
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.


<p><em>Editor&#8217;s Note: In December 2024, Colorado PERA and the Fire &amp; Police Pension Association of Colorado sent a joint letter to Sens. Michael Bennet and John Hickenlooper, encouraging them to support the Social Security Fairness Act in the Senate. <a href="https://content.copera.org/wp-content/uploads/2024/12/COPERA-and-FPPA_Please-Support-Repeal-of-Provisions-in-Social-Security-WEP-and-GPO_12.13.24.pdf" target="_blank" rel="noreferrer noopener">Read the letter</a>.</em></p>



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<p>In a historic first, the U.S. House of Representatives voted to pass a bill that aims to repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which can reduce Social Security benefits for Colorado PERA members and other public employees.</p>



<p>The bill, <a href="https://www.congress.gov/bill/118th-congress/house-bill/82" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 82</a>—also known as the Social Security Fairness Act—was introduced in early January 2023 and eventually gained the support of over 300 cosponsors on both sides of the aisle. Lawmakers didn’t take any significant action on the bill until September 2024, when sponsors Reps. Abigail Spanberger (D-VA) and Garret Graves (R-LA) filed what’s known as a discharge petition, seeking to move the bill out of committee and force a floor vote.</p>



<p>Despite an Election Day maneuver seeking to table the bill, House leadership put H.R. 82 to a vote on Tuesday, November 12. It passed by a vote of 327 to 75.</p>



<p>The bill&#8217;s fate now lies with the Senate as lawmakers have just days to pass legislation before the current Congress ends. Senate Majority Leader Chuck Schumer has said he intends to bring the bill up for a vote.</p>



<p>Some lawmakers have expressed concern about the bill’s cost; a recent <a href="https://www.cbo.gov/system/files/2024-09/hr82.pdf" target="_blank" rel="noreferrer noopener">estimate from the Congressional Budget Office</a> found it would require nearly $200 billion in additional spending over the next decade to provide larger Social Security benefits to those affected.</p>



<div class="wp-block-advgb-accordions advgb-accordions-b92c7005-29f3-41c5-8ad2-2a98b034c717 advgb-accordion-wrapper">
<div class="wp-block-advgb-accordion-item advgb-accordion-item" style="margin-bottom:15px"><div class="advgb-accordion-header" style="background-color:#000;color:#eee;border-style:solid;border-width:1px;border-radius:2px"><span class="advgb-accordion-header-icon"><svg fill="#fff" xmlns="http://www.w3.org/2000/svg" width="24" height="24" viewBox="0 0 24 24"><path fill="none" d="M0,0h24v24H0V0z"></path><path d="M12,5.83L15.17,9l1.41-1.41L12,3L7.41,7.59L8.83,9L12,5.83z M12,18.17L8.83,15l-1.41,1.41L12,21l4.59-4.59L15.17,15 L12,18.17z"></path></svg></span><h4 class="advgb-accordion-header-title" style="color:inherit">What are WEP and GPO?</h4></div><div class="advgb-accordion-body" style="border-style:solid !important;border-width:1px !important;border-color:undefined !important;border-top:none !important;border-radius:2px !important">
<p>Social Security benefits are designed to replace only some of a worker’s pre-retirement earnings, and lower-paid workers receive a larger replacement percentage than higher-paid workers. Prior to the WEP being enacted in 1983, non-Social Security government workers like PERA members would receive a larger-than-intended Social Security benefit because of those years in their earning record when they weren’t contributing to Social Security. The WEP was meant to remove that advantage.</p>



<p>The GPO applies to PERA retirees who also receive a Social Security spousal or widow(er) benefit and reduces the Social Security benefit by two-thirds of the PERA benefit. That’s because spousal and widow(er) benefits are considered “dependent” benefits and were meant to help spouses who stayed at home and depended on their working partner for financial support. According to the Social Security Administration, now that it is common for both spouses to work, the GPO requires the “dependent” benefit to be offset by the dollar amount of their own retirement benefit.</p>



<p>It’s important to note that a retiree’s PERA benefit will never be reduced to Social Security or other benefits. Learn more about&nbsp;<a href="https://www.copera.org/retirees/benefit-basics-for-retirees/pera-and-social-security" target="_blank" rel="noreferrer noopener">PERA and Social Security</a>.</p>
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<p>Federal lawmakers also voted on another WEP-related bill, <a href="https://www.congress.gov/bill/118th-congress/house-bill/5342" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 5342</a>, which would have introduced a new formula for calculating Social Security benefit reductions rather than a full repeal. That bill failed on a vote of 175 to 225.</p>



<p><em>PERA On The Issues</em> will continue to monitor legislation on this issue and we’ll post updates when available. Be sure to <a href="https://copera.org/pera-on-the-issues/subscribe" target="_blank" rel="noreferrer noopener">subscribe to our biweekly newsletter</a> to stay informed.</p>


U.S. House Passes WEP/GPO Repeal Bill, Heads to Senate


<h4 class="wp-block-heading"><a href="https://www.nerdwallet.com/article/finance/when-the-fed-cuts-rates" target="_blank" rel="noreferrer noopener"><strong>What Happens Now That the Fed Finally Cut Rates? | NerdWallet</strong></a></h4>



<p>Federal Reserve Chair Jerome Powell recently announced the central bank would lower its key interest rate for the first time since 2020. While a rate cut was expected, some were surprised by the Fed’s decision to slash the rate by 0.5% instead of a more incremental 0.25%. Here’s what lower interest rates could mean for your finances and the economy as a whole.</p>



