Order Code RL32477
CRS Report for Congress
Received through the CRS Web
Social Security: The Public Servant Retirement
Protection Act (H.R. 4391/S. 2455)
July 19, 2004
Laura Haltzel
Specialist in Social Security
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Social Security: The Public Servant Retirement
Protection Act (H.R. 4391/S. 2455)
Summary
A worker is “covered” by Social Security if he or she pays into Social Security
through the Old-Age, Survivors, and Disability Insurance (OASDI) payroll tax.
Currently 96% of all workers are covered by Social Security. The majority of non-
covered positions are held by federal, state, and local government employees.
The current-law Windfall Elimination Provision (WEP) reduces the Social
Security retirement or disability benefits of workers who also receive a pension from
employment not covered by Social Security. The goal of the WEP was to remove an
unintended advantage that the regular Social Security benefit formula provided to
employees who divided their careers between covered and non-covered positions.
As of December 2003, approximately 758,000 beneficiaries (approximately 1.6 %
of the entire beneficiary population at that time) had their benefits reduced as a result
of the current-law WEP.
On May 19, 2004, Representative Kevin Brady introduced H.R. 4391, the Public
Servant Retirement Protection Act (PSRPA), which would alter the current-law WEP
formula for those who first enter non-Social Security-covered employment one year
after the bill’s enactment. The PSRPA would maintain the current-law WEP for
workers who have worked in non-covered employment prior to this date except in
cases where the PSRPA WEP provides them with a higher benefit. On May 20,
2004, Senator Kay Bailey Hutchison introduced the sister bill, S. 2455. Both bills
would replace the current-law WEP formula with a new WEP formula that provides
a benefit in rough proportion to the percentage of earnings worked in Social Security-
covered employment.
When compared to current-law, the effect of the PSRPA WEP on a worker’s
benefit levels varies both by earnings level and the number of years of Social Security
covered-earnings. The current-law WEP generally provides a benefit that increases
with additional years of Social Security coverage. By contrast, the key determinant
of the new proportional benefit amount is the percentage of the highest 35 years of
covered and non-covered earnings that can be attributed to covered work — the
higher the value of these covered earnings compared to the highest 35 years of
covered and non-covered earnings, the larger the benefit under the PSRPA. Thus,
the PSRPA WEP provides a benefit that increases with a rise in the proportion of
Social Security covered earnings relative to overall earnings, regardless of the
number of years worked in Social Security covered employment.
This report will be updated as legislative activity warrants.

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Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Current-Law Windfall Elimination Provision (WEP) . . . . . . . . . . . . . . . . . . 1
Rationale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Social Security-Covered and Non-Covered Work . . . . . . . . . . . . . . . . . 3
Who is Currently Affected by the WEP? . . . . . . . . . . . . . . . . . . . . . . . . 5
The “Public Servant Retirement Protection Act” (PSRPA) . . . . . . . . . . . . . 9
Future Non-Covered Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Applies a New, Proportional PIA Formula to Those Who First Begin
Non-covered Employment One Year after the Bill’s Enactment . . 9
Current and Past Non-Covered Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Holds Harmless Individuals Who Already Work or Have Worked
in Non-covered Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
How Will the PSRPA Affect Benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Earnings Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Number of Years of Covered Earnings . . . . . . . . . . . . . . . . . . . . . . . . 14
Assumptions and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix: Benefit Amounts Under Current-Law and PSRPA by Earnings
Level and Years of Social Security Covered Earnings . . . . . . . . . . . . . . . . 17
List of Figures
Figure 1. Current-Law WEP, Scaled Average-Wage Earner . . . . . . . . . . . . . . . . 3
Figure 2. Current-Law WEP and PSRPA WEP
Scaled Average-Wage Earner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 3. Current-Law WEP and PSRPA WEP
Minimum-Wage Earner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 4. Current-Law WEP and PSRPA WEP
Scaled Low-Wage Earner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 5. Current-Law WEP and PSRPA WEP
Scaled High-Wage Earner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 6. Current-Law WEP and PSRPA WEP
Maximum-Wage Earner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 7. Percent Change in WEP Benefit Under PSRPA
Compared to Current-Law, by Earnings Level . . . . . . . . . . . . . . . . . . . . . . 14
Figure 8. Percent Change in WEP Benefit Under PSRPA
Compared to Current-Law, by Years of Covered Earnings . . . . . . . . . . . . . 15
List of Tables
Table 1. Estimated Social Security Coverage of Workers with State and
Local Government Employment, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 2. Number of Beneficiaries in Current Payment Status with Benefits
Affected by Windfall Elimination Provision (WEP), by State and Type
of Benefit, December 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

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Table 3. Number of Beneficiaries in Current Payment Status with Benefits
Affected by the Windfall Elimination Provision (WEP), by Gender and
Type of Benefit, December 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 4. Number of Individuals Affected by the Windfall Elimination
Provision, by Gender and Number of Years of Coverage, December 2003 . 8
Table 5. Minimum-Wage Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table 6. Scaled Low-Wage Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 7. Scaled Average-Wage Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 8. Scaled High-Wage Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 9. Maximum-Wage Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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Social Security: The Public Servant
Retirement Protection Act
(H.R. 4391/S. 2455)
Background
The Windfall Elimination Provision (WEP) reduces the Social Security benefits
of workers who also have pension benefits from employment not covered by Social
Security. On May 19, 2004, Representative Kevin Brady introduced H.R. 4391, the
Public Servant Retirement Protection Act (PSRPA), which would alter the current-
law WEP formula for those who first enter non-Social Security-covered employment
one year after the bill’s enactment. The PSRPA would maintain the current-law
WEP for workers who have worked in non-covered employment prior to this date
except in cases where the PSRPA WEP provides them with a higher benefit. On May
20, 2004, Senator Kay Bailey Hutchison introduced the sister bill, S. 2455. Both bills
would replace the current-law WEP formula with a new WEP formula that provides
a benefit in rough proportion to the percentage of earnings worked in Social Security-
covered employment.
Current-Law Windfall Elimination Provision (WEP)
The current-law WEP reduces the Social Security retirement or disability
benefits of workers who also receive a pension from employment not covered by
Social Security. The base Social Security benefit, the Primary Insurance Amount
(PIA), is the amount that a worker would receive as a Social Security retirement
benefit if he or she retired exactly at the full retirement age (65 years and four months
in 2004). The PIA formula applies three progressive factors — 90%, 32%, and 15%
— to three different levels, or brackets, of a worker’s average indexed monthly
covered earnings (AIME).1 In 2004, the PIA formula is
90% of the first $612 of the AIME, PLUS
32% of the AIME between $612 and $3,689, PLUS
15% of the AIME exceeding $3,689.
Under current-law, this regular PIA formula is modified for those receiving
pensions from non-Social Security covered employment by adjusting the 90% factor
1The AIME is a dollar amount that represents the average monthly earnings from Social
Security-covered employment over most of the worker’s adult life indexed to the increase
in average annual wages. To calculate the AIME, a worker’s earnings prior to age 60 are
first indexed to the year that the worker reaches age 60. The highest 35 years of indexed
yearly earnings are used to compute the AIME. The sum of the indexed earnings in these
35 years is divided by the number of months in these 35 years to obtain the average indexed
monthly earnings.

