Social Security: Coverage of Public Employees and Implications for Reform

GAO-05-786T Published: Jun 09, 2005. Publicly Released: Jun 09, 2005.
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Social Security covers about 96 percent of all U.S. 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. The Subcommittee asked GAO to discuss Social Security's effects on public employees as well as the implications of reform proposals.

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Matter for Congressional Consideration

Matter Status Comments
To facilitate complete and accurate reporting of government pension income, the Congress may wish to consider giving IRS 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 the 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, which was reported by Senate Finance, 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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