<h4 class="wp-block-heading"><a href="https://www.govexec.com/pay-benefits/2024/09/lawmakers-successfully-force-vote-eliminating-windfall-elimination-provision/399759/" target="_blank" rel="noreferrer noopener"><strong>Lawmakers Successfully Force a Vote on Eliminating the Windfall Elimination Provision | Government Executive</strong></a></h4>



<p>The federal lawmakers leading the charge on H.R. 82—aka the Social Security Fairness Act, which would repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)—have succeeded in their efforts to force a floor vote on the issue. Reps. Abigail Spanberger (D-VA) and Garret Graves (R-LA) used a rare tactic called a discharge petition, which reached the necessary threshold of 218 signatures to bypass Congressional leadership and get a vote on the floor of the House of Representatives. A vote likely won’t happen until at least November, and the bill would still have to pass the Senate before the conclusion of this Congress in January.</p>



<h4 class="wp-block-heading"><a href="https://www.cnbc.com/2024/09/24/september-consumer-confidence-falls-the-most-in-three-years.html" target="_blank" rel="noreferrer noopener"><strong>September Consumer Confidence Falls the Most in Three Years | CNBC</strong></a></h4>



<p>The latest survey data show American consumers are increasingly pessimistic about the current and future state of the economy. According to the monthly Conference Board report, its consumer confidence index dropped to 98.7 in August, marking the biggest single-month decline since 2021. Survey respondents largely cited the weakening job market and the effects of inflation as their main concerns.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.ecu.edu.au/newsroom/articles/research/travel-could-be-the-best-defence-against-ageing" target="_blank" rel="noreferrer noopener">Travel Could Be the Best Defense Against Aging | Edith Cowan University</a></strong></h4>



<p>If your retirement plans include travel, you could be doing yourself the favor of improving your health and slowing down the aging process. According to new research from Edith Cowan University in Australia, the pleasure we derive from travel activities—such as unplugging from daily life, getting more exercise, and having new experiences—can help alleviate stress and boost our overall functioning, which can help slow down the clock in terms of aging.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: What Lower Interest Rates Mean For Your Finances


<h4 class="wp-block-heading"><a href="https://spanberger.house.gov/posts/spanberger-graves-file-discharge-petition-for-social-security-fairness-act-push-to-force-u-s-house-vote-on-bipartisan-bill-to-eliminate-wep-gpo" target="_blank" rel="noreferrer noopener"><strong>Spanberger, Graves File Discharge Petition for Social Security Fairness Act, Push to Force U.S. House Vote on Bipartisan Bill to Eliminate WEP &amp; GPO | Rep. Abigail Spanberger</strong></a></h4>



<p>Congress is back from recess, and the two main sponsors of a bill that would repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) say they’re going to attempt to force a floor vote on the bill. Representatives Abigail Spanberger (D-VA) and Garret Graves (R-LA) filed a discharge petition, which will need 218 signatures to force a vote. The bill, The Social Security Fairness Act, has received the support of more than 300 members of Congress but has stalled since it was introduced in early 2023.</p>



<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/retirement/employee-retirement-income-security-act-erisa-turns-50" target="_blank" rel="noreferrer noopener"><strong>Employee Retirement Income Security Act Turns 50: Protecting Your Plans | Kiplinger</strong></a></h4>



<p>It’s been 50 years since the Employee Retirement Income Security Act of 1974 (ERISA) was enacted into law, adding new protections for workers and changing the way many people save for retirement. While ERISA doesn’t govern public pension plans like Colorado PERA, it’s been a consequential piece of legislation in the private sector and paved the way for today’s employer-based retirement plans like 401(k)s.</p>



<h4 class="wp-block-heading"><a href="https://chhs.source.colostate.edu/new-drug-may-improve-memory-in-older-adults-treat-alzheimers/" target="_blank" rel="noreferrer noopener"><strong>New Drug May Improve Memory in Older Adults, Treat Alzheimer’s | Colorado State University</strong></a></h4>



<p>Researchers at Colorado State University say they’ve been testing a drug that shows promise in treating memory loss associated with aging and neurological conditions like Alzheimer&#8217;s disease. The researchers teamed up with a local biotech company to test the drug, which targets two specific proteins in the brain. The team hopes to get approval for human trials soon.</p>



<h4 class="wp-block-heading"><a href="https://coloradosun.com/2024/09/10/colorado-taxes-pilot-program/" target="_blank" rel="noreferrer noopener"><strong>Colorado Department of Revenue to Help 100,000 Residents File Their Taxes | The Colorado Sun</strong></a></h4>



<p>State officials are working to implement a new law that will help many Coloradans claim tax credits they may know they qualify for. Under the law, the Colorado Department of Revenue will help up to 100,000 households file or amend their tax returns to claim state and/or federal earned income tax credits and child tax credits, which could help many lower income families in the state.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Lawmakers Push for Floor Vote on WEP/GPO Bill


<p><em>Update: In November 2024, the House passed H.R. 82, the Social Security Fairness Act. Please <a href="https://www.copera.org/pera-on-the-issues/u-s-house-passes-wep-gpo-repeal-bill-heads-to-senate">visit this page</a> for the latest.</em></p>



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<p>We often hear from Colorado PERA members who want to know if legislators have made any progress in their efforts to change two provisions of federal law that can reduce retirees’ Social Security benefits.</p>



<p>Because most PERA members do not participate in Social Security while working for a PERA employer, any Social Security benefit they earned from private-sector work may be affected by the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO).</p>



<p>Those provisions have been part of federal law since the 1980s, but lawmakers in recent years have repeatedly sought to modify or repeal them without success.</p>