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CRS-2
based on the number of years the worker had “substantial” employment covered by
Social Security (i.e., having earned at least one quarter of the “old-law” Social
Security maximum taxable wage base for each year).2 The higher the number of
years of substantial Social Security coverage, the higher the first formula factor used
in the WEP PIA formula. The lowest formula factor is 40%, which applies to those
with 20 or fewer years of substantial Social Security covered employment. For each
additional year of substantial Social Security coverage over 20, the formula factor
increases by five percentage points until it reaches 90% for those with 30 years of
substantial Social Security covered employment — the same first formula factor as
under the regular PIA formula. Thus, a worker who would otherwise be subject to
the WEP would be exempt from any benefit reduction if he or she had at least 30
years in covered employment. The 32% and 15% PIA formula factors continue to
apply as under the regular PIA formula. Figure 1 demonstrates how the benefit level
resulting from the current-law WEP formula varies by years of covered earnings for
a worker with average earnings.3 In no case can the reduction in benefits under the
WEP exceed more than half of the pension based on non-covered work.
2For determining years of coverage after 1978 for individuals with pensions from non-
covered employment, the amount is 25% of what the contribution and benefit base otherwise
would have been if the 1977 Social Security Amendments had not been enacted. In 2003,
the “old-law” taxable wage base was equal to $64,500 and, thus, to earn credit for one “year
of coverage” under the WEP, a worker would have to earn at least $16,125 in Social
Security-covered employment.
3A “year of coverage” should not be confused with a “year of covered earnings.” In 2003,
to earn credit for one “year of coverage” under the WEP, a worker would have to earn at
least $16,125 in Social Security-covered employment. A “year of covered earnings” is any
year in which the worker had earnings from Social Security-covered employment, regardless
of the amount earned. Because the PSRPA does not rely on the current-law definition of
“years of coverage”in calculating WEP benefits (as determined by measuring “substantial
earnings”), the common denominator of “years of covered earnings” is used in all charts.
For example, in 2003, a minimum-wage worker in Social Security covered-employment
would have earned $10,712. While this minimum-wage worker has a year of Social
Security-covered earnings, he or she would not have earned a “year of coverage” towards
the current-law WEP formula which required a worker to earn at least $16,125 in Social
Security covered-employment. Any attempt to graphically represent a minimum-wage
worker’s current-law benefit under the WEP by “years of coverage” would have been
impossible as the minimum-wage worker never qualifies for a single “year of coverage.”

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CRS-3
Figure 1. Current-Law WEP, Scaled Average-Wage Earner
$3,500
)
$3,000
s
C urrent Law W EP
$2,500
$2,000
$1,500
Benefit Level
$1,000
(Constant 2003 Dollar
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Rationale. The goal of the WEP was to remove an unintended advantage that
the regular Social Security benefit formula provided to employees who divide their
careers between covered and non-covered positions. The regular Social Security
formula is intended to replace a higher proportion of earnings for those workers who
spent their working years in low paying jobs relative to those who had high earnings.
However, the regular formula cannot differentiate between those who worked their
whole lives in low-paying jobs and those who simply appear to be low paid because
they worked for many years in jobs not covered by Social Security. Because those
who work in non-Social Security covered positions do not contribute to Social
Security through the payroll tax, each year of non-covered employment is recorded
as a year of zero earnings in the calculation of a worker’s AIME. Thus, workers in
non-covered Social Security positions received the advantage of the progressive
Social Security formula because their few years of covered earnings were averaged
over their entire working career to determine the average covered earnings on which
their Social Security benefits were based. The WEP formula is intended to remove
this advantage for these workers.
Social Security-Covered and Non-Covered Work. A worker is in a
position “covered” by Social Security if he or she pays into Social Security through
the Old-Age, Survivors, and Disability Insurance (OASDI) payroll tax.
Approximately 96% of all workers are covered. The majority of non-covered
positions are held by government employees: most federal employees hired before
1984 and some state and local government employees. The latest available
information on the Social Security coverage of state and local workers is for the year
2001. Nationwide, approximately 72% of state and local government employees are
covered.4 However, coverage varies from state to state. For example, approximately
97% of state and local employees in Vermont are covered by Social Security, while
only 3% of state and local employees in Ohio are covered.5 Table 1 below provides
a breakdown of Social Security covered and non-covered employees by state.
4Social Security Administration, Estimated Social Security Coverage of Workers with State
and Local Government Employment, 2001.
5Ibid.

