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WEP

AARP leadership must be wimps or indifferent to the injustice of taking a big chunk of Social Security benefits from government employees just because they have a pension, but not SS for that part of their employment record. So why take a huge chunk from benefits they earned from other employment where they DID contribute to Social Security? The WEP states get to pay their employees less because they don't have to pay for their half of SS contributions. Also, they can give a smaller paycheck to the employee because not requiring the employee's half makes the net paycheck seem on a par with states that pay higher wages to make sure employees have an adequate net paycheck. Louisiana is a WEP state, where I taught for 14 years.  I understand....you don't receive benefits if you don't contribute. Then, I moved to Tennessee, a non-WEP state. The first thing I noticed is that my gross earnings were about ten thousand more. My net paycheck wasn't a lot higher, but some of the higher gross wages were to account for Social Security contributions. The kicker is that I not only get $0.00 from State of Louisiana wages. I loose 40% from every other job I ever had, including 12 years of teaching in Tennessee, where I fully contributed to Social Security. 

It appears that both congress and AARP are only making token gestures to right this wrong. I used to love AARP. As a school librarian, I even gave the Cat in the Hat his own AARP card when he turned 50!  A lot of seniors are affected by this. AARP should be making a LOT more noise, and should keep the public and Congress aware that you are taking real steps, and you're not going to let Congress write dead end bills that end up on the back burner again and again.

 

 

 

Honored Social Butterfly

The WEP isn't because one gets a government pension.  It is because while working in a government job, YOU and the employer (government) did NOT participate int he Social Security system - they opted to give or share in this pension benefit.

 

If you worked at another job or multiple jobs where YOU and the employer DID participate in the Social Security system, then based on that length of time your SS benefit isn't affected as much or even none at all at about 30 years of coverage.

SSA.gov - Windfall Elimination Provision

 

My neighbor was a plumber for his working career.  He worked for a local school system where he got earned a pension rather than participating in the SS system.  During this time, he also free lanced his services as a self-employed person - he paid into the SS system and paid SE taxes (he paid both parts of the SS contribution each year - as the employee and the employer).  He worked for the school system long enough to get his full pension - retired from there and then worked a few more years (adding up to about 30) as a self-employed plumber.  He gets both  benefits - IN FULL.

 

Perhaps your efforts should have been to change state law where ALL employees of a government have to participate in the Social Security system. The current system does need the contributions.

 

The SS WEP formula was developed because people who are in the situation as you described have to have a special formula because the benefits calculation of the SS system are progressive in nature; leaning more to those of lower earners.  People in the WEP situation aren't low income workers - thus the need for the special WEP formula.

 

The WEP formula might not be exact, I have to leave that in the hands of the actuaries, but it isn't off by much, if any.

 

 

 

 

It's Always Something . . . . Roseanna Roseannadanna
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@SueB9112 wrote:
People in the WEP situation aren't low income workers? Really?!?!? That certainly would be news to lots of teachers, adjunct professors, and other government workers!!!!!

Sorry, this is just plain wrong and the WEP is profoundly unfair to all sorts of workers in those professions.


I want to thank SueB9119 for her comment about low income earning WEP and GPO victims. There are 100’s of THOUSANDS who do not have robust 20, 25 or 30 years or were part time only with very low state government jobs. Some get less than $900 a month with only 10 years or so because they started late as older workers or became disabled, etc. This is in reply to Gail’s comment to SueB9112 with the intent of answering Gail (is Gail one person or a group…aarp?) for her/their comment here:

11-11-2021 01:03 PM
Gail says: The WEP isn't because one gets a government pension. It is because while working in a government job, YOU and the employer (government) did NOT participate int he Social Security system - they opted to give or share in this pension benefit.


Comment: If the WEP isn’t because one gets a government pension then what is it?? It IS the penalty for receiving a government pension! Second sentence… YOU did participate int he (sic¬) Social Security system but not while employed for certain entities – they (YOU, and the employer) sometimes had their pension system set up WAY before Social Security was ever established such as back in the 18th century like Massachusetts so they did not “opt” since there was NO choice to be had. Once again, faulty logic is exposed and by-the-way, Gail most definitely has to be an organization or many more than one person since “she” has posted some 6,000 – 7,000 POSTS and what “individual” has that kind of time?


Gail says: If you worked at another job or multiple jobs where YOU and the employer DID participate in the Social Security system, then based on that length of time your SS benefit isn't affected as much or even none at all at about 30 years of coverage.