<div class="wp-block-advgb-accordions advgb-accordions-505a0fe6-41e1-4105-b85d-38166d97884b advgb-accordion-wrapper">
<div class="wp-block-advgb-accordion-item advgb-accordion-item" style="margin-bottom:15px"><div class="advgb-accordion-header" style="background-color:#000;color:#eee;border-style:solid;border-width:1px;border-radius:2px"><span class="advgb-accordion-header-icon"><svg fill="#fff" xmlns="http://www.w3.org/2000/svg" width="24" height="24" viewBox="0 0 24 24"><path fill="none" d="M0,0h24v24H0V0z"></path><path d="M12,5.83L15.17,9l1.41-1.41L12,3L7.41,7.59L8.83,9L12,5.83z M12,18.17L8.83,15l-1.41,1.41L12,21l4.59-4.59L15.17,15 L12,18.17z"></path></svg></span><h4 class="advgb-accordion-header-title" style="color:inherit">Why WEP and GPO exist</h4></div><div class="advgb-accordion-body" style="border-style:solid !important;border-width:1px !important;border-color:undefined !important;border-top:none !important;border-radius:2px !important">
<p>Social Security benefits are designed to replace only some of a worker’s pre-retirement earnings, and lower-paid workers receive a larger replacement percentage than higher-paid workers. Prior to the WEP being enacted in 1983, non-Social Security government workers like PERA members would receive a larger-than-intended Social Security benefit because of those years in their earning record when they weren’t contributing to Social Security. The WEP was meant to remove that advantage.</p>



<p>The GPO applies to PERA retirees who also receive a Social Security spousal or widow(er) benefit and reduces the Social Security benefit by two-thirds of the PERA benefit. That’s because spousal and widow(er) benefits are considered “dependent” benefits and were meant to help spouses who stayed at home and depended on their working partner for financial support. According to the Social Security Administration, now that it is common for both spouses to work, the GPO requires the “dependent” benefit to be offset by the dollar amount of their own retirement benefit.</p>



<p>It’s important to note that a retiree’s PERA benefit will never be reduced to Social Security or other benefits. Learn more about <a href="https://www.copera.org/retirees/benefit-basics-for-retirees/pera-and-social-security" target="_blank" rel="noreferrer noopener">PERA and Social Security</a>.</p>
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<h4 class="wp-block-heading"><strong>Where things stand</strong></h4>



<p>While federal lawmakers have introduced about a half-dozen bills this Congress that touch on the WEP and GPO issue, the one that has received the most attention and support is <a href="https://www.congress.gov/bill/118th-congress/house-bill/82" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 82</a>, the Social Security Fairness Act of 2023. Its counterpart in the Senate is <a href="https://www.congress.gov/bill/118th-congress/senate-bill/597" target="_blank" rel="noreferrer noopener" class="broken_link">S. 597</a>. Both bills were introduced in early 2023.</p>



<p>Other bills that seek to modify or repeal WEP and/or GPO include <a href="https://www.congress.gov/bill/118th-congress/house-bill/4583" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 4583</a> and <a href="https://www.congress.gov/bill/118th-congress/senate-bill/2280" target="_blank" rel="noreferrer noopener" class="broken_link">S. 2280</a>—both known as the Social Security 2100 Act—which propose a number of changes to Social Security, including temporarily eliminating WEP and GPO. Those bills were introduced in July 2023.</p>



<p>In April 2024, the House Ways and Means Committee convened for <a href="https://www.ncpers.org/blog_home.asp?display=350" target="_blank" rel="noreferrer noopener">an informational hearing on the topic of WEP and GPO</a>. The meeting didn’t result in any action on the above bills, but lawmakers heard from a panel of experts on the effects the two provisions have on retired public employees and the potential impacts of any changes to Social Security. Testimony largely centered around the fact that the Social Security Administration now has better worker data and WEP/GPO formulas could potentially be updated, but the cost to make any changes would amount to billions of dollars over the next decade.</p>



<p>Neither Social Security Fairness Act bill has made forward progress in Congress, but they continue to gather support—H.R. 82 in particular has gained more than 300 cosponsors in the House. And in May, the bipartisan Problem Solvers Caucus threw its support behind the Social Security Fairness Act with its 62 members <a href="https://problemsolverscaucus.house.gov/media/press-releases/problem-solvers-back-legislation-to-guarantee-full-social-security-benefits-for-police-officers-firefighters-and-public-servants" target="_blank" rel="noreferrer noopener">endorsing the legislation</a>.</p>



<p>In September, bill sponsors Reps. Abigail Spanberger (D-VA) and Garret Graves (R-LA) filed what&#8217;s known as a discharge petition, seeking to move H.R. 82 out of committee and force a floor vote. That petition reached the required threshold of 218 signatures, allowing the sponsors to request a vote in the House of Representatives. With Congress in recess for the month of October, a vote could happen as soon as November, but even if it passes the House, the bill faces an uncertain future in Senate.</p>



<h4 class="wp-block-heading"><strong>What’s next?</strong></h4>



<p>We can expect congressional lawmakers to continue discussing this issue. Even if none of the above bills see any meaningful action before the current Congress ends, legislators are likely to introduce new bills in the next Congress.</p>



<p>As we’ve seen repeatedly over the years, bills that seek to modify or repeal WEP and/or GPO face a steep uphill battle, with lawmakers often citing the cost of increased Social Security benefits as a significant hurdle to overcome. That’s especially true in the face of pessimistic forecasts of Social Security’s finances.</p>



