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Friday March, 24, 2000

Cathy Noe

For Immediate Release

410-965-8904 FAX 410-966-9973

Social Security Online


News Release

Kenneth S. Apfel, Commissioner of Social Security,
Praises Senate Action and Announces Implementation Plan for the Repeal of the Retirement Earnings Test

Kenneth S. Apfel, Commissioner of Social Security, today praised the United States Senate for its vote of 100-0 earlier this week to eliminate the retirement earnings test. The United States House of Representatives passed a similar version on March 1 by a 422-0 vote. "Beneficiaries who are 65 years young should be allowed to contribute their energy, talent and experience to the workplace without being penalized for doing so," said Commissioner Apfel. "I know that the President is anxious to sign this bill into law. I also want people to know that SSA is moving to implement this important piece of legislation as quickly as possible."

The retirement earnings test has been a part of the Social Security program since its inception when there were 5 workers for every beneficiary. Demographics are changing the dynamics of both the workforce and the Social Security program. Today, there are three workers for every beneficiary and by 2030 there will be 2 workers per beneficiary. "The earnings test is counterproductive in an economy in which employers want and need the skills and talents of older workers," commented Apfel. "It is an outdated policy that discourages healthy seniors from continuing to work past age 65 if they choose to do so."

The legislation, which is retroactive to January 1, 2000, will affect around 800,000 beneficiaries who are either working or are dependents of workers. In addition, there are about another 100,000 persons who have not filed claims for benefits because they are working (or because they are dependents of workers). The legislation will allow these people to receive benefits this year when they file claims for benefits. Altogether, about $6 billion in benefits will be paid this year because of the legislation. With the elimination of the earnings test, each beneficiary affected by the legislation will receive, on average, an additional $6,700 in benefits this year.

About 415,000 of the affected beneficiaries (workers and dependents) have already had $1.4 billion in Social Security benefits withheld because of the earnings test since January 1. If the elimination of the earnings test is signed into law by mid-April, each beneficiary will receive a retroactive payment in May, averaging about $3,500.

"We are working hard to ensure that Social Security beneficiaries who are affected by the new law will have money in their pockets quickly," said Apfel. SSA will send notices to all beneficiaries potentially affected by the earnings test shortly after the bill is signed. The notices will tell beneficiaries about the legislation and how SSA will implement the new law. If the President signs the bill by mid-April, SSA will be able to make retroactive payments to beneficiaries by early May 2000 and change monthly benefit payments to reflect the new law by June 2000.

While there is a short-term cost to eliminate the retirement earnings test--about $22 billion over ten years, there is virtually no long-term cost to the Social Security program to eliminate it.

"This bi-partisan legislation is an excellent example of how we can all work together to make positive changes to the Social Security program," said Commissioner Apfel. "We can and must apply this same spirit of cooperation to strengthening Social Security for future generations of Americans."

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