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CRS-4
Table 1. Estimated Social Security Coverage of Workers with
State and Local Government Employment, 2001
(in thousands)
Non-Covered
Percent
State
All Workersa
Covered Workers
Workers
Non-Covered
Alabama
369
343
26
7%
Alaska
85
41
44
52%
Arizona
407
366
41
10%
Arkansas
216
193
23
11%
California
2,582
1,114
1,468
57%
Colorado
385
122
263
68%
Connecticut
286
194
92
32%
D.C.
73
47
26
36%
Delaware
71
67
4
6%
Florida
1,124
951
173
15%
Georgia
648
467
181
28%
Hawaii
125
74
51
41%
Idaho
144
131
13
9%
Illinois
1,055
566
489
46%
Indiana
481
427
54
11%
Iowa
289
254
35
12%
Kansas
286
257
29
10%
Kentucky
363
274
89
25%
Louisiana
365
104
261
72%
Maine
129
62
67
52%
Maryland
443
403
40
9%
Massachusetts
468
26
442
94%
Michigan
823
729
94
11%
Minnesota
460
416
44
10%
Mississippi
251
225
26
10%
Missouri
484
356
128
26%
Montana
97
84
13
13%
Nebraska
173
156
17
10%
Nevada
142
42
100
70%
New Hampshire
109
96
13
12%
New Jersey
651
602
49
8%
New Mexico
187
165
22
12%
New York
1,747
1,679
68
4%
North Carolina
674
628
46
7%
North Dakota
75
65
10
13%
Ohio
846
26
820
97%
Oklahoma
303
271
32
11%
Oregon
289
262
27
9%
Pennsylvania
797
726
71
9%
Puerto Rico
254
225
29
11%
Rhode Island
71
57
14
20%
South Carolina
366
336
30
8%

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CRS-5
Non-Covered
Percent
State
All Workersa
Covered Workers
Workers
Non-Covered
South Dakota
84
77
7
8%
Tennessee
476
429
47
10%
Texas
1,704
868
836
49%
Utah
226
203
23
10%
Vermont
60
58
2
3%
Virginia
627
584
43
7%
Washington
514
451
63
12%
West Virginia
151
136
15
10%
Wisconsin
506
444
62
12%
Wyoming
73
63
10
14%
Other b
7
1
6
86%
Total
23,621
16,943
6,678
28%
Source: Social Security Administration, Continuous Work History Sample, 1% sample.
Notes: Workers with more than one state and local employer during the year are counted for each
employer.
a. Includes seasonal and part-time workers for whom state and local government employment was not
the major job.
b. Includes persons employed in American Samoa, Guam and Virgin Islands, U.S. citizens employed
abroad by American employers, and persons employed on oceanborne vessels.
This variation in coverage occurs because, while Social Security originally did
not cover any state and local government workers, over time the law has changed.
Most state and local government employees became covered by Social Security
through voluntary agreements between the Social Security Administration and
individual states.6 Beginning in July 1991, state and local employees who were not
members of a public retirement system were mandatorily covered by Social Security
because they had no alternative retirement or disability protection.7
Who is Currently Affected by the WEP? Individuals who work or who
have worked in positions where they did not pay into Social Security are potentially
affected by the WEP. As of December 2003, approximately 758,000 beneficiaries
(approximately 1.6% of the entire beneficiary population at that time) had their
benefits reduced as a result of the current-law WEP. As Social Security coverage
varies by state, so does the number of individuals affected by the WEP. Table 2
below provides a detailed breakdown by state of the number of beneficiaries affected
by the WEP.
6 These agreements are known as “Section 218 agreements” because they are authorized by
Section 218 of the Social Security Act.
7P.L. 101-508, The Omnibus Budget Reconciliation Act of 1990, H.Rept. 101-881, p. 358.

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CRS-6
Table 2. Number of Beneficiaries in Current Payment Status
with Benefits Affected by Windfall Elimination Provision (WEP),
by State and Type of Benefit, December 2003
Total Number
Spouses
Percent of All
Retired
Disabled
State
of WEP
and
Beneficiaries
Workers
Workers
Beneficiaries
Children
in the Statea
Alabama
11,006
9,672
180
1,154
1%
Alaska
3,188
2,941
48
199
5%
Arizona
13,150
11,835
197
1,118
2%
Arkansas
6,338
5,659
131
548
1%
California
90,676
81,748
1,125
7,803
2%
Colorado
21,341
19,403
206
1,732
4%
Connecticut
6,527
6,105
102
320
1%
Delaware
1,648
1,491
28
129
1%
District of Columbia
5,231
4,909
71
251
7%
Florida
44,304
39,955
530
3,819
1%
Georgia
21,208
19,403
270
1,535
2%
Hawaii
4,953
4,367
65
521
3%
Idaho
2,957
2,633
48
276
1%
Illinois
37,734
34,994
359
2,381
2%
Indiana
7,719
6,967
142
610
1%
Iowa
4,818
4,384
50
384
1%
Kansas
5,088
4,605
86
397
1%
Kentucky
9,491
8,495
197
799
1%
Louisiana
14,732
12,780
331
1,621
2%
Maine
6,806
6,186
104
516
3%
Maryland
24,695
22,585
307
1,803
3%
Massachusetts
24,476
22,831
333
1,312
2%
Michigan
9,497
8,478
157
862
1%
Minnesota
10,309
9,486
99
724
1%
Mississippi
5,424
4,805
116
503
1%
Missouri
16,081
14,788
229
1,064
2%
Montana
2,661
2,359
50
252
2%
Nebraska
3,065
2,809
36
220
1%
Nevada
8,829
8,148
129
552
3%
New Hampshire
3,330
3,023
62
245
2%
New Jersey
12,408
11,238
224
946
1%
New Mexico
6,504
5,656
76
772
2%
New York
18,356
16,608
284
1,464
1%
North Carolina
13,675
12,379
214
1,082
1%
North Dakota
1,552
1,395
10
147
1%
Ohio
56,008
51,004
635
4,369
3%
Oklahoma
9,953
8,836
181
936
2%
Oregon
7,161
6,422
99
640
1%
Pennsylvania
19,527
17,525
323
1,679
1%
Rhode Island
2,411
2,187
42
182
1%
South Carolina
8,746
7,830
133
783
1%

