Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 11 of 20

@CharlesU659303 wrote:

 

     Why shouldn't the local government be forced to pay all of that backpay since they took it out?  Why did they take it out in the first place and why is it arbitrarily deemed "not" paid into Social Security when private ones are not?  It should be treated as private so the WEP and GPO need to be repealed and at the very least, WEP and GPO need to be repealed for those with less than 20 years of non covered local public employment combined with years of covered employment before or after their local public employment, (non covered) before the WEP and GPO can truly be called fair and progressive.  Repeal the WEP & GPO, period!  H.R. 141 - SOCIAL SECURITY FAIRNESS ACT of 2019 does just this.


NO, @CharlesU659303 , that's the problem - they didn't take it out.

There are still some government agencies that do not participate in the SS system.

BY LAW, ALL private employer HAVE to take out SS and Medicare payroll taxes from their employees and match it and pay it to the SSA regularly.  It has always been this way for private employers.

But government (state and federal) had their choice of participation in the SS system OR have their own pension plans where they funded the government pension - NO SS payroll taxes were ever deducted from these government employees on their government salary NOR was their a match by the government employer into the SS system.  The pension was these government employees retirement - completely.

A government pension is a retirement benefit from non-Social Security-covered employment for a state or local government.

Non-SS-covered employment is work you perform for a state or local government that is not covered by Social Security.

 

On your W-2 each year, Line 3 says "Social Security Wages" and Line 4 says "Social Security Wages Withheld" - For NON-covered government employment, those amounts would have showed ZERO every year.

Image result for W-2 form

 

The only way that these government employees could have become vested in the SS retirement system was to have another job and paid into the SS system and matched by their private employers for (10) years or more.  For that employment, Line 3 and 4 on the W-2 would have shown the SS wages and the SS taxes withheld by the employer and reported to the SSA yearly.

 

The WEP and the GPO are formula adjustments that have to be made for people in this situation.

IF they worked 30 years at another private employment job in addition to their government (non-covered, government penion earning job), then there is NO formula adjustment - no WEP or GPO adjustment because they have earned both retirements - and the same formula as everybody else can be used.

 

The "progressive" nature of retirement benefit computation by our Social Security system has to do with the way low income earners are given a bonus in retirement because MORE of their salary amount is used at the higher % to figure their benefit.

 

Once your AIME (average indexed monthly earnings)  is calculated, it's applied to a three-part formula to help determine your initial Social Security benefit.  Social Security benefits are calculated by applying three different percentages to a person's lifetime average indexed monthly earnings (AIME) and adding them up to obtain the worker's monthly benefit (primary insurance amount (PIA)) at full retirement age. For most beneficiaries in 2019, the PIA equals the sum of:

  • 90 percent of the first $926 of AIME, plus                              
  • 32 percent of AIME over $926 and through $5583, plus
  • 15 percent of AIME over $5583.

For those government non-covered employees NOT covered by the SS system that have worked for 10 - 20+ years at another covered job, covered by the SS system, their AIME is skewed and cannot be used in this computation of retirement benefits by the SSA.  Thus the reason for the WEP adjustment. 

 

The WEP % adjustment may not be completely accurate but it is pretty close - in fact, if we did invent another formula, it could come out worse for those involved in the WEP.

 

Here is some link that also try to explain it -

2019 Social Security.gov - Publication - Your Retirement Benefit: How It’s Figured 

 

Social Security.gov - Research, Statistics & Policy Analysis - Windfall Elimination Provision 

 

Congressional Research Service Report 10/22/2019 - Social Security: The Windfall Elimination Provisi...

 

National Education Association: FAQs About the Windfall Elimination Provision 

 

The only time there is a WEP or GPO adjustment is if they did NOT work 30 years under the SS system in other employment. 

 

The formula adjustment has to be made because this situation is an outlier and thus the same formula to compute benefits cannot be done.   

 

It is easy to get 225 Representatives to sign on to some legislation especially if they don't understand the history and the formula basis for computing retirement benefits under SS and the actual purpose and basis for the WEP adjustment.

