To implement the GPO and WEP provisions, SSA needs to know which social security applicants and beneficiaries are, or will be in the future, receiving pensions earned in noncovered employment. SSA does not, however, make the same postentitlement comparison with OPM data to ensure proper application of the WEP benefit reduction for federal retirees. On the basis of these studies, we estimate that GPO- and WEP-related overpayments range between $160 million and $355 million. SSA’s Studies of the GPO Provision for Retired State and Local Government Workers Indicate That Overpayments Are Being Made

For many years, SSA has been concerned with its uneven approach to administering the GPO provision between federal and state and local government retirees. We identified two sources of information that can be used to identify state and local government retirees who have pension income resulting from noncovered employment: the individual retirement systems making pension payments to their eligible members and IRS, which receives reports from the retirement systems identifying pensions paid to each beneficiary every year. The merits and drawbacks associated with obtaining pension data from each source are described below. SSA could examine cases for which it has not applied the GPO and WEP reductions. Certainly, SSA can use the OPM pension data that it already has to enhance its WEP enforcement controls for federal employees. Recommendations to the Commissioner of Social Security

To improve the administration of the GPO 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 and 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. Evaluation of GPO and WEP Administration

To determine how well SSA administers the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) benefit reduction provisions, we reviewed past reports by the Office of Inspector General, Congressional Research Service, and Congressional Budget Office and SSA’s Office of Program Integrity Reviews concerning the GPO and WEP benefit reduction provisions; met with SSA headquarters staff in components responsible for policy, operations, and systems for GPO and WEP; reviewed SSA operating procedures for processing benefit claims and verifying payments made to retired government employees who worked in positions not covered by social security; and examined the results of monthly computer matching to pension data provided under agreement with OPM to identify persons receiving spouse benefits and federal pensions.
Why GAO Did This Study

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.

What GAO Found

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.