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CRS-7
Total Number
Spouses
Percent of All
Retired
Disabled
State
of WEP
and
Beneficiaries
Workers
Workers
Beneficiaries
Children
in the Statea
South Dakota
2,116
1,912
26
178
2%
Tennessee
9,758
8,662
152
944
1%
Texas
60,429
54,611
668
5,150
2%
Utah
6,529
5,789
85
655
3%
Vermont
1,407
1,267
21
119
1%
Virginia
26,243
23,528
315
2,400
2%
Washington
13,990
12,292
203
1,495
2%
West Virginia
3,451
2,993
80
378
1%
Wisconsin
6,579
6,020
59
500
1%
Wyoming
1,277
1,172
12
93
2%
Outlying areas and
foreign countries
42,568
32,560
433
9,575
4%
Total
757,930
679,730
10,063
68,137
1.6%
Source: Social Security Administration, Office of Research, Evaluation and Statistics, Mar. 1, 2004.
a. CRS calculations based on Social Security Administration, Office of Research, Evaluation and
Statistics, Annual Statistical Supplement, 2004, Table 5.J2 (not yet published).
Of this group affected by the WEP, about 90% were receiving retired worker
benefits, about 1% were receiving disabled worker benefits, and about 9% were
receiving benefits as spouses or children of insured workers. Spouses and children
may have their benefits indirectly reduced as a result of the WEP since their benefits
are based on the reduced PIA of the worker. However, the WEP reduction is
removed for the calculation of survivor benefits. Of those receiving retirement or
disability benefits, approximately 34% were women and 66% were men (see Table
3).
Table 3. Number of Beneficiaries in Current Payment Status
with Benefits Affected by the Windfall Elimination Provision
(WEP), by Gender and Type of Benefit, December 2003
Type of Benefit
Gender
Total
Retired Workers
Disabled Workers
Women
233,939
230,523
3,416
Men
455,854
449,207
6,647
Total
689,793
679,730
10,063
Source: Social Security Administration, Office of Research, Evaluation and Statistics, Mar. 1, 2004.
The number of affected individuals also varies by years of coverage (years of
substantial Social Security covered earnings) that count towards the WEP formula.
Table 4 demonstrates that approximately 70% of all individuals currently affected
by the WEP had 20 or fewer years of coverage and 20% had 21 or more years of
coverage, while the information on years of coverage is not available for 10% of
those affected. Thus, for about 70% of all beneficiaries affected by the current-law
WEP, the first formula factor used in the WEP PIA never exceeds 40%.

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CRS-8
Table 4. Number of Individuals Affected by the Windfall
Elimination Provision, by Gender and Number of Years of
Coverage, December 2003
Percent of Total
Years of
Women
Men
Total
by Years of
Coverage
Coverage
Information not available
32,680
35,502
68,182
9.9%
0
2,292
972
3,264
0.5%
1
3,260
2,482
5,742
0.8%
2
4,609
4,358
8,967
1.3%
3
6,055
6,213
12,268
1.8%
4
7,323
8,265
15,588
2.3%
5
8,825
10,778
19,603
2.8%
6
10,232
13,118
23,350
3.4%
7
11,709
15,762
27,471
4.0%
8
12,997
18,560
31,557
4.6%
9
13,787
21,528
35,315
5.1%
10
13,911
23,891
37,802
5.5%
11
13,131
24,368
37,499
5.4%
12
11,985
23,230
35,215
5.1%
13
10,614
21,548
32,162
4.7%
14
9,448
20,243
29,691
4.3%
15
8,142
18,917
27,059
3.9%
16
7,354
17,835
25,189
3.7%
17
6,583
16,711
23,294
3.4%
18
5,589
15,600
21,189
3.1%
19
4,774
14,741
19,515
2.8%
20
4,424
14,913
19,337
2.8%
21
3,977
15,944
19,921
2.9%
22
3,454
15,380
18,834
2.7%
23
3,193
14,299
17,492
2.5%
24
2,962
13,076
16,038
2.3%
25
2,545
11,529
14,074
2.0%
26
2,362
10,521
12,883
1.9%
27
2,001
9,292
11,293
1.6%
28
1,880
8,426
10,306
1.5%
29
1,794
7,772
9,566
1.4%
30+
47
80
127
0.0%
Total
233,939
455,854
689,793
100.0%
Source: Unpublished table, Social Security Administration, Office of Research, Evaluation and
Statistics, May 18, 2004.
Notes: A “year of coverage” should not be confused with a “year of covered earnings.” Under the
current-law WEP, the number of years the worker had “substantial” employment covered by
Social Security (i.e., having earned at least one quarter of the “old-law” Social Security
maximum taxable wage base for each year) qualifies as a “year of coverage.” In 2003, the “old-
law” taxable wage base was equal to $64,500 and, thus, to earn credit for one “year of coverage”
under the WEP, a worker would have to earn at least $16,125 in Social Security-covered

---

CRS-9
employment. A “year of covered earnings” is any year in which the worker had earnings from
Social Security-covered employment, regardless of the amount earned.
The “Public Servant Retirement Protection Act” (PSRPA)
The PSRPA would treat future non-covered workers differently from current or
past non-covered workers when calculating Social Security retirement or disability
benefits.
Future Non-Covered Workers
Applies a New, Proportional PIA Formula to Those Who First Begin
Non-covered Employment One Year after the Bill’s Enactment. The
PSRPA legislation establishes a new PIA formula that takes into account the
proportion of a worker’s career earnings attributable to Social Security-covered
employment. First, to represent the PIA that a worker would receive if he or she had
worked a full career in Social Security-covered employment, a PIA is calculated
using the worker’s highest 35 years of earnings from both covered and non-covered
employment. Second, this career-based PIA is multiplied by a ratio that reflects the
portion of the worker’s lifetime earnings attributable to covered employment. This
ratio is equal to the current-law AIME, which is based on the worker’s highest 35
years of Social Security-covered earnings, divided by an AIME based on the worker’s
highest 35 years of earnings from both covered and non-covered employment. The
new PIA is therefore equal to the portion of the career PIA that the worker is eligible
to receive based on his or her Social Security-covered earnings. Thus, the new PIA
formula for future non-covered workers is as follows:
New PIA = PIA using covered
X (AIME using highest 35 years covered earnings)
and non-covered earnings
(AIME using highest 35 years covered and non-
covered earnings)
Current and Past Non-Covered Workers
Holds Harmless Individuals Who Already Work or Have Worked in
Non-covered Employment. Those individuals currently working in non-Social
Security-covered employment, those who have worked in non-covered employment
in the past, and those who begin work in non-covered employment within one-year
of the bill’s enactment would not experience any reduction in benefits and could
potentially experience a benefit increase. The PSRPA legislation retains the current-
law WEP formula for these individuals as well as the guarantee that the reduction in
benefits caused by the current-law WEP cannot exceed more than half of the pension
based on non-covered work. However, if the PIA calculated under the proportional
WEP formula would be higher than that provided under current-law, the worker
would receive the higher PIA.
Figure 2 demonstrates the basic relationship between the current-law WEP
formula and the PSRPA proportional benefit formula for a scaled average-wage
worker whose years of Social Security covered earnings occur at the end of his
career.