 

That is why this legislation has gone NO-WHERE since it was introduced - I looked my (Democrat) Representative has NOT signed on - I have made sure that he understands the purpose of the WEP adjustment.

 

 

 

 

 


* * * * It's Always Something . . . Roseanne Roseannadanna
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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 12 of 20

"If you want a bigger benefit - one that is NOT just adjusted for only your earned income for those 10 - 30 years where you worked a job covered by the SS system and you want to continue with your pension from a job that was NOT covered by the SS system - in order to figure your benefit just like everybody else - then just go back and figure up your Social Security withholding tax - for yourself and the portion that should have been paid by your employer - for all those earnings which were NOT covered by the SS program - and then ask the government where they want you to send the check for all of this money, enclose a corrected W-2 for each year, indicating "Social Security" wages and they will put it into the system along with your money and BAM - no more WEP.

Yea, like government employees with this condition would want to send in all this "back tax" - a lot of money."

 

     Why shouldn't the local government be forced to pay all of that backpay since they took it out?  Why did they take it out in the first place and why is it arbitrarily deemed "not" paid into Social Security when private ones are not?  It should be treated as private so the WEP and GPO need to be repealed and at the very least, WEP and GPO need to be repealed for those with less than 20 years of non covered local public employment combined with years of covered employment before or after their local public employment, (non covered) before the WEP and GPO can truly be called fair and progressive.  Repeal the WEP & GPO, period!  H.R. 141 - SOCIAL SECURITY FAIRNESS ACT of 2019 does just this.

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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 13 of 20

The solution is here!  H.R. 141 is the Social Security Fairness Act of 2019.  It will eliminate the WEP and GPO.  It has the floor votes to pass but there is a push to force it over the finish line for passage.  Your help would be greatly appreciated.  Go to www.ssfairness.org and help.  You can also go to the House of Representatives' site to see if your congressional member has added their name as a cosponsor.  If not, CALL THEM and respectfully ask them to do so!  The site to check if your representative has cosponsored it is www.congress.gov.  Then type in the bill number "H.R. 141" and it will pull up all actions.  I'm confident that aarp will support its passage and a feather in its cap and more members!  Nearly 3 million Americans are affected and perhaps another 2-3 million collaterally as family members.  This is our chance to end this injustice once and for all.  Please act and ask your friend or relative to help too.  Thank you. H.R. 141 is HERE!

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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 14 of 20

I was a police officer and subject to wep and knew perfectly well why I was subjected to it. Why should you receive benefits of SS   when you never contributed a dime to it as an officer.  You were probably given 100  percent of pension benefits when you retired while other civil servant workers are given 70 percent the other 30 percent is SS.  I fail to see the why me question when you know the answer.  Go out get your 40 quarters and then you can collect SS. 

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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 15 of 20
Absolutely spot on Richard! How about we get an AARP "letters to congress" campaign going for this travesty?
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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 16 of 20

@RichardcS169850 

 

I am gonna have to breakdown your post in some paragraphs to understand what you are saying and respond.  I added the numbers to correspond to my response.

 


@RichardcS169850 wrote:

 

1.  This is discrimination because many other SS Trust Fund (SSTF) beneficies receive income in their retirement from investments in bank accounts, insurance policies, securities, real estate and royalties.  They are not penalized even though the earnings (yield) on those investments have been exempt from SS because they are not "earned income".  

 

2.  For instance, my pension is from the City of Miami Firefighters and Police Officers Retirement Trust (Trust) for work that was not covered by social security.  Understood.  Like many of my colleagues I do receive SS because I worked other jobs.  HOWEVER, the pension received from the Trust is the result of my payroll contributions that during my career was between 8.5% of pay to 10.5% of pay.  

 

3.  During earlier years the contribution was "after-tax" dollars and in later years (1986 forward?) is was "pre-tax" dollars.  It is not a gift; not a windfall; it is a return on my investment into that Trust.  A glance at the investments made by the trustees of the Trust resembles that of a mutual fund.  I legitimately purchased benefits on a personal level via the Trust as well as I paid for my SS benefit (in most cases, so did employers of mine) through other work not for the City of Miami.  