<p>While the most recent projections are somewhat better than expected, Social Security’s cash reserves are still <a href="https://www.cnbc.com/2024/05/06/social-security-expected-to-run-short-on-funds-in-2035-government-says.html" target="_blank" rel="noreferrer noopener">expected to be depleted in about a decade</a>. If that happens and Congress hasn’t taken any action, Social Security will be forced to begin reducing benefits, but experts expect lawmakers will take action to shore up the system’s finances before any benefit reductions are necessary. It’s possible that a package of reforms for Social Security could also include some changes to the WEP and GPO, but only time will tell.</p>



<p>One of the most effective forms of advocacy is for PERA members and retirees to&nbsp;<a href="https://www.usa.gov/elected-officials" target="_blank" rel="noreferrer noopener">contact their senators and representatives</a>&nbsp;in Congress to let them know how the WEP and GPO affect them, as this issue is will be decided at the federal level.</p>



<p>We’ll continue to monitor this issue and post any updates on <em>PERA On The Issues </em>when we can. To stay in the loop, be sure to <a href="https://www.copera.org/pera-on-the-issues/subscribe" target="_blank" rel="noreferrer noopener">subscribe</a> to our biweekly newsletter.</p>


The Latest on Federal WEP/GPO Legislation


<p>PERA’s executive team hosted two virtual Town Hall meetings on Wednesday, June 26 to provide updates on PERA and answer questions from members and retirees.</p>



<p>Chief Executive Officer/Executive Director was joined by Chief Investment Officer/Chief Operating Officer Amy C. McGarrity, Chief Benefits Officer Patrick Lane, and Chief Operating Officer Jeremy Hill.</p>



<p>We’ve included clips of some of the executives’ answers below, and full recordings of each Town Hall are available at <a href="https://copera.org/about/pera-town-hall" target="_blank" rel="noreferrer noopener">copera.org/townhall</a>.</p>



<h5 class="wp-block-heading"><strong>How did PERA’s investments perform last year and what is PERA’s financial status?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/amy-investments-2024.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/amy-investments.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/amy-investments-2024.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>McGarrity began by highlighting PERA’s financial results from 2023, as reported in the recently released 2023 <em>Annual Comprehensive Financial Report</em>.</p>



<p>“For the year ended December 31, 2023, PERA’s investment portfolio earned a positive return of 13.4% net-of-fees,” McGarrity said. “The value of the total PERA Defined Benefit Plan was $61.5 billion at the end of the year, and PERA’s funded status was 69.6%.”</p>



<p>PERA remains on track to meet its funding goals, and as such, there will be no automatic adjustments to member and employer contributions or annual benefit increases. Retirees and beneficiaries will receive a 1% Annual Increase in July 2024 and another 1% in 2025.</p>



<p>Explore PERA’s financial results in an interactive format at <a href="https://copera.org/snapshot" target="_blank" rel="noreferrer noopener">copera.org/snapshot</a>.</p>



<h5 class="wp-block-heading"><strong>As PERA’s new CEO, do you anticipate making any major changes, such as implementing a larger annual benefit increase for retirees?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/24-andrew-increase.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/andrew-ai.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/24-andrew-increase.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>Roth reiterated that staff and the Board understand the challenge inflation has posed in recent years as the <a href="https://www.copera.org/retirees/benefit-basics-for-retirees/annual-benefit-increases" target="_blank" rel="noreferrer noopener">Annual Increase</a>—which is set in statute and can only adjust up or down based on PERA’s funding progress, has not kept pace.</p>



<p>“I, as Executive Director, do not have the power or authority to make changes to the Annual Increase,” Roth said. “We understand and are doing everything we can to address financial security for our retirees, as is central to our mission.”</p>



<h5 class="wp-block-heading"><strong>Has PERA been planning for the possibility of a recession, and what could that mean for the portfolio?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/24-amy-recession.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/amy-recession.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/24-amy-recession.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>McGarrity discussed PERA’s strategic asset allocation—which is set by Board—and its focus on long-term performance. In addition, the Board is currently conducting a study of its investment strategy known as an <a href="https://www.copera.org/pera-on-the-issues/asset-liability-study-a-guide-to-building-a-strategic-portfolio" target="_blank" rel="noreferrer noopener">asset/liability study</a>, and that process includes modeling many different scenarios.</p>



<p>“In that 30-year capital market assumption set, they have a variety of market scenarios, there are recessions, there are bull markets,” McGarrity said. “So as it relates to shorter term or medium term economic events…they’re incorporated into those long-term assumptions.”</p>



<h5 class="wp-block-heading"><strong>PERACare premiums have largely held steady over the past few years; will they remain the same next year?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/24-patrick-peracare.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/patrick-peracare.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/24-patrick-peracare.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>“I’ll be very direct and say, ‘No.’ PERACare premiums will be going up for the 2025 plan year,” Lane said. “Our Medicare Advantage participants have been protected from premium increases for the last three years because of the rate we were able to get guaranteed when we renewed three years ago. Unfortunately, that rate guarantee is expiring this plan year.”</p>



<p>Lane added that regulatory changes have also prompted insurance carriers to raise their rates for the coming plan year. PERA is still working out the details with carriers and expects to provide 2025 plan information in the fall.</p>



<h5 class="wp-block-heading"><strong>What is PERA doing about Social Security’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/24-patrick-wep-gpo.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/patrick-wep-gpo.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/24-patrick-wep-gpo.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>Lane said that since the WEP and GPO are provisions of federal law, any changes would have to come from Congress. And while legislators have introduced various bills related to the issue over the years, lawmakers haven’t come to an agreement on a path forward.</p>



<p>“What would happen if the WEP/GPO were to be repealed, that would mean more money coming out of the Social Security trust fund, and that is really where legislation has failed in the past,” Lane said. “I think there are a lot of members of Congress who are interested in the subject and are open to the conversation, but they have yet to reach an agreement on how to actually fund that additional money that would be coming out of the trust fund.”</p>