---

CRS-10
Figure 2. Current-Law WEP and PSRPA WEP
Scaled Average-Wage Earner
$3,500
)
$3,000
Current Law
rs
WEP
lla
$2,500
o
PSRPA
vel
WEP
e
D
3
$2,000
0
t L
0
fi
e
2
$1,500
nt
Ben
ta
$1,000
ons
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
The straight line represents benefits under the PSRPA, while the line with bend
points at 20 and 30 years of covered earnings and shifting slopes represents the
current-law WEP. The area between these two lines represents the estimated change
in benefits between current-law and the PSRPA. Most of the following analysis of
the results deals with explaining the difference in the gaps for workers with varying
levels of earnings and years of covered earnings.
How Will the PSRPA Affect Benefits?
! Under the current-law WEP, benefits are driven by the number of “years of
coverage,” while under the PSRPA benefits are driven by the value of covered
earnings relative to overall earnings, regardless of the number of years spent
accruing those covered earnings.
! While the current-law WEP formula provides no increase in the first PIA
formula factor of 40% for those with between 10 and 20 years in covered
employment, the PSRPA uses a 90% formula factor and thus would provide
a higher percent increase in benefit levels for each year of covered earnings.
! Future non-covered workers who spend 30 years or more in Social Security
covered employment would not be exempt from a reduced Social Security
benefit as are workers under current-law.
! Based on estimates for future hypothetical workers using the PSPRA formula:
—
Minimum-wage workers and low-wage workers would receive
the greatest percent increase in Social Security benefits under
the PSRPA relative to current-law, regardless of the number of
years of covered earnings.

---

CRS-11
—
Average-wage workers with up to 27 years of covered earnings
would receive benefits greater than what they would receive
under current law.
—
High-wage workers with up to 23 years of covered earnings
would receive benefits greater than what they would receive
under current law.
—
Maximum-wage workers would experience a decrease in Social
Security benefits under the PSRPA relative to current-law,
regardless of the number of years of covered earnings.
The remainder of this report uses the Congressional Research Service (CRS)
Social Security case-simulation model to analyze how the PSRPA would affect the
Social Security benefits of hypothetical workers with various earnings levels who
spend differing numbers of years working in Social Security-covered employment.
In the case-simulation model, it is necessary to specify not only the number of years
of covered employment, but also when those years occurred. Because we are relying
on hypothetical earnings patterns for workers, in all of our examples higher earnings
levels come towards the end of the worker’s career. Therefore, individuals whose
years of covered earnings occur later in their career experience slightly higher benefit
levels under the PSRPA than those individuals who have covered earnings earlier in
their career. While the relative importance of the timing of covered earnings holds
true for individuals with earnings histories that start low and increase throughout the
career, it would not necessarily hold true for other earnings patterns.
The appendix provides a series of tables with examples of how the PSRPA
would affect future non-covered workers based on differences in earnings levels and
years of Social Security covered earnings. The output for each scenario includes
information on the PIA based on all earnings, the new PSRPA PIA, the current-law
WEP PIA, and the percent increase or decrease under the PSRPA proposal compared
to current-law. The main results based on these examples and a preliminary
explanation of these results are summarized below.
Earnings Levels. Figures 3, 4, 5 and 6 demonstrate the relationship between
current-law and the PSRPA for minimum-wage workers, scaled low-wage workers,
scaled high-wage workers and maximum-wage workers, respectively, who have
covered earnings at the end of their careers.8 These figures illustrate features of the
current-law and the PSRPA WEP formulas, with respect to years of covered
earnings, by earnings levels. In all cases, the WEP benefit level, under both current-
law and the PSRPA, increases with years of covered earnings. However, the current-
law WEP generally increases at a varying rate with years of covered earnings,
8 The projected earnings histories for these workers are those used by the Social Security
Administration to produce the Annual Trustees Report. It is assumed that they follow
typical lifetime earnings patterns that would produce a Social Security benefit equivalent
to that of workers with career earnings of either: (1) a “low”wage (45% of a wage equal to
Social Security’s “average wage series);” (2) an “average wage”(a wage equal to Social
Security’s “average wage series);” (3) a “high” wage (160% of a wage equal to Social
Security’s “average wage series);” or (4) the maximum wage creditable under Social
Security.

---

CRS-12
whereas the PSRPA WEP increases at a constant rate.9 Also, the slope of both the
current-law WEP and PSRPA WEP, with respect to years of coverage, increases as
earnings increase (e.g., compare Figure 3 with Figure 4). These formula features
account for the differences in benefits illustrated in subsequent figures, with respect
to years of covered earnings and earnings levels.
Figure 3. Current-Law WEP and PSRPA WEP
Minimum-Wage Earner
$3,500
$3,000
)
rs
Current Law
lla
WEP
$2,500
o
PSRPA
WEP
evel
$2,000
t L
fi
e
t 2003 D
n
$1,500
e
tan
B
s
n
$1,000
o
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Figure 4. Current-Law WEP and PSRPA WEP
Scaled Low-Wage Earner
$3,500
$3,000
Current Law
rs)
WEP
lla
$2,500
PSRPA
WEP
evel
$2,000
t L
fi
e
t 2003 Do
$1,500
Ben
tan
s
n
$1,000
(Co
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
9 This constant rate is primarily a function of the assumptions used to generate the
hypothetical earners used in this analysis, particularly the long-term constant rate of growth
in the national average wage.

