid Social Security on all their earnings. 
Otherwise, such couples would be worse off than couples who were no 
longer subject to the GPO. And far more spouses are subject to the dual 
entitlement offset than to the GPO; as a result, the costs of 
eliminating the dual entitlement offset would be commensurately 
greater. 

Mandatory Coverage Has Been Proposed: 

Making coverage mandatory for all state and local government employees 
has been proposed to help address the program's financing problems. 
According to Social Security actuaries' 2005 estimate, requiring all 
newly hired state and local government employees to begin paying into 
the system would reduce the 75-year actuarial deficit by about 11 
percent.[Footnote 9] Expanding coverage to currently noncovered workers 
increases revenues relatively quickly and improves solvency for some 
time, since most of the newly covered workers would not receive 
benefits for many years. In the long run, benefit payments would 
increase as the newly covered workers started to collect benefits; 
however, overall, this change would represent a small net gain for 
solvency. 

In addition to considering solvency effects, the inclusion of mandatory 
coverage in a comprehensive reform package would need to be grounded in 
other considerations. In recommending that mandatory coverage be 
included in reform proposals, the 1994-1996 Social Security Advisory 
Council stated that mandatory coverage is basically "an issue of 
fairness." Its report noted that "an effective Social Security program 
helps to reduce public costs for relief and assistance, which, in turn, 
means lower general taxes. There is an element of unfairness in a 
situation where practically all contribute to Social Security, while a 
few benefit both directly and indirectly but are excused from 
contributing to the program." 

Another advantage of mandatory Social Security coverage is that it 
could improve benefits for the affected workers, but it could also 
increase pension costs for state and local governments. The effects on 
public employees and employers would depend on how states and 
localities changed their noncovered pension plans in response to 
mandatory coverage. 

For example, by gaining coverage, workers would benefit from Social 
Security's automatic inflation protection, full benefit portability, 
and dependent benefits, which are not available in many public pension 
plans. Also, the GPO and the WEP would no longer apply and so could be 
phased out over time. 

With mandatory coverage, the costs for state and local governments 
would likely increase, adding to the fiscal challenges that already lie 
ahead for many.[Footnote 10] If states and localities provided pension 
benefits that are similar to the benefits provided employees already 
covered by Social Security, studies indicate that their retirement 
costs could increase by as much as 11 percent of payroll. 
Alternatively, states and localities that wanted to maintain level 
spending for retirement under mandatory coverage would likely need to 
reduce some pension benefits. Thus, while workers' benefits may be 
enhanced in some ways by gaining Social Security, their total 
contribution rate may increase, and the benefits they receive under 
their previously noncovered pension plans may be reduced. 

Additionally, states and localities could require several years to 
design, legislate, and implement changes to current pension plans, and 
mandating Social Security coverage for state and local employees could 
elicit constitutional challenges. Also, mandatory coverage would not 
immediately address the issues and concerns regarding the GPO and the 
WEP, as these provisions would continue to apply to existing employees 
and beneficiaries for many years to come before eventually becoming 
obsolete. Finally, state and local governments would have to administer 
two different systems-one for existing noncovered employees and another 
for newly covered employees--until the provisions no longer applied to 
anyone or were repealed. 

Conclusions: 

In conclusion, there are no easy answers to the difficulties of 
equalizing Social Security's treatment of covered and noncovered 
workers. Any reductions in the GPO or the WEP would ultimately come at 
the expense of other Social Security beneficiaries and taxpayers. 
Mandating universal coverage would promise eventual elimination of the 
GPO and the WEP, but at potentially significant cost to affected state 
and local governments, and even so, the GPO and the WEP would continue 
to apply for many years to come unless they were repealed. 

As long as the GPO and the WEP remain in effect, it will be important 
to administer the provisions as effectively and equitably as possible. 
SSA has found it difficult to administer these provisions because they 
depend on complete and accurate reporting of government pension income, 
which is not currently available. The resulting disparity in the 
application of these two provisions is a continuing source of 
unfairness for Social Security beneficiaries, both covered and 
noncovered. 

Matter for Congressional Consideration: 

GAO has previously recommended that the Congress consider giving IRS 
the authority to collect the information that SSA needs on government 
pension income to administer the GPO and WEP provisions accurately and 
fairly. GAO continues to believe that this important issue warrants 
further consideration by the Congress. 

Mr. Chairman, this concludes my statement, I would be happy to respond 
to any questions you or other members of the subcommittee may have. 