<p>We follow this issue closely and will provide any updates on federal WEP/GPO legislation when we can.</p>



<h5 class="wp-block-heading"><strong>Where do you see PERA headed in the future and how can I be sure I will receive my full benefit when I retire?</strong></h5>



<div class="wp-block-advgb-video advgb-video-block full-width" data-video="https://content.copera.org/wp-content/uploads/2024/07/24-andrew-pera-future.mp4" data-source="local" data-video-attr="controls,playsinline" data-video-preload="metadata"><div class="advgb-video-wrapper full-width no-lightbox"><video class="full-width" height="450" poster="https://content.copera.org/wp-content/uploads/2024/07/andrew-pera-future.png" controls preload="metadata" playsinline><source src="https://content.copera.org/wp-content/uploads/2024/07/24-andrew-pera-future.mp4"/>Your browser does not support HTML5 video.</video></div></div>



<p>“We have been delivering benefits for almost a century, and we are focused on doing the exact same thing for the next century; your benefits will be here,” Roth said. “Colorado PERA is here for its members and we look forward to serving you as we move into the future together.”</p>



<p>For full recordings of both Town Halls, visit <a href="https://copera.org/about/pera-town-hall" target="_blank" rel="noreferrer noopener">copera.org/townhall</a>.</p>


CEO Andrew Roth, Executives Answer Questions in PERA Town Halls


<p><em>Editor’s note: This article has been updated to include details on new bills that have been introduced since it was originally published.</em></p>



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<p>As the 118<sup>th</sup>&nbsp;session of Congress continues, lawmakers in both chambers have introduced bills to address two provisions of federal law that can reduce Social Security payments to retirees who receive a pension like Colorado PERA.</p>



<p>The&nbsp;Windfall Elimination Provision&nbsp;(WEP) and&nbsp;Government Pension Offset&nbsp;(GPO) both affect Social Security benefits, but in slightly different ways. The WEP can reduce Social Security benefit payments to retirees who receive a pension based on work during which they did not contribute to Social Security (though it does not apply to workers with 30 or more years of substantial SS earnings). The GPO reduces Social Security dependent benefit payments to spouses, widows, and widowers who receive a government pension.</p>



<p>It’s important to note that a person’s PERA benefit is never reduced due to Social Security or other benefits. Read more about PERA and Social Security&nbsp;<a href="https://www.copera.org/pera-and-social-security" target="_blank" rel="noreferrer noopener">here</a>.</p>



<blockquote class="wp-block-quote">
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<p class="has-text-align-left"><strong>Did you know?</strong><br><em>The PERA Defined Benefit Plan predates and serves as a replacement for Social Security in Colorado, so PERA members do not pay Social Security taxes like most private-sector workers. Because Social Security pays a larger benefit to lower-income workers, the years during which a worker didn’t contribute to Social Security can lead to the worker earning a higher benefit than they would otherwise be entitled to. The WEP and GPO were enacted to counteract that effect.</em></p>
</blockquote>
</blockquote>



<p>In January, members of the House of Representatives reintroduced <a href="https://www.congress.gov/bill/118th-congress/house-bill/82" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 82</a>, the Social Security Fairness Act, which would fully repeal both the WEP and GPO. The bill gained wide bipartisan support in 2022 but never made it to a floor vote.</p>



<p>The reintroduced bill has since gained the support of more than 250 members of the House of Representatives, including five from Colorado: Reps. Diana DeGette (D-CO-1), Joe Neguse (D-CO-2), Jason Crow (D-CO-6), Brittany Pettersen (D-CO-7), and Yadira Caraveo (D-CO-8).</p>



<p>Since&nbsp;we last covered this issue, lawmakers in Congress have introduced additional bills that aim to either repeal or modify WEP and/or GPO.</p>



<p>Sen. Sherrod Brown (D-OH) introduced <a href="https://www.congress.gov/bill/118th-congress/senate-bill/597" target="_blank" rel="noreferrer noopener" class="broken_link">S. 597</a>, the Senate’s version of the Social Security Fairness Act, in March. Like the House version of the bill, S. 597 aims to fully repeal both the WEP and GPO. Sens. John Hickenlooper (D) and Michael Bennet (D) have both signed on as cosponsors.</p>



<p>In addition to the repeal bills, other bills propose changing the WEP formula to lessen its impact on public workers.</p>



<p>In June, Rep. Richard Neal (D-MA-1) introduced <a href="https://www.congress.gov/bill/118th-congress/house-bill/4260" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 4260</a>, the Public Servants Protection and Fairness Act. Under that bill, retirees would receive a Social Security benefit based on whichever formula provides the higher amount—the current WEP formula or the new proportional formula.</p>



<p>In September, Rep. Jodey Arrington (R-TX-19) introduced <a href="https://www.congress.gov/bill/118th-congress/house-bill/5342" target="_blank" rel="noreferrer noopener" class="broken_link">H.R. 5342</a>, the Equal Treatment of Public Servants Act. Like Rep. Neal’s bill, H.R. 5342 proposes an updated WEP formula to calculate retirees’ Social Security benefits, but only the new formula would apply to those who become eligible for benefits in 2068 or later.</p>



<p>As in previous years, these bills face a tough road ahead. Lawmakers have introduced bills to modify or repeal the WEP and GPO every session in recent years, but the efforts never make it very far in the legislative process despite gaining many cosponsors from both parties. Lawmakers usually cite the cost associated with the bills — with Social Security facing insolvency&nbsp;<a href="https://www.cnbc.com/2023/03/31/social-security-trust-funds-depletion-date-moves-up-to-2034.html" target="_blank" rel="noreferrer noopener">in about a decade</a>, many consider it a tough sell at the moment, but expect it will stand a greater chance of success if included as part of broader reforms to the program which Congress may need to consider in the next few years.</p>