 

Comment: The mere FACT that YOU worked in covered jobs should mean you should be “covered” or receive your FULL amount of SS that YOU paid into and EARNED. Why in the devil should it be based upon an arbitrary time of 30 years that you worked which would NOT be progressive but based upon MORE money earned via time? And the 30 years plus a non-covered job is illogical and unfair since so few are in that category. Moreover, assuming that you are not in some stress-free public union protected job and can have the luxury of working simultaneously during your career for 30 years alongside your day job, then this too is UNFAIR and ARBITRARY. Otherwise, it is rare indeed for someone to work 30 years and then another 30 years to “take care of the penalty by this rule” which amounts to 60 years and is, in fact, abusive of the rules in Social Security, period. Yet, somehow, “Gail” doesn’t get this.

 

SSA.gov - Windfall Elimination Provision

Gail says: My neighbor was a plumber for his working career. He worked for a local school system where he got (sic) earned a pension rather than participating in the SS system. During this time, he also free lanced his services as a self-employed person - he paid into the SS system and paid SE taxes (he paid both parts of the SS contribution each year - as the employee and the employer). He worked for the school system long enough to get his full pension - retired from there and then worked a few more years (adding up to about 30) as a self-employed plumber. He gets both benefits - IN FULL.

 

Comment: Good for this plumber but the kicker is that he ALSO PAID INTO SS during his second job as a plumber yet must WAIT 30 years! How stupid and punitively abusive such a Social Security rule is. Get rid of WEP and GPO NOW.

Gail says: Perhaps your efforts should have been to change state law where ALL employees of a government have to participate in the Social Security system. The current system does need the contributions.

 

Comment: So, you want to rob Peter to pay Paul…. oh brother… the states that chose NOT to participate mean they do NOT pay into Social Security, but the employee should NOT be penalized with the WEP and GPO when they are APART from their state job regarding this state law AND doing covered work on TOP of the work they’ve done for the state. Again, they paid for and EARNED their FULL Social Security. What you’re suggesting is that the Social Security needs to be funded to ward off an abstract actuary about its insolvency whenever that is (and supposedly 12 years from now) …well, the congress needs to pass legislation to do that but don’t penalize those who have PAID INTO AND EARNED their Social Security. It’s a DEBT the Social Security needs to re-pay. Moreover, state law does not need to be changed. That’s called the U.S. Constitution and states have rights too.

Gail says: The SS WEP formula was developed because people who are in the situation as you described have to have a special formula because the benefits calculation of the SS system are progressive in nature; leaning more to those of lower earners. People in the WEP situation aren't low income workers - thus the need for the special WEP formula.

 

Comment: NO. The SS WEP formula was a response to politics about “double dipping” back in the late 70’s and early 80’s. Spouses would get each other’s spousal social security and thus the “double dipping” accusation. Personally, keeping together a marriage is often very hard with many challenges and the couple should be REWARDED for doing that. Marriage should be incentivized so that would offset the dumb “double dipping” accusation with an equal or more valid reason especially if the couple had to raise children or care for each other who might be disabled, etc. The WEP and GPO make the Social Security benefit REGRESSIVE and NOT “progressive” as was its original INTENT. The original intent has been assaulted, subverted, and diverted. Our Social Security is NOT some “social handout program” but a program that was EARNED and PAID INTO. Last sentence… BULL, people in the WEP situation can come in all levels of income with about 21% in the lowest income bracket, and another 17% next to the lowest of about 5 different brackets adding up to 100%. Granted 29% make up the highest income bracket but let’s see the forest for the trees! The Devil is in the details and those details need be EXPOSED. Therefore adding 21% to 17% gives us 38% and thus significantly higher than the 29% of those who have a robust non covered career.

 

Gail says: The WEP formula might not be exact, I have to leave that in the hands of the actuaries, but it isn't off by much, if any.

 

Comment: The WEP formula is arbitrary and PUNITIVE to be exact. Why 30 years to “get off the hook” with WEP? Why hurt people who paid into and earned their full Social Security? Actuaries use a calculation formula that is also arbitrary, abstract, and NOT the here and NOW but based upon HOW things would turn out IF there is NO interference to the contrary such as funding Social Security properly. ANYTHING could happen between now and the insolvency time and even if it did become insolvent, SO??? Isn’t our country running on TRILLIONS of dollars of DEBT?? Don’t we give BILLIONS and BILLIONS to the Ukraine and to foreign aid, or forgive 43 MILLION Americans of student loan debt or give BILLIONS in Stimulus Money for the Pandemic? So, if the congress wants to kick the can down the road again and again, leave it to POLITICS to solve the insolvency issue but do not use that lame reason to rob people of their hard-earned keep. Finally, the term “WEP” means Windfall Elimination Provision. This is a misnomer because our EARNINGS that we PAID into and EARNED is NOT a “WINDFALL”!

 

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@CharlesU659303 wrote:

(is Gail one person or a group…aarp?) 

Just one person here - not affillliated with AARP - not even a member - just somebody that understands and researches various government/and other programs and the reasoning behind them in certain circumstances (the outliers).  I have posted here on various related subjects since 2008.  

 

@CharlesU659303 wrote:

If the WEP isn’t because one gets a government pension then what is it??

It is a method of computing SS benefits when a person is an outlier in the method used for someone who has worked 30 - 35 years under the SS program - meaning where the the employer and the employee have contributed to the program via the payroll deduction system.

 

SSA.gov - 2022 - Windfall Elimination Provision.pdf

This government pamphlet (2-pages) covers it pretty well.  

 

@CharlesU659303 wrote:

The mere FACT that YOU worked in covered jobs should mean you should be “covered” or receive your FULL amount of SS that YOU paid into and EARNED.

1.  Social Security benefits have to be earned to be vested.  One must be within the system and paying payroll taxes on a specific (minimum) amount of income each year for a minimum of (10) years to even get a benefit and it isn't much for (10) years of SSA covered work.

SSA.gov 2022 - Your Retirement Benefit: How It’s Figured

In order to have a good benefit, which is progressive in nature, one must work under the SS system for 30 - 35 years AND enough yearly earnings to qualify. 

I believe it would be beneficial for you and others involved in the WEP to understand how benefits for most people are figured - by most people, I am talking about people who work 30-35 years within the SS system and with wages high enough to qualify because the only reason that the WEP is there is to make an adjustment in the normal benefits formula computation.

 

Then for those others who did work under the SS system but they were low income earners AND they didn't work for at least 30 years - they have a formula of their very own - *

 

Smart Asset.com 03/02/2022 - 2022 Minimum Social Security Benefit

This link is from a smart read from a financial advisor which describes how benefits are figured and some of the variations when people don't fall within the system in regular computations.

=====================================================

from the above link:  *

What Is the Special Minimum Social Security Benefit?

The special minimum Social Security benefit is a minimum PIA (primary insurance amount) that was created in 1972 to provide benefits to certain low-income workers. Specifically, the special minimum benefit is designed for people who have lower lifetime earnings overall. These benefits are calculated based on years of service, not earnings.

Low-income workers must have at least 11 years of coverage to qualify. A year of coverage is any year in which a worker paid in a significant amount to the Social Security Trust Fund. To get the full special minimum PIA, workers must have at least 30 years of coverage.

For 2022, the primary insurance amount for people receiving the Social Security special minimum benefit ranges $45.50 for someone with 11 years of coverage to $950.80 for workers with 30 years of coverage.

 

end quote from the link but there is lots more beneficial info at the link

====================================================

 

Also, SS benefits computation is progressive in nature - what this means is when computing one's benefit, the bend points are set up to give more weight to lower income folks than for higher income folks - this causes the wage replacement of the benefit to be higher for lower income folks then for higher income folks.

SSA.gov - Benefit Calculation Examples for Workers Retiring in 2022

 

Social Security is an insurance (annuity)program - not a pension program.  The formulas used to compute benefits are based on participation in the system for a specific number of years.  By participation, I mean - working under it with payroll taxes paid by employee and employer - and for a minimum number of years.  30 - 35 years of work for the regular computations of benefits under the SS system.  

 

People who are affected by the WEP are outliers - meaning that the regular benefits computation doesn't work for them - before the WEP, these workers were being figured as low-income workers - meaning that they were getting the higher benefit /wage replacement in the computation just because that was how the formula saw them.  Thus, the WEP is just an adjustment to the formula - is it the best one?  I don't know but there will always be an adjustment for a worker covered by the WEP because they don't fit the regular benefit computation formula.

 

Now to my plumber friend - he worked both at the same time.  He worked for the school system (not under the SS program; but earning a government pension) + he was self-employed and paid into the SS program via his employee/employer contributions since he was self-employed, he is one of the same.  When he retired from the school system with his pension, he then worked a bit longer as a self-employed plumber until he got to his 30-35 years of covered earnings under the SS system.  

 

When you understand why SS benefits are computed as they are as described above in the links - then come back with some rational discussion.