 

4.  At a minimum, and I must review the acutal figures with the SSA, I have lost $50K+ since I retired with SS.  This is due to the WEP.  I consider this biased and discriminatory tax not levied on the others I enumerated prior.  For it to be fair, those illucidated prior who dont have their 30 years of significant earnings (The term the SSA used with me in communications prior.) should have their SS benefit reduced!  

 

5.  The amounts exacted from me by the WEP is not returned to my Trust.  My Trust benefit amount is not taken from the SS Trust Fund.  It is the annuity from the investment I made to my Trust.  

 

6.  What actually is going on here is other beneficiaries of SS enjoy the benefit of having a larger balance in the SS Trust Fund which enables increases in benefits as reviewed by Congress.  That larger balance is a result, in part, from my having an unfair tax exacted from me by Congress from my earned SS retirement benefit! 

 

 


1.  Social Security withholding tax, and matched by the employer, is only based on earned income.  Been that way from the get-go.  The formula for figuring benefits is based on earned income for which has been taxed at the employee/employer level during the working years, not any other type of income.

 

2.  The benefit formula is based on earned income for which Social Security payroll taxes were paid by the employee and the employer.  If you made earned income for which NO Social Security payroll taxes were paid by you and then matched by the employer - those earnings are not covered in the benefit formula.

 

3.  We are only discussing Social Security payroll taxes - employee and employer - not income taxes.  Again, if your annual earned income during your working years (every year) had Social Security taxes paid on the amount by you as the employee and matched by your employer - those wages are included in your benefit computation.

 

4.  Social Security Benefit calculation is progressive in nature due to the bend points.  As a benefit, you are given a higher % of your average earning below a certain level, the % of benefit received goes down the higher your average salary - the reason for this is to help replace the earnings of those more in need rather those who were higher wage earners.

 

5.  The only reason the WEP reduction is in place is because it represents a more accurate average earnings benefit calculation for those who worked under a NON-Social Security system job - meaning they and their employer paid NO Social Security taxes on those earnings and thus does not count towards a benefit - you had something else designed by your employer to take its place - government pension.

 

6.  If a person during their working career had both earned income wages that were covered under the SS system AND those that were not for some years - the benefit formula has to be adjusted so that you are not classified as a low income earner who gets a bump from the progressive benefit formula (see # 4 above).

 

Is this WEP formula fair - pretty close - fairer than the old method of giving you a bump in benefits because the old formula figured your benefits based on being a low income earner rather than just someone who had other wages NOT covered by the SS program.

 

If you want a bigger benefit - one that is NOT just adjusted for only your earned income for those 10 - 30 years where you worked a job covered by the SS system and you want to continue with your pension from a job that was NOT covered by the SS system - in order to figure your benefit just like everybody else - then just go back and figure up your Social Security withholding tax - for yourself and the portion that should have been paid by your employer - for all those earnings which were NOT covered by the SS program - and then ask the government where they want you to send the check for all of this money, enclose a corrected W-2 for each year, indicating "Social Security" wages and they will put it into the system along with your money and BAM - no more WEP.

Yea, like government employees with this condition would want to send in all this "back tax" - a lot of money.

 

 

.

 

 


* * * * It's Always Something . . . Roseanne Roseannadanna
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Re: Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 17 of 20

@GayleO746308 

If you paid Social Security tax on 30 years of substantial earnings you are not affected by SSA.gov - WEP Chart.

 

Even under the WEP you get credit for the time that you did work under wages covered by Social Security.  Look at the chart.  The ONLY thing that the WEP did / does was/is to change the way a person's benefit was figured - now it is actually based on your earnings covered under the SS system rather than figuring you as a LOW WAGE earner, who get a progressive bump in their benefits due to the bend point computation..


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Message 18 of 20

I, too, strongly urge AARP to support the Equal Treatment of Public Servants Act of 2019 (H.R. 3934). Teachers, policemen, firemen are under paid from the start. With the Social Security Windfall Elimination Provision the federal government penalizes Social Security benefits for these workers because they were required to be part of a local or state retirement plan with low benefits. However, many of these people worked second jobs throughout their working career that did pay Social Security, yet they can't claim full benefits because they did not earn enough for 40 credit required to retire. This is wrong on so many levels. 

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Message 19 of 20

The May 14, 2019 CRS report does not answer all the questions and appears to be biased.  The WEP actually should be the basis for a discrimination lawsuit.  As a member of AARP for 26 years I DEMAND AARP TO FILE THE SUIT NOW.  I DEMAND AARP TO LIVE UP TO ITS CLAIMS OF BEING THE ADVOCATE FOR SENIORS.  

 

This is discrimination because many other SS Trust Fund (SSTF) beneficies receive income in their retirement from investments in bank accounts, insurance policies, securities, real estate and royalties.  They are not penalized even though the earnings (yield) on those investments have been exempt from SS because they are not "earned income".  For instance, my pension is from the City of Miami Firefighters and Police Officers Retirement Trust (Trust) for work that was not covered by social security.  Understood.  Like many of my colleagues I do receive SS because I worked other jobs.  HOWEVER, the pension received from the Trust is the result of my payroll contributions that during my career was between 8.5% of pay to 10.5% of pay.  During earlier years the contribution was "after-tax" dollars and in later years (1986 forward?) is was "pre-tax" dollars.  It is not a gift; not a windfall; it is a return on my investment into that Trust.  A glance at the investments made by the trustees of the Trust resembles that of a mutual fund.  I legitimately purchased benefits on a personal level via the Trust as well as I paid for my SS benefit (in most cases, so did employers of mine) through other work not for the City of Miami.  At a minimum, and I must review the acutal figures with the SSA, I have lost $50K+ since I retired with SS.  This is due to the WEP.  I consider this biased and discriminatory tax not levied on the others I enumerated prior.  For it to be fair, those illucidated prior who dont have their 30 years of significant earnings (The term the SSA used with me in communications prior.) should have their SS benefit reduced!  The amounts exacted from me by the WEP is not returned to my Trust.  My Trust benefit amount is not taken from the SS Trust Fund.  It is the annuity from the investment I made to my Trust.  What actually is going on here is other beneficiaries of SS enjoy the benefit of having a larger balance in the SS Trust Fund which enables increases in benefits as reviewed by Congress.  That larger balance is a result, in part, from my having an unfair tax exacted from me by Congress from my earned SS retirement benefit! 

 

I AM ASKING FOR AARP TO FILE THE SUIT NOW.  I AM ASKING AARP TO LIVE UP TO ITS CLAIMS OF BEING THE ADVOCATE FOR SENIORS.

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Social Security: The Windfall Elimination Provision (WEP) - 2019 CRS Report

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Message 20 of 20

This is a 2019 report on the Social Security Windfall Elimination Provision done for Congress by the Congressional Research Service.

 

It explains it all as clearly as it can be explained -

Congressional Research Service 02/07/2019 - Social Security: The Windfall Elimination Provision (WEP...

 

I am just copying and pasting the Table of Contents on this report so you can see what is within it and the value that reading it may give to those involved in the WEB.  It is 15 pages but many pages are tables and others just give the number of people affected by it.  PLEASE READ IT.

Since I don't seem to be getting through, maybe the CRS (Congressional Research Service) report will help.  Plus it gives the arguements for and against the WEB and it briefly describes the Legislation that has been introduced on the subject - for this year as well as last year.

 

Contents

  • Introduction
  • Background on the Social Security Benefit Formula
  • How the Windfall Elimination Provision Works
  • The Number of People Affected by the WEP
  • Legislative History and Rationale
  • Arguments FOR the WEP
  • Arguments AGAINST the WEP
  • The WEPs Impact on Low-Income Workers
  • Legislative Activity on the WEP in the 116th Congress (2019 - 2020)
  • Legislative Activity on the WEP in the 115th Congress (2017 - 2018)

 


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