U.S. House OKs bill that would boost Social Security benefits for thousands of Alaskans who have worked in public sector

Congress has taken a step toward passing a federal law that could increase Social Security benefits for thousands of Alaskans by hundreds of dollars per month.

The U.S. House approved on Tuesday a bill in a 325-75 vote that will reverse what is called the Social Security Windfall Elimination Provision and the Government Pension Offset Provision.

The provisions, in place for more than four decades, have meant that Alaskans who have worked in the state’s public sector — including as teachers and public safety officers — and who also worked jobs outside of Alaska’s public sector, could see their Social Security benefits increase.

Alaskans who are eligible for the state’s public retirement benefits are not eligible for Social Security. Under existing federal law, that means that if they worked in Social Security-eligible jobs before or after working in Alaska’s public sector, they could have their benefits reduced by thousands of dollars a year, even if they spent decades paying into Social Security.

Alaska’s lone U.S. House Rep. Mary Peltola was one of the supporters of the legislation.

“Right now, too many Alaskans aren’t receiving the Social Security they’re owed. Our teachers and public servants deserve the benefits they paid into,” Peltola said in a statement posted on social media.

The bill must still pass the U.S. Senate and be signed by the president in order to become law. U.S. Senate leadership members have not announced a plan to bring the bill to a vote.

Alaska’s Republican Sens. Lisa Murkowski and Dan Sullivan have both expressed support for the federal reform.

Murkowski is one of the co-sponsors of the Senate legislation, along with Maine Republican Sen. Susan Collins and Ohio Democratic Sen. Sherrod Brown.

In a statement last year, Murkowski said that public sector employees “deserve the Social Security benefits they’ve worked for and earned.”

“This commonsense, bipartisan legislation that I’ve supported every Congress since I’ve been in the Senate will repeal unfair deductions to their benefits,” Murkowski said in the statement last year.

Sullivan adviser Amanda Coyne said Wednesday that Sullivan “believes this is an important issue for Alaska and has worked relentlessly with teachers and other public servants to stop the reduction in Social Security benefits for Alaska workers who qualify for retirement benefits through certain programs, such as Alaska’s PERS (Public Employees’ Retirement System) and TRS (Teachers’ Retirement System).”

“The senator believes Alaskans should not be penalized by the Social Security Administration and the IRS for being pushed into a system they didn’t choose. Senator Sullivan continues to work with all involved agencies to find an appropriate solution for Alaskans,” Coyne said.

The Alaska Legislature unanimously passed a resolution earlier this year supporting the repeal of the federal provisions.

Anchorage Democratic Sen. Bill Wielechowski, who co-sponsored the resolution, said Alaska’s public sector employees are significantly affected by the federal provisions because those hired after 2006 are not eligible for a defined benefit retirement system, meaning they have no guaranteed income in retirement. Alaska’s post-2006 system offers only a 401(k)-style investment account, and the savings rate is not ensured by the state.

“So this is why Alaska employees really get whacked, get hit hard by this, because they don’t get a pension, and then their Social Security is actually reduced just by the fact that they work for a state or local government,” said Wielechowski. “So it really is discouraging for people to want to work for state or local government, because it’s potentially going to reduce their Social Security by $7,000 per year, and that number goes up every year.”

Wielechowski said that if the federal law were to pass and be signed by the president, it would benefit the Alaska economy by injecting an extra several thousand dollars into the pockets of many Alaska households.

Tim Parker, former president of NEA-Alaska, a union representing most educators in the state, said he has long advocated for the repeal of the provisions, which he said penalize workers who in many cases aren’t aware of the penalty until after they have taken a public sector job or until they retire.

Parker said he spoke about the bill with Alaska’s late U.S. Sen. Ted Stevens more than 20 years ago.

“It is something that Ted didn’t think could happen,” said Parker. Now, he said decades of work are paying off. “This work that we’ve been doing, that’s felt like an uphill battle that we could never win, apparently has persuaded enough legislators.”

Parker, who is now retired after 22 years as a teacher, said that Alaska educators are hard-hit by the reduction to Social Security because of the state’s existing retirement system.

“To me, that just feels like you’re getting kicked on top of already being kicked,” said Parker.

Parker also stands to be personally impacted by the provisions. Before becoming a public school teacher in Fairbanks, he worked for several years in the private sector.

“If this passes, I’ll get $300 instead of $150 (in monthly Social Security benefits),” Parker estimated.

In Parker’s case, the impact amounts to an insignificant change, but many Alaska households rely significantly on Social Security in retirement, meaning the reduction in benefits puts them in difficult positions.

“Every single person has a little bit of a different effect on them, from zero to a lot,” said Parker.

Even if the federal legislation is signed into law, it would not solve the wider challenges facing Alaska’s public sector retirees, Parker said. In 2006, the state switched from a defined benefit pension system for public employees to what is known as a defined contribution system, meaning employees can invest in a savings account but have no guaranteed income in retirement.

That is something many lawmakers say they are hoping to change in the coming legislative session. Earlier this year, the state Senate passed a bill that would have reinstated a guaranteed pension for Alaska’s public sector workers. The bill was then blocked by Republicans in the state House, but a bipartisan coalition poised to flip control of the chamber has indicated that pension reform could top its agenda when the Legislature reconvenes next year.