Contacts and Acknowledgments: 

For further information regarding this testimony, please contact 
Barbara D. Bovbjerg, Director, Education, Workforce, and Income 
Security Issues at (202) 512-7215 or bovbjergb@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this statement. Individuals making key 
contributions to this testimony include Michael Collins and Margie 
Shields. 

[End of section] 

Related GAO Products: 

State and Local Government Retiree Benefits: Current Status of Benefit 
Structures, Protections, and Fiscal Outlook for Funding Future Costs. 
GAO-07-1156. Washington, D.C.: September 24, 2007. 

State and Local Governments: Persistent Fiscal Challenges Will Likely 
Emerge within the Next Decade. GAO-07-1080SP. Washington, D.C.: July 
18, 2007. 

Social Security: Coverage of Public Employees and Implications for 
Reform. GAO-05-786T. Washington, D.C.: June 9, 2005. 

Social Security Reform: Answers to Key Questions. GAO-05-193SP. 
Washington, D.C.: May 2005. 

Social Security: Issues Relating to Noncoverage of Public Employees. 
GAO-03-710T. Washington, D.C.: May 1, 2003. 

Social Security: Congress Should Consider Revising the Government 
Pension Offset "Loophole." GAO-03-498T. Washington, D.C.: Feb. 27, 
2003. 

Social Security Administration: Revision to the Government Pension 
Offset Exemption Should Be Considered. GAO-02-950. Washington, D.C.: 
Aug. 15, 2002. 

Social Security Reform: Experience of the Alternate Plans in Texas. 
GAO/HEHS-99-31, Washington, D.C.: Feb. 26, 1999. 

Social Security: Implications of Extending Mandatory Coverage to State 
and Local Employees. GAO/HEHS-98-196. Washington, D.C.: Aug. 18, 1998. 

Social Security: Better Payment Controls for Benefit Reduction 
Provisions Could Save Millions. GAO/HEHS-98-76. Washington, D.C.: April 
30, 1998. 

Federal Workforce: Effects of Public Pension Offset on Social Security 
Benefits of Federal Retirees. GAO/GGD-88-73. Washington, D.C.: April 
27, 1988. 

[End of section] 

Footnotes: 

[1] See the list of related GAO products at the end of this statement. 

[2] Beginning with those born in 1938, the age at which full benefits 
are payable will increase in gradual steps from age 65 to age 67. 

[3] See GAO, State and Local Government Retiree Benefits: Current 
Status of Benefit Structures, Protections, and Fiscal Outlook for 
Funding Future Costs, GAO-07-1156 (Washington, D.C.: Sept. 24, 2007). 

[4] See GAO, Social Security: Better Payment Controls for Benefit 
Reduction Provisions Could Save Millions, GAO/HEHS-98-76 (Washington, 
D.C.: Apr. 30, 1998). 

[5] In its first match, SSA identified about 14,600 people whose 
benefits should have been calculated using WEP's modified formula. We 
estimate that detecting these payment errors will generate $207.9 
million in lifetime benefit reduction for this cohort. We further 
estimate each year's match will generate about $57 million in lifetime 
benefit reductions for each new cohort. 

[6] GAO, Social Security: Issues Relating to Noncoverage of Public 
Employees, GAO-03-710T (Washington, D.C.: May 1, 2003); and GAO, Social 
Security: Coverage of Public Employees and Implications for Reform, GAO-
05-786T (Washington, D.C.: June 9, 2005). 

[7] Pub. L. No. 108-203, Section 419(c), provides for disclosure to 
workers of the effect of GPO and WEP provisions. 

[8] Laura Haltzel, Analysis of How Well the Government Pension Offset 
(GPO) Replicates the Social Security Dual-Entitlement Rule 
(Congressional Research Service, Washington, D.C.: July 5, 2007). See 
also Laura Haltzel, Social Security: The Government Pension Offset 
(GPO) (Congressional Research Service, Washington, D.C.: Updated March 
9, 2007). 

[9] SSA uses a period of 75 years for evaluating the program's long- 
term actuarial status to obtain the full range of financial commitments 
that will be incurred on behalf of current program participants. 

[10] See GAO, State and Local Governments: Persistent Fiscal Challenges 
Will Likely Emerge within the Next Decade, GAO-07-1080SP (Washington, 
D.C.: July 18, 2007).

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U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, DC 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Gloria Jarmon, Managing Director, jarmong@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548: