Possible Solution to the Social Security WEP and GPO - Your Thoughts ???
First off, I am very sorry that many people seem surprised and shocked over the WEP or GPO if they are affected by either of these when they retire. On the other hand, I understand why this formula reduction is there and the concept seems fair.
Is the current WEP or GPO reduction formula correct for those whose benefits are being recalculated because of them - I don't know. I do know that the previous method of calculating benefits for these folks was not right - so going back to the previous method is really out of the question. So there either has to be a new formula which will still not give a full benefit or a totally new concept.
I have come up with a possiblesolution and wanted to run it by the folks here to see what you think?
Why not give these government / civil employees, on an individual selection basis, the option of staying within the Social Security system by allowing the person to pay their own payroll withholding SS tax on their government / civil wages - both parts, employee and employer, the same way a self-employed does it. Currently this would be 12.4% up to the (2018) taxable wage cap of $128,400 - the cap changes yearly.
We cannot ask the government entity (employer) to pay any part of this since they would still be running and contributing to the current pension plan which they have opted to sponsor instead of being within the SS program and I am sure most don't want to give that up. So it would be up to the government/civil employee to pay both (employee and employer) parts of this tax in order to build their SS benefit but yet not affect their civil servant pension benefit.
As an example a government /civil employee who works for a government entity that does NOT participate in the SS system who earns an annual salary of $ 50,000 per year would be paying a Social Security payroll tax of $ 6200 into the system but ALL those wages would also count toward the Social Security benefit when they retire, computed without a WEP formula.
As with any retirement system, this would take some thought and planning for not only ones self but any dependent or spouse that could be left as survivors.
Perhaps there maybe a way for an involved government / civil employee to go back and pay this tax according to the tax year and receive added benefits - but it would require paying these back payroll taxes which might add up to be a pretty penny depending upon the government/civil salary through the years.