The Senate advanced legislation that will cost hundreds of billions of dollars by eliminating what is called the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). It’s a double-edged sword for Alaska unions and Democrats (and some Republicans) in the Alaska House and Senate.

Many public-sector workers’ Social Security payments are drastically reduced because of the WEP and GPO. If they get a pension or defined benefit, their Social Security payment gets a big haircut, although this financial penalty only impacts a portion of public sector retirees who meet certain requirements in terms of longevity of public service.

Sen. Lisa Murkowski has co-sponsored legislation repeatedly since she was appointed to the Senate to end the penalties that impact Alaska public workers more than any in the country. She celebrated the victory Friday, while highlighting the massive support from union leaders in Alaska:

“I have been working on the Social Security Fairness Act for as long as I’ve been representing Alaska in the United States Senate,” Murkowski said. “There is no doubt that Congress has taken too long to address this inequity, but I am grateful to the diligent bipartisan work of my colleagues to help us finally get this over the finish line. This legislation takes care of Alaskans who have dedicated years of service to our communities, serving in integral roles such as teachers, firefighters, and police officers. Hardworking public servants should not be denied the benefits that they paid for because of their career choices, and I’m relieved that this longstanding injustice has been remedied.”

Unintended consequence – defined benefits for state workers

The new law will invalidate one of the most often-repeated arguments that unions and Democrats in Alaska are making to return defined benefits to certain employees in the state. They have said that defined benefits are necessary because of the federal Windfall Elimination Provision and Government Pension Offset.

Defined benefits for state workers is expected to be front-and-center in the coming Alaska Legislature, which is controlled by Democrats and union-aligned Republicans.

In fact, many of the same people fighting for a return to state defined benefits in Alaska were quoted in Murkowski’s press release:

Joelle Hall, president of Alaska AFL-CIO: “The Alaska AFL-CIO and all of its affiliated unions are elated with the passage of the Social Security Fairness Act. The GPO/ WEP provisions have existed for far too long impacting the lives of thousands of Alaska workers and their heirs. Punishing public employees and their heirs for dedicating their lives to their community is wrong and we want to thank Senator Murkowski for her long-standing support for fixing this policy that has hurt so many families.”

Heidi Drygas, executive director of ASEA/AFSCME Local 52: “Today’s vote is incredibly welcome news to thousands of Alaska’s current and former public employees who have been unfairly punished simply for their public service. We thank Senator Murkowski for her leadership on this critically important issue for our membership. So many Alaska families will breathe easier tonight knowing they will receive the full retirement that they deserve. Thank you to the thousands of AFSCME employees and retirees for their decades of persistent advocacy on this issue.”

Sean Kuzakin, president of Public Safety Employees Association Local 803: “Alaska’s law enforcement personnel have worked too hard and put too much on the line in service of our communities to not receive their fully deserved Social Security benefits. I’m relieved that this long-standing injustice has been corrected and grateful to Senator Murkowski for her support for Alaska’s public safety employees.”

Dominic Lozano, president of Alaska Professional Fire Fighters: “Alaska’s firefighters applaud Senator Murkowski for standing up for public workers across Alaska,. For too long the federal government has been withholding portions of our social security benefits unfairly.  Senator Murkowski understands the importance of this legislation and has been advocating for Alaskans since she started in the Senate. Retirees throughout Alaska know the importance of this legislation as well as future generations of Alaskans who will now receive their full social security benefit.”

Kathy Simpler, director of National Education Association-Alaska: “Passage of H.R. 82 is historic and will immediately make a positive difference in the lives of thousands of former military members, public servants and educators. We’re grateful that Senator Murkowski has been fighting alongside Alaska’s educators on this issue for her entire career in the US Senate.”

Paul McIntosh, president, National Active and Retired Employees Association:“More than 17,000 former public servants in Alaska, and over 2.8 million nationally, are unfairly penalized by WEP and GPO. With this Senate vote, backed by Senator Murkowski, we will finally receive the full benefits we earned through our hard work. The National Active and Retired Federal Employees Association (NARFE) will be forever grateful for Senator Murkowski’s leadership in the effort to repeal WEP and GPO, which NARFE has been advocating for 40 years.”

None of the Alaska union leaders mentioned that they will now drop their push for the costly defined benefits for State of Alaska employees, pensions that would impact city, borough, and school district employees across Alaska.

The State of Alaska still owes at least $6 billion to the former defined-benefit recipients who were enrolled in the program before it was discontinued in 2006 and replaced with a defined-contribution system, similar to what is found in the private sector.

More details

The WEP was enacted in 1983. It trims or drastically cuts Social Security benefits of workers who receive pensions from a federal, state, or local government for employment not covered by Social Security.

Alaska, a state that has a massive government workforce, has thousands of retirees impacted by the provision.

Likewise, the GPO, which was enacted in 1977, reduces Social Security benefits for spouses, widows, and widowers whose spouses receive pensions from a federal, state, or local government.

Together, these provisions reduce Social Security benefits for nearly 3 million American workers and retirees, Murkowski’s office said.

The bill had the support of all Democrats in the Senate, and 24 Republicans, including Murkowski, Sen. Dan Sullivan, and Vice President-elect Sen. JD Vance.

The bill now heads to the desk of President Joe Biden, who is expected to sign it. It will cost nearly $200 million over a decade and will increase the risk of Social Security being insolvent by the mid 2030s.