<p><em>PERA On The Issues</em>&nbsp;will continue to track these bills and other Social Security-related legislation and provide updates when available.</p>



<p>Remember to&nbsp;<a href="https://peraontheissues.com/subscribe/">subscribe to our</a><a href="https://peraontheissues.com/subscribe/" target="_blank" rel="noreferrer noopener">&nbsp;</a><a href="https://peraontheissues.com/subscribe/">biweekly newsletter</a>&nbsp;to stay in the know.</p>


An Update on 2023 WEP/GPO Legislation


<p>Winter is nearly over (according to the calendar, at least), and state lawmakers in Denver are more than halfway through the 120-day Colorado General Assembly. In Washington, DC, senators and representatives from across the country are well into their own legislative work in Congress.</p>



<p>Some of that important legislative work pertains to public employees and their retirement benefits. Here we discuss key actions lawmakers have taken so far in 2023, as well as what may still be ahead.</p>



<h4 class="wp-block-heading"><strong>Colorado legislation</strong></h4>



<p>So far this session, state lawmakers have introduced more than 400 bills, seven of which apply directly to Colorado PERA.</p>



<p>Four of those bills have been postponed indefinitely. That means the bill is no longer under consideration and these will not make it to the House or Senate floor for a vote. This can happen if lawmakers decide a bill needs more work or doesn’t have the support to pass.</p>



<p>Several other bills remain under consideration and are working their way through the process in the state legislature. Included in those bills is <a href="https://leg.colorado.gov/bills/sb23-056" target="_blank" rel="noreferrer noopener">SB23-056</a>, which aims to fully recompense PERA for the state’s missed 2020 payment of $225 million to PERA. Legislators <a href="https://peraontheissues.com/colorado-lawmakers-pass-bill-making-up-225m-payment-to-pera/" target="_blank" rel="noreferrer noopener">passed a bill last year</a> that aimed to make up that payment, and Gov. Jared Polis signed it into law. This new bill aims to pay PERA the remaining shortfall of $35.05 million.</p>



<p>Other bills currently under consideration include <a href="https://leg.colorado.gov/bills/sb23-016" target="_blank" rel="noreferrer noopener">SB23-016</a>, which would require PERA to include in its annual&nbsp;<a href="https://www.copera.org/investment-stewardship" target="_blank" rel="noreferrer noopener"><em>Investment Stewardship Report</em></a>&nbsp;a description of climate-related investment risks, impacts and strategies, and <a href="https://leg.colorado.gov/bills/hb23-1176" target="_blank" rel="noreferrer noopener">HB23-1176</a>, which would create a new defined contribution plan for members of PERA’s School and Denver Public Schools divisions.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/2023-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">2023 Proposed Legislation Status</a></p>
</blockquote>



<p>As we saw last year, legislative work can continue all the way up to the last minute of the session, so there’s still plenty ahead. That includes the Long Bill, which lays out the State’s budget and spending for every state department and program for the next fiscal year. The Long Bill will be introduced in the Senate in late March. All legislative activity for the current session will wrap up by May 8.</p>



<h4 class="wp-block-heading"><strong>Federal legislation</strong></h4>



<p>Lawmakers in Washington, DC have been working on bills affecting public employee retirement.</p>



<p>While Congress passed the package of retirement-related legislation collectively known as SECURE Act 2.0 in late December, many of its dozens of provisions don’t take effect until 2023 or 2024. Those include an increase in the age that retirees must start taking their annual required minimum distributions (RMDs) and new types of penalty-free distributions from retirement accounts.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/whats-in-secure-2-0/" target="_blank" rel="noreferrer noopener">What’s in SECURE 2.0?</a></p>
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<p>Congress is also tackling an issue that comes up every session: <a href="https://content.copera.org/checking-in-on-legislative-activity-so-far-this-year/" target="_blank" rel="noreferrer noopener">Social Security’s Windfall Elimination Provision and Government Pension Offset</a>. The two provisions of federal law can reduce Social Security benefits for members of Colorado PERA, which serves as a substitute for Social Security. While lawmakers have introduced bills addressing the WEP and GPO in every session of Congress in recent years, the bills never make it to a floor vote for full consideration, with lawmakers citing the cost as a key reason.</p>



<p>So far this year, lawmakers have re-introduced last year’s Social Security Fairness Act, which seeks to repeal both the WEP and GPO. Last year, we saw multiple similar bills, with some aiming to modify the WEP and GPO calculations rather than repealing them. It remains to be seen whether lawmakers will introduce other bills on the topic this year.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/bill-to-repeal-wep-gpo-reintroduced-in-congress/" target="_blank" rel="noreferrer noopener">Bill to Repeal WEP/GPO Reintroduced in Congress</a></p>
</blockquote>



<p>As always, <em>PERA On The Issues</em> will continue to track these topics and others that come up throughout the year. You can <a href="https://peraontheissues.com/subscribe/" target="_blank" rel="noreferrer noopener">subscribe to our biweekly email newsletter</a> to stay in the loop, as well as sign up for the <a href="https://www.copera.org/ambassador-program" target="_blank" rel="noreferrer noopener">PERA Ambassador</a> email list to be informed about important legislative activity.</p>


Checking in on Legislative Activity So Far This Year


<p><em>Editor&#8217;s note (June 7, 2023) : Since we published this article, more legislation has been introduced in Congress. <a href="https://peraontheissues.com/an-update-on-2023-wep-gpo-legislation/">Click here</a> for the latest.</em></p>



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<p>Federal lawmakers seeking to repeal Social Security’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) are giving it another try this year.</p>



<p>U.S. Representatives Abigail Spanberger (D-VA) and Garrett Graves (R-LA) reintroduced the <a href="https://content.copera.org/an-update-on-2023-wep-gpo-legislation/" target="_blank" rel="noreferrer noopener">Social Security Fairness Act of 2023</a> (H.R. 82) in January. A similar bill received widespread bipartisan support in 2022 but never made it to a floor vote. Bills that don’t pass expire at the conclusion of each Congress.</p>



<p>The <a href="https://content.copera.org/wep-gpo-bill-introduced-in-d-c/" target="_blank" rel="noreferrer noopener">WEP and GPO</a>, which are part of federal law, can reduce Social Security benefits for recipients of public pensions like Colorado PERA that serve as a substitute for Social Security. It’s important to note that a person’s PERA benefit is never reduced due to Social Security or other benefits.</p>



<p>While some bills in recent years have aimed to modify one or both the WEP and GPO, H.R. 82 seeks to fully repeal both provisions. As of early February, the bill had nearly 150 cosponsors, two of whom are from Colorado: Rep. Joe Neguse (D-CO-2) and Rep. Jason Crow (D-CO-6). The previous version of the bill received over 300 cosponsors, including four from Colorado.</p>



<p>Why hasn’t Congress taken any substantial action on WEP/GPO despite strong support? Essentially, it comes down to cost. Eliminating or changing the WEP/GPO provisions of Social Security would mean providing larger checks to benefit recipients, costing the system more money. Recent projections show the Social Security trust funds are <a href="https://www.cbo.gov/publication/58564" target="_blank" rel="noreferrer noopener">expected to be depleted in about a decade</a>, so it’s a tough sell.</p>



<p>Since major changes may be needed to shore up Social Security’s financial footing, it’s possible changes to WEP/GPO could be included in a larger reform package. But it’s not clear when or if that might happen.</p>



<p>What’s Colorado PERA doing about it? Since this is a federal issue to be determined by Congress, we encourage members and retirees to <a href="https://content.copera.org/bill-to-repeal-wep-gpo-reintroduced-in-congress/" target="_blank" rel="noreferrer noopener">contact their members of Congress</a> to share their opinion about these provisions and how they affect them. PERA will continue to work with the Colorado General Assembly to ensure PERA is on-track to meet its funding goal in order to continue to provide current and future retirees with monthly income in retirement that cannot be outlived.</p>



<p><em>PERA On The Issues</em> will continue to track any legislative action on WEP/GPO throughout the year. <a href="https://peraontheissues.com/subscribe/" target="_blank" rel="noreferrer noopener">Subscribe</a> to our biweekly newsletter for updates on this bill and other news related to public employee retirement.</p>


Bill to Repeal WEP/GPO Reintroduced in Congress


<h4 class="wp-block-heading"><a href="https://www.thinkadvisor.com/2022/09/20/house-panel-advances-bill-repealing-2-unpopular-social-security-rules/" target="_blank" rel="noreferrer noopener"><strong>House Panel Advances Bill Repealing 2 Unpopular Social Security Rules | ThinkAdvisor</strong></a></h4>



<p>The House Ways and Means Committee gave its approval to The Social Security Fairness Act, which would repeal Social Security’s Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). Analysts say the bill still faces a very challenging road ahead, with a low likelihood of getting to a floor vote before the end of the year.</p>



<h4 class="wp-block-heading"><a href="https://content.copera.org/news-you-should-know-house-committee-takes-action-on-wep-gpo-bill/" target="_blank" rel="noreferrer noopener"><strong>Student Loan Relief Could Help Retirement Savings, but Debt Remains a Concern | Pensions &amp; Investments</strong></a></h4>



<p>The Biden Administration announced plans to forgive up to $20,000 in student debt for some borrowers. Experts say loan forgiveness could give younger workers extra cash they can set aside for retirement instead of paying down debt.</p>



<h4 class="wp-block-heading"><a href="https://www.cbsnews.com/news/inflation-tax-bracket-irs-changes-2023/" target="_blank" rel="noreferrer noopener"><strong>Inflation Means the IRS Could Soon Change Your Tax Bracket. Here&#8217;s What to Know. | CBS News</strong></a></h4>



<p>The current period of high inflation means the IRS may need to adjust its tax brackets accordingly. Nothing is official yet, but here are some estimates of what inflation-adjusted income brackets could look like.</p>



<h4 class="wp-block-heading"><a href="https://www.nbcnews.com/health/health-news/drinking-tea-lower-risk-diabetes-heart-disease-death-rcna48096" target="_blank" rel="noreferrer noopener"><strong>Drinking Tea May Lower Risk of Diabetes, Heart Disease and Death | NBC News </strong></a></h4>



<p>You might just find better health at the bottom of a cup of tea – or rather, several cups a day. Recent research solidifies the link between tea drinking and reduced risk of certain medical conditions. In particular, at least four daily cups of black, green or Oolong tea have been found to reduce the risk of type 2 diabetes by 17 percent over 10 years.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: House Committee Takes Action on WEP/GPO Bill


<p><em>Editor&#8217;s note: This bill was reintroduced in January 2023. <a href="https://peraontheissues.com/bill-to-repeal-wep-gpo-reintroduced-in-congress/">Read more here</a>.</em></p>



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<p>In the decades since the <a href="https://sgp.fas.org/crs/misc/98-35.pdf" target="_blank" rel="noreferrer noopener">Windfall Elimination Provision</a> (WEP) and <a href="https://sgp.fas.org/crs/misc/RL32453.pdf" target="_blank" rel="noreferrer noopener">Government Pension Offset</a> (GPO) went into effect, lawmakers in Washington, DC have repeatedly introduced legislation to modify or repeal the two provisions.</p>



<p>The WEP and GPO, which are part of federal law, can reduce Social Security benefits for recipients of public pensions like Colorado PERA. It’s important to note that a person’s PERA benefit is never reduced due to Social Security or other benefits.</p>



<blockquote class="wp-block-quote">
<p><strong>Read more on copera.org:</strong> <a rel="noreferrer noopener" href="https://www.copera.org/pera-and-social-security" target="_blank">PERA and Social Security</a></p>
</blockquote>



<p>Despite bipartisan support and even President Joe Biden <a href="https://www.brookings.edu/blog/brown-center-chalkboard/2020/09/28/how-would-joe-bidens-plan-for-older-americans-affect-teachers/" target="_blank" rel="noreferrer noopener">expressing his support for WEP repeal</a>, lawmakers have not made any changes to either provision since their inception. Legislators often cite the cost of administering additional Social Security benefits as a barrier to changing the law.</p>



<p>Nonetheless, there are currently several bills before Congress that would either change how the WEP and/or GPO affect Social Security, or eliminate them entirely.</p>



<h4 class="wp-block-heading" id="h-r-82-and-s-1302-social-security-fairness-act"><strong>H.R. 82 and S. 1302: Social Security Fairness Act</strong></h4>



<p><a href="https://content.copera.org/whats-the-latest-on-federal-wep-gpo-legislation/" target="_blank" rel="noreferrer noopener">H.R. 82</a>, titled the “Social Security Fairness Act,” was introduced in the House of Representatives in January 2021. It aims to eliminate both the WEP and GPO. Since the bill was introduced last year, lawmakers have referred it to the Subcommittee on Social Security, but Congress hasn’t taken any further action.</p>



<p>In February, the bill’s lead sponsors, Reps. Abigail Spanberger (D-VA-7) and Rodney Davis (R-IL-13) <a rel="noreferrer noopener" href="https://d12t4t5x3vyizu.cloudfront.net/spanberger.house.gov/uploads/2022/02/220129-FINAL-Letter-on-Social-Security-Fairness-Act.pdf" target="_blank">wrote a letter to House leadership</a> urging a floor vote on the bill, arguing that it has more bipartisan support than most of the other 7,700+ bills introduced in the current session.</p>



<p>That bill has more than 250 cosponsors, including representatives Jason Crow (D-CO-6), Diana DeGette (D-CO-1), Joe Neguse (D-CO-2) and Ed Perlmutter (D-CO-7) of Colorado.</p>



<p>A bill with the same title was introduced in the U.S. Senate, with senators Michael Bennet (D) and John Hickenlooper (D) as cosponsors. That bill, <a href="https://www.copera.org/whats-the-latest-on-federal-wep-gpo-legislation" target="_blank" rel="noreferrer noopener">S. 1302</a>, was referred to the Committee on Finance in April 2021, and Congress hasn’t taken any further action on the bill.</p>



<h4 class="wp-block-heading" id="h-r-2337-public-servants-protection-and-fairness-act-of-2021"><strong>H.R. 2337: Public Servants Protection and Fairness Act of 2021</strong></h4>



<p>While the two bills above aim to eliminate the WEP and GPO, <a href="https://www.copera.org/whats-the-latest-on-federal-wep-gpo-legislation" target="_blank" rel="noreferrer noopener">H.R. 2337</a>, the “Public Servants Protection and Fairness Act of 2021,” seeks to instead modify the WEP with an alternate formula for calculating a person’s Social Security benefit. Advocates have sometimes argued that changing the law to reduce its impact on retirees is a more politically realistic goal than full repeal.</p>



<p>Representatives Crow, DeGette, Neguse and Perlmutter are also cosponsors of this bill, which was introduced in the House in April 2021. Like the above bills, Congress has not taken any action to move the bill further along in the legislative process.</p>



<h4 class="wp-block-heading" id="having-your-voice-heard"><strong>Having your voice heard</strong></h4>



<p>Colorado PERA, along with other public pension plans across the country, retiree organizations and other groups continually meet with members of Congress to educate them on this issue of great importance to retired public employees.</p>



<p>In addition to those efforts, one of the most effective forms of advocacy is for PERA members and retirees to <a href="https://www.copera.org/whats-the-latest-on-federal-wep-gpo-legislation" target="_blank" rel="noreferrer noopener">contact their senators and representatives</a> in Congress to let them know how the WEP and GPO affect them.</p>



<blockquote class="wp-block-quote">
<p>For updates on these bills and other important pieces of legislation affecting Colorado’s public employees, subscribe to the biweekly <a rel="noreferrer noopener" href="https://www.copera.org/what-to-expect-in-colorados-2022-legislative-session" target="_blank"><em>PERA On The Issues</em> newsletter</a>.</p>
</blockquote>



<p><strong>More <em>PERA On The Issues</em> coverage of this issue:</strong></p>



<ul>
<li><a href="https://content.copera.org/wep-gpo-bill-introduced-in-d-c/" target="_blank" rel="noreferrer noopener">What’s the Deal with the WEP and GPO?</a></li>



<li><a href="https://www.copera.org/wep-gpo-bill-introduced-in-d-c" target="_blank" rel="noreferrer noopener">WEP/GPO: The Case for Reform</a></li>
</ul>


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