Social Security:

Better Payment Controls for Benefit Reduction Provisions Could Save Millions

HEHS-98-76: Published: Apr 30, 1998. Publicly Released: Apr 30, 1998.

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Pursuant to a congressional request, GAO reviewed: (1) how well the Social Security Administration (SSA) administers the Government Pension Offset and the Windfall Elimination Provision (WEP) benefit payment provisions of the Social Security Act; and (2) the options to improve any administrative deficiencies.

GAO noted that: (1) from several internal studies of SSA's administration of the Government Pension Offset and WEP provisions, GAO estimates that the agency made overpayments costing the social security trust funds between $160 million and $355 million from 1978 to about 1995; (2) weaknesses in its internal controls are a primary cause; (3) in implementing the benefit reduction provisions for retired federal employees, SSA could make better use of available information; (4) although SSA reviews information on pension payments to federal retirees to ensure that it has properly applied the Government Pension Offset provisions, it does not use that information to ensure the appropriate application of the WEP provision; (5) in implementing the benefit reduction provisions on retired state and local government workers, SSA relies on the accuracy of information provided by the retirees regarding whether they receive, or will in the future receive, a pension that results from noncovered employment; (6) SSA has not developed any independent source of this pension information; (7) thus, it cannot verify the accuracy of the self-reported information, a basic and effective internal control practice; (8) although SSA managers have long suspected that its controls needed strengthening, they have not yet decided on a way to improve them; (9) several courses of action could improve SSA's internal controls; (10) for retired federal employees, SSA could periodically use the pension data it already receives from the Office of Personnel Management (OPM) to check whether WEP has been properly applied; (11) for state and local government retirees, SSA needs to obtain independently reported pension data to adequately control its payments for the Government Pension Offset and WEP reductions; (12) both retirement systems that pay benefits for noncovered employment and the Internal Revenue Service (IRS), which receives reports of each taxpayer's pension income from individual retirement systems, are potential sources of pension data; and (13) both sources have various merits and drawbacks.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the administration of the Government Pension Offset and WEP benefit reductions, the Commissioner of Social Security should begin using pension information obtained from OPM to establish a postentitlement matching program for WEP so that it can verify the accurate payment of social security benefits to retired federal government employees.

    Agency Affected: Social Security Administration

    Status: Closed - Implemented

    Comments: SSA advises that it has initiated the postentitlement matching program GAO recommended. In the initial match, SSA has identified about 15,000 beneficiaries being paid where WEP applied and is determining if and how much benefits should be reduced. Such matching will be done on a regular basis in the future. Preliminary results suggest that $14 million in benefit savings will be realized per year. Projecting this benefit over the lives of the beneficiaries and considering savings for this year and next, over $250 million in savings will be realized over the next 16 years.

    Recommendation: To improve the administration of the Government Pension Offset and WEP benefit reductions, the Commissioner of Social Security should work with IRS to revise the reporting of pension information on IRS form 1099R, so that SSA would be able to identify people receiving a pension from noncovered employment and to improve its internal controls by establishing a postentitlement matching program.

    Agency Affected: Social Security Administration

    Status: Closed - Not Implemented

    Comments: IRS does not believe it has the authority to make the recommended change without new legislative authority. However, IRS will not seek this authority because it believes the adoption of our recommendation would create an excessive taxpayer burden. Using its own data, SSA reviewed 532 instances where the GPO or WEP benefit reductions might have applied. After further investigation, SSA found that benefits should have been reduced in only 24 of these instances. In the absence of IRS action, SSA does not believe it can efficiently identify persons receiving state and local pensions using its own data.

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