---

CRS-13
Given our assumed earnings histories, the PSRPA provides a strictly
proportional benefit. However, the current-law WEP formula replaces a higher
proportion of the AIME of higher-wage workers than lower-wage workers. Higher-
wage workers tend to have larger AIMEs, and a larger portion of their benefit is
based on the 32% and 15% formula factors under the current-law WEP PIA. Lower-
wage workers tend to have smaller AIMEs, and a larger portion of their benefit is
based on the first PIA formula factor which can be as small as 40% under the current-
law WEP. Furthermore, under the current-law WEP, minimum-wage earners do not
have high enough earnings to qualify for a “year of coverage” under the WEP.
Therefore, while their AIMEs increase with additional years of covered earnings,
their WEP “years of coverage” do not and so the first PIA formula factor remains at
40%. The impact of this “year of coverage” requirement can be seen by comparing
Figure 3 (minimum-wage worker) with Figure 2 (scaled average-wage worker). The
pattern of current-law benefits by years of covered earnings for the minimum-wage
worker does not exhibit the typical bend-points one expects from the WEP formula
because the first PIA formula factor never rises with additional years of covered
earnings. This same pattern holds true for scaled low-wage workers (Figure 4), but
to a lesser degree. Scaled low-wage workers earn high enough wages in some years
to qualify for a “year of coverage,” but even then the first PIA formula factor only
reaches 60%. Thus, when the new proportional PIA is used, and the regular PIA
formula using the 90% first formula factor is put in place, minimum-wage and scaled
low-wage workers experience the greatest percent increase in benefits. Scaled
average-wage, scaled high-wage, and maximum-wage earners all have high enough
earnings in each year of covered earnings to qualify for a ‘year of coverage’ under the
WEP and thus their first PIA formula factors rise every year between 20 and 30 years
of covered earnings (Figure 2, Figure 5 and Figure 6). The difference in the
percentage increase or decrease by earnings level is highlighted in Figure 7.
Figure 5. Current-Law WEP and PSRPA WEP
Scaled High-Wage Earner
$3,500
Current Law
) $3,000
WEP
rs
PSRPA
l
lla $2,500
WEP
e
o
v
D
3 $2,000
0
0
fit Le
$1,500
ne
nt 2
e
B
ta
$1,000
ons
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings

---

CRS-14
Figure 6. Current-Law WEP and PSRPA WEP
Maximum-Wage Earner
$3,500
Current Law
)
WEP
$3,000
rs
PSRPA
lla $2,500
o
WEP
evel
$2,000
t L
fi
e
t 2003 D $1,500
n
e
B
tan
s $1,000
n
o
(C
$500
$0
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Figure 7. Percent Change in WEP Benefit Under PSRPA
Compared to Current-Law, by Earnings Level
Minimum wage worker
1.2
Scaled low-wage worker
fit
Scaled average-wage worker
1
Scaled high-wage worker
ne
e
Maximum wage worker
0.8
EP B
0.6
in W 0.4
nge
a 0.2
h
t C
0
n
e
rc -0.2
Pe -0.4
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Years of Covered Earnings
Number of Years of Covered Earnings. Under the PSRPA, the key
determinant of the new proportional benefit amount is the percentage of the highest
35 years of covered and non-covered earnings that can be attributed to covered work
— the higher the value of covered earnings to career earnings, the larger the benefit
under the PSRPA. In order to separate out the effect of the number of years of
covered earnings, we examined workers with identical earnings histories, but with
different numbers of years of covered earnings. For example, Figure 8 highlights

---

CRS-15
how the percent change in benefit level for a scaled average-wage worker who has
covered earnings at the end of his career varies by the number of years of coverage.10
As seen in Figure 8, the average-wage worker who has between 10 and 20 years
of covered earnings experiences a large percent increase in Social Security benefit
level compared to the current-law WEP. The current-law WEP formula limits the
first PIA formula factor to 40% (instead of 90% for regular workers) no matter how
many additional “years of coverage” a worker earns between 10 and 20. With the
PSRPA PIA, workers would receive an increase in benefit proportional to the
increase in their earnings for each year of additional covered earnings.
Figure 8. Percent Change in WEP Benefit Under PSRPA
Compared to Current-Law, by Years of Covered Earnings
30%
fit 25%
ne
Scaled Average-Wage Worker
20%
15%
in WEP Be 10%
nge
5%
t Cha
n
0%
e
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
rc
-5%
Pe
-10%
Years of Covered Earnings
For those workers with 21 to 29 years of covered earnings, the percent increase
in benefit under the PSRPA declines for each year of covered earnings gained.
Again, this pattern is due to the current-law WEP formula. Under the current-law
WEP, the first formula factor in the PIA increases by 5% for each additional “year
of coverage” at the same time the current-law AIME increases as a result of
additional covered earnings. For the average-wage worker, the percent increase in
the covered AIME per year of coverage (the base of growth for the PSRPA) doesn’t
keep pace with the 5% increase in the first PIA formula factor (the base of growth for
the current-law WEP). Thus, for the average-wage worker, the current-law WEP
provides a higher benefit than the PSRPA would once covered earnings exceed 27.5
years.
Relative to current-law, individuals who work 30 to 34 years of covered
earnings would experience the largest percent decrease in their Social Security
benefits. Under current-law, individuals who work 30 or more years in covered
10For scaled average-wage workers, a year of covered earnings equals a “year of coverage”
under the current-law WEP.

---

CRS-16
employment are exempt from any reduction in benefits under the WEP because their
benefits are calculated using the regular PIA formula with the 90% formula factor.
Under the new PSRPA, these individuals would now be affected by the proportional
WEP PIA.
Individuals who work for 35 years in covered employment at the end of their
careers would experience neither an increase nor a decrease in benefit levels. Under
current-law these individuals would be exempt from the WEP PIA formula. Under
the PSRPA PIA formula, these individuals are still exempt from the proportional
WEP reduction because their AIME based on covered work is equal to the AIME
based on all earnings. Because the AIME takes the highest 35 years of earnings, and
in both cases the highest 35 years are covered earnings from the end of the career, the
AIME’s are equal and the 35 year covered worker receives a PIA identical to what
he would have received under the current-law WEP PIA.
Assumptions and Methodology
The results presented in this report were calculated using the intermediate
(Alternative II) assumptions of the 2003 Social Security Trustees Report. All dollar
figures are in constant 2003 dollars. In each scenario, the worker is born in 1984,
begins work at age 21 in 2005, and retires at the full retirement age of 67 in 2051.
As a result, our example worker has a career of 46 years. We provide estimates for
minimum-wage workers, scaled low-wage workers, scaled average-wage workers,
scaled high-wage workers and maximum-wage workers, as defined by the Social
Security Office of the Chief Actuary.11 It is assumed that they follow typical lifetime
earnings patterns that would produce a Social Security benefit equivalent to that of
workers with career earnings of either: (1) a “low”wage (45% of a wage equal to
Social Security’s “average wage series);” (2) an “average wage”(a wage equal to
Social Security’s “average wage series);” (3) a “high” wage (160% of a wage equal
to Social Security’s “average wage series);” or (4) the maximum wage creditable
under Social Security. The scenarios provided show individuals with between 10 and
35 years of covered earnings. These scenarios are for illustration only and are not
meant to fully represent every possible scenario that actual workers may experience.
For example, by relying on stylized workers, we have assumed no gaps in
employment. Furthermore, the CRS case-simulation model does not contain
information on the estimated level of non-covered pension each type of worker could
be expected to receive upon retirement. Therefore, we are unable to model the
provision of the current-law WEP that would limit the reduction in Social Security
benefits to 50% of the non-covered pension amount. The output for each scenario
includes information on the PIA based on all earnings, the PSRPA PIA, the current-
law WEP PIA, and the percent increase or decrease under the PSRPA compared to
current-law.
11Social Security Administration, Office of the Actuary, Internal Rates of Return Under the
OASDI Program for Hypothetical Workers, Actuarial Note no. 144, June 2001. The pattern
in these “scaled” earnings histories shows relatively low earnings at the beginning of the
career, fairly rapid growth through the middle of the career, and a gradual tapering off of
earnings at the end of the career.

