Social Security: Issues Relating to Noncoverage of Public Employees

GAO-03-710T Published: May 01, 2003. Publicly Released: May 01, 2003.
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Social Security covers about 96 percent of all US workers; the vast majority of the rest are state, local, and federal government employees. While these noncovered workers do not pay Social Security taxes on their government earnings, they may still be eligible for Social Security benefits. This poses difficult issues of fairness, and Social Security has provisions that attempt to address those issues, but critics contend these provisions are themselves often unfair. Congress asked GAO to discuss these provisions as well as the implications of mandatory coverage for public employees.

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Matter for Congressional Consideration

Matter Status Comments
To facilitate complete and accurate reporting of government pension income, Congress may wish to consider giving the Internal Revenue Service the authority to collect this information, which could perhaps be accomplished through a simple modification to a single form.
Closed – Implemented
As a result of GAO's matter for congressional consideration, Congress considered giving IRS the authority to collect this information. Specifically, Congress included a provision in the Social Security Protection Act of 2004 to help identify persons receiving state and local pensions based on non-covered work. This provision required state and local government pension-paying entities to indicate on their Form 1099R report whether the pension is based on earnings not covered by Social Security. The provision allowed IRS to share this information with SSA for the purpose of equitably administering the Government Pension Offset and Windfall Elimination Provision. Although the final legislation did not include this provision, a similar measure ("Enforce Windfall Elimination Provision/Government Pension Offset") appears in the President's 2008 Budget.

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