The Social Security Administration (SSA) has decided that it will accept and obey a Circuit Court ruling that will exempt military retired pay from being used to reduce Social Security benefits under a provision of the Social Security Act that would have reduced benefit payments to the retiree. This is good news, because SSA does not always obey the rulings of District and Circuit Courts. Sometimes SSA will intentionally disregard the decisions of Federal Courts and do whatever the policy makers in the Administration think is in their own best interests.
SSA has announced that it will acquiesce in the decision of the U.S. Court of Appeals for the Eighth Circuit in Petersen v. Astrue, 633 F3d 633 (8th Cir. 2011). In that case, the court held that a national guard technician who worked in non-covered employment was exempt from application of the Windfall Elimination Provision (WEP), which would have reduced his retirement benefits. The Acquiescence Ruling, AR 12-X(8), became effective August 27, 2012, and applies only to permanent legal residents in a state that is within the Eighth Circuit, i.e., Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.
The WEP of Social Security Act (Act) §215(a)(7) reduces the Social Security benefits received by an insured worker who splits his or her career between covered and non-covered employment so that the worker does not receive a benefit “windfall” that would otherwise result if the worker also receives a pension for the non-covered employment. The WEP provision, however, does not apply, per Act §215(a)(7)(A)(III), if the pension is based wholly on service as a member of a uniformed service, including a reserve component. In this case, the claimant worked as a technician in the Air National Guard. He was a federal civilian employee; however, he had “dual status” because he was required as a condition of employment to maintain membership in the reserve. Thus, the appellate court found that the pension he received as a result of that work was exempt from the WEP, even though the work was in non-covered employment, because of his membership in a uniformed service. The statute providing for the exemption only requires membership in the uniformed service. It does not require that the service be only in a non-civilian or military duty capacity. Accordingly, the court found that the Social Security benefit received by the retired technician was not subject to reduction by the WEP.
The agency’s position
The SSA interprets the uniformed services exception to the WEP to mean that only monthly payments based on military service are exempt. Under this interpretation, monthly payments that are based on non-covered civilian public employment, including that of National Guard technicians who work under the Civil Service Retirement System (CSRS), are not exempt from the WEP. Moreover, the effect of the uniformed services exception and the regulatory provision found at 20 CFR 404.213(e)(9) is to exempt from the WEP only military retirement pay based on reserve inactive duty training (IDT). Other kinds of military duty, such as active duty, already were not subject to the WEP because they have been considered covered employment since 1956.
The legislative history of the uniformed services exception explains that the purpose was to exempt military retired pay, based on noncovered IDT military duty, from application of the WEP. The exception was not intended to exempt any pension based on civilian work. The Eighth Circuit declined to consider the legislative history of the uniformed services exception because the court found there was no ambiguity to it.
AR will apply at all decision-making levels
The acquiescence ruling will apply to Social Security old-age or disability applicants and beneficiaries who receive a CSRS pension based on noncovered work as dual status National Guard technicians, and who are permanent legal residents of a state within the Eighth Circuit. Like all acquiescence rulings, AR 12-X(8) will apply at all levels of administrative review. The full text of the acquiescence ruling was published in the August 27, 2012, Federal Register (77 Fed. Reg. 51842).