---

CRS-17
Appendix: Benefit Amounts Under Current-Law and
PSRPA by Earnings Level and Years of Social
Security Covered Earnings
Table 5. Minimum-Wage Worker
(All benefit amounts in constant 2003 dollars)
Percent
Years of Covered
PIA Based on
Current-Law
PSRPA WEP
Change in
Earnings
All Earnings
WEP-PIA
PIA
WEP Benefit
10
$966.17
$158.10
$293.71
86%
11
$966.17
$172.76
$320.59
86%
12
$966.17
$187.17
$347.47
86%
13
$966.17
$201.84
$374.35
85%
14
$966.17
$216.25
$401.23
86%
15
$966.17
$230.67
$428.11
86%
16
$966.17
$245.33
$454.99
85%
17
$966.17
$259.75
$481.87
86%
18
$966.17
$274.16
$508.74
86%
19
$966.17
$288.83
$535.62
85%
20
$966.17
$303.24
$526.50
85%
21
$966.17
$317.66
$589.38
86%
22
$966.17
$332.32
$616.26
85%
23
$966.17
$346.98
$643.38
85%
24
$966.17
$361.40
$670.51
86%
25
$966.17
$375.82
$697.38
86%
26
$966.17
$388.03
$724.26
87%
27
$966.17
$399.76
$751.14
88%
28
$966.17
$411.25
$778.02
89%
29
$966.17
$422.98
$804.90
90%
30
$966.17
$434.46
$831.78
91%
31
$966.17
$446.19
$858.66
92%
32
$966.17
$457.67
$885.54
93%
33
$966.17
$469.40
$912.42
94%
34
$966.17
$480.89
$939.29
95%
35
$966.17
$492.62
$966.17
96%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. This scenario is for illustration only and is not meant to fully represent
every possible scenario that actual workers may experience. For example, by relying on stylized
workers, we have assumed no gaps in employment. This scenario focuses on workers with between
10 and 35 years of covered earnings because a worker generally needs 40 quarters of coverage (10
years) to qualify for Social Security benefits and the highest 35 years of earnings are generally used
in calculating Social Security benefits. These estimates do not include the current-law WEP provision
that would limit the reduction in Social Security benefits to 50% of the non-covered pension amount.

---

CRS-18
Table 6. Scaled Low-Wage Worker
(All benefit amounts in constant 2003 dollars)
Years of Covered
PIA Based on
Current-Law
PSRPA
Percent Change
Earnings
All Earnings
WEP PIA
WEP PIA
in WEP Benefit
10
$1,176.32
$189.37
$284.18
50%
11
$1,176.32
$211.12
$317.17
50%
12
$1,176.32
$233.60
$350.89
50%
13
$1,176.32
$257.06
$385.83
50%
14
$1,176.32
$280.76
$421.51
50%
15
$1,176.32
$304.95
$457.67
50%
16
$1,176.32
$329.14
$494.33
50%
17
$1,176.32
$353.82
$531.47
50%
18
$1,176.32
$378.75
$568.61
50%
19
$1,176.32
$398.78
$606.24
52%
20
$1,176.32
$418.82
$643.87
54%
21
$1,176.32
$438.86
$681.26
55%
22
$1,176.32
$458.65
$718.64
57%
23
$1,176.32
$478.44
$755.54
58%
24
$1,176.32
$497.99
$792.44
59%
25
$1,176.32
$517.54
$829.09
60%
26
$1,176.32
$536.84
$865.26
61%
27
$1,176.32
$555.66
$900.93
62%
28
$1,176.32
$574.47
$935.87
63%
29
$1,176.32
$593.05
$970.82
64%
30
$1,176.32
$611.13
$1,005.03
64%
31
$1,176.32
$676.61
$1,038.75
54%
32
$1,176.32
$741.61
$1,071.98
45%
33
$1,176.32
$806.61
$1,104.72
37%
34
$1,176.32
$870.88
$1,136.49
30%
35
$1,176.32
$887.49
$1,167.77
32%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “low” wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to 45% of Social Security’s “average wage” series. This scenario is for illustration only
and is not meant to fully represent every possible scenario that actual workers may experience. For
example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.

---

CRS-19
Table 7. Scaled Average-Wage Worker
(All benefit amounts in constant 2003 dollars)
Percent
Years of
PIA Dased on
Current-Law
PSRPA
Change in
Covered Earnings
All Earnings
WEP PIA
WEP PIA
WEP Benefit
10
$1,943.10
$412.47
$469.65
14%
11
$1,943.10
$451.57
$523.89
16%
12
$1,943.10
$491.88
$580.10
18%
13
$1,943.10
$533.18
$637.76
20%
14
$1,943.10
$575.21
$696.41
21%
15
$1,943.10
$618.21
$756.27
22%
16
$1,943.10
$661.46
$816.87
23%
17
$1,943.10
$705.45
$877.96
24%
18
$1,943.10
$749.68
$939.78
25%
19
$1,943.10
$794.15
$1,001.60
26%
20
$1,943.10
$838.62
$1,063.67
27%
21
$1,943.10
$930.50
$1,125.49
21%
22
$1,943.10
$1,021.89
$1,187.07
16%
23
$1,943.10
$1,113.27
$1,248.40
12%
24
$1,943.10
$1,204.42
$1,309.25
9%
25
$1,943.10
$1,294.83
$1,369.60
6%
26
$1,943.10
$1,385.24
$1,429.47
3%
27
$1,943.10
$1,474.67
$1,488.11
1%
28
$1,943.10
$1,563.62
$1,546.27
-1%
29
$1,943.10
$1,652.32
$1,603.69
-3%
30
$1,943.10
$1,740.29
$1,660.14
-5%
31
$1,943.10
$1,780.11
$1,715.85
-4%
32
$1,943.10
$1,819.46
$1,770.83
-3%
33
$1,943.10
$1,858.06
$1,824.59
-2%
34
$1,943.10
$1,896.18
$1,877.61
-1%
35
$1,943.10
$1,933.08
$1,929.17
-0%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “average” wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to Social Security’s “average wage” series. This scenario is for illustration only and
is not meant to fully represent every possible scenario that actual workers may experience. For
example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.

---

CRS-20
Table 8. Scaled High-Wage Worker
(All benefit amounts in constant 2003 dollars)
Years of
PIA Based on
Current-Law
PSRPA
Percent Change
Covered Earnings
All Earnings
WEP PIA
WEP PIA
in WEP Benefit
10
$2,565.71
$614.79
$620.17
1%
11
$2,565.71
$676.86
$691.76
2%
12
$2,565.71
$741.61
$765.80
3%
13
$2,565.71
$807.59
$842.04
4%
14
$2,565.71
$875.03
$919.75
5%
15
$2,565.71
$943.69
$998.43
6%
16
$2,565.71
$1,013.09
$1,078.58
6%
17
$2,565.71
$1,083.22
$1,159.21
7%
18
$2,565.71
$1,154.08
$1,240.58
7%
19
$2,565.71
$1,225.19
$1,322.44
8%
20
$2,565.71
$1,296.54
$1,404.30
8%
21
$2,565.71
$1,414.81
$1,486.16
5%
22
$2,565.71
$1,533.07
$1,567.53
2%
23
$2,565.71
$1,650.61
$1,648.41
-0%
24
$2,565.71
$1,767.90
$1,728.56
-2%
25
$2,565.71
$1,884.45
$1,808.22
-4%
26
$2,565.71
$2,000.52
$1,887.14
-6%
27
$2,565.71
$2,115.12
$1,964.85
-7%
28
$2,565.71
$2,229.24
$2,041.57
-8%
29
$2,565.71
$2,335.77
$2,117.32
-9%
30
$2,565.71
$2,413.48
$2,192.09
-9%
31
$2,565.71
$2,443.53
$2,265.65
-7%
32
$2,565.71
$2,473.10
$2,338.22
-5%
33
$2,565.71
$2,501.94
$2,409.33
-4%
34
$2,565.71
$2,530.52
$2,478.97
-2%
35
$2,565.71
$2,558.14
$2,547.14
-0%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “high” wage worker follows a typical lifetime
earnings pattern that would produce a Social Security benefit equivalent to that of workers with career
earnings equal to 160% of Social Security’s “average wage” series. This scenario is for illustration
only and is not meant to fully represent every possible scenario that actual workers may experience.
For example, by relying on stylized workers, we have assumed no gaps in employment. This scenario
focuses on workers with between 10 and 35 years of covered earnings because a worker generally
needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the highest 35
years of earnings are generally used in calculating Social Security benefits. These estimates do not
include the current-law WEP provision that would limit the reduction in Social Security benefits to
50% of the non-covered pension amount.

---

CRS-21
Table 9. Maximum-Wage Worker
(All benefit amounts in constant 2003 dollars)
Years of
PIAbased on
Current-Law
PSRPA
Percent Change
Covered Earnings
All Earnings
WEP PIA
WEP PIA
in WEP Benefit
10
$3,131.15
$1,120.12
$951.51
-15%
11
$3,131.15
$1,215.90
$1,038.75
-15%
12
$3,131.15
$1,311.20
$1,125.74
-14%
13
$3,131.15
$1,406.99
$1,212.73
-14%
14
$3,131.15
$1,502.53
$1,299.96
-13%
15
$3,131.15
$1,597.83
$1,386.95
-13%
16
$3,131.15
$1,693.61
$1,474.18
-13%
17
$3,131.15
$1,789.16
$1,561.17
-13%
18
$3,131.15
$1,884.70
$1,648.16
-13%
19
$3,131.15
$1,939.43
$1,735.15
-11%
20
$3,131.15
$1,984.15
$1,822.39
-8%
21
$3,131.15
$2,076.52
$1,909.62
-8%
22
$3,131.15
$2,168.64
$1,996.86
-8%
23
$3,131.15
$2,260.76
$2,083.85
-8%
24
$3,131.15
$2,352.88
$2,171.08
-8%
25
$3,131.15
$2,445.25
$2,258.31
-8%
26
$3,131.15
$2,537.61
$2,345.55
-8%
27
$3,131.15
$2,629.73
$2,432.78
-7%
28
$3,131.15
$2,722.10
$2,520.02
-7%
29
$3,131.15
$2,814.22
$2,607.01
-7%
30
$3,131.15
$2,906.34
$2,694.24
-7%
31
$3,131.15
$2,951.30
$2,781.72
-6%
32
$3,131.15
$2,996.26
$2,868.95
-4%
33
$3,131.15
$3,041.22
$2,956.19
-3%
34
$3,131.15
$3,085.94
$3,043.42
-1%
35
$3,131.15
$3,130.90
$3,130.41
-0%
Source: Congressional Research Service (CRS) calculations.
Notes: Assumes a worker is born in 1984, begins work at age 21 in 2005, and retires at the full
retirement age of 67 in 2051. It is assumed that the “maximum” wage worker follows a typical
lifetime earnings pattern that would produce a Social Security benefit equivalent to that of workers
with career earnings equal to the maximum wage creditable under Social Security. This scenario is
for illustration only and is not meant to fully represent every possible scenario that actual workers may
experience. For example, by relying on stylized workers, we have assumed no gaps in employment.
This scenario focuses on workers with between 10 and 35 years of covered earnings because a worker
generally needs 40 quarters of coverage (10 years) to qualify for Social Security benefits and the
highest 35 years of earnings are generally used in calculating Social Security benefits. These estimates
do not include the current-law WEP provision that would limit the reduction in Social Security
benefits to 50% of the non-covered pension amount

---

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