 

 

It's Always Something . . . . Roseanna Roseannadanna
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Well, there is a lot that amounts to same thing that raise many questions.  You do not mention the substantial earnings catch to be off the hook with 30 years of covered work and why that it so.  What about the 5 years of 4 quarters minimum?  The WEP itself is a misnomer because one's hard earned keep is NOT a "windfall" but something earned and then paid into.  What about the Constitutionally protected rights and privileges reserved to  States?  Isn't the WEP and GPO overreach beyond the boundaries of its federal limits?  Finally, why can't State pensions be treated like private ones?  And that raises the question of why isn't the WEP and GPO done to private ones!?  Read my response again.  Eliminating the WEP and GPO will be a start in order to fix this broken attempt at "fairness" which is UNFAIR and INJUST.  You have not answered many questions about insolvency, Constitutional Rights, and low income WEP and GPO victims being hammered. 

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People in the WEP situation aren't low income workers?  Really?!?!?  That certainly would be news to lots of teachers, adjunct professors, and other government workers!!!!!

 

Sorry, this is just plain wrong and the WEP is profoundly unfair to all sorts of workers in those professions.

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@SueB9112 wrote:

People in the WEP situation aren't low income workers?  Really?!?!?  That certainly would be news to lots of teachers, adjunct professors, and other government workers!!!!!

 

Sorry, this is just plain wrong and the WEP is profoundly unfair to all sorts of workers in those professions.


The Computation of Social Security benefits are progressive in nature - meaning those with the lowest salary WHO PAID INTO THE SOCIAL SECURITY SYSTEM over a lifetime get a higher proportion of their salary replaced in retirement because of the bend points used when 35 years of wages are computed.

 

The reason there is a WEP or a GPO reduction is because these government employees who did not pay into the Social Security system are outliers to the benefits computation system of Social Security - thus the offset.  If they work inside the SS system for 30 years, there is no offset - 

 

So it is either these government employees have some other method of computing their SS benefit or use the current WEP or GPO offset - has to be one of the two because they are outside of the way benefits are computed from 35 years of work under the Social Security system.

 

Would government employees give up their pension benefit to be part of the Social Security system?  Yea, I am sure states would really like to pay those matched contributions.  

 

Maybe they should be within both systems - Social Security and Government Pension.  

 

There will always be an adjustment - just because of the way Social Security figures benefits.  Now how that adjustment is figured I don't know - but there will always be one until such a time when government employees are brought into the Social Security system and the benefits computation can be applied to everybody.

 

SSA.gov Windfall Elimination Provision

 

SSA.gov - Your Retirement Benefit: How It’s Figured (pdf)

 

Center on Budget and Policy Priorities 09/19/2022 - Repealing Social Security’s WEP and GPO Rules Wo...

 

 

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Well, there is a lot that amounts to same thing that raise many questions. You do not mention the substantial earnings catch to be off the hook with 30 years of covered work and why that is so. What about the 5 years of 4 quarters minimum? The WEP itself is a misnomer because one's hard earned keep is NOT a "windfall" but something earned and then paid into. What about the Constitutionally protected rights and privileges reserved to States? Isn't the WEP and GPO overreach beyond the boundaries of its federal limits? Finally, why can't State pensions be treated like private ones? And that raises the question of why isn't the WEP and GPO done to private ones!? Read my response again. Eliminating the WEP and GPO will be a start in order to fix this broken attempt at "fairness" which is UNFAIR and INJUST. You have not answered many questions about Constitutional Rights, and low income WEP and GPO victims being hammered.

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@CharlesU659303 The Social Security Program has many complex provisions that are difficult to understand. Many folks believe the Social Security Program is a retirement plan similar to a defined pension plan. It is not a retirement plan (i.e., pension plan). Others may call it an annuity. However, it is not an annuity similar to the product one may purchase from an insurance company. Some call it a social insurance program. However, it does not meet the requirements to be deemed an insurance.policy or contract.  In fact, you do not even have an account with the SS Program wherein your FICA taxes are accumulated and earn interest. It is a Federal Entitlement Program funded by dedicated taxes (i.e., FICA payroll taxes). Your SS Benefit which is called Primary Insurance Amount (PIA) is developed using indexed earnings over 35 years. So, if you work for an employer that does not participate in the SS Program, you are credited with $0.00 (zero) for each of those years. Also, if you do not work at least 35 years for employers that participate in the SS Program, zeroes are assigned for each year under the 35 year requirement. It should be abundantly clear that your SS Indexed Earnings will be divided by 420 (12 months X 35 years) to determine your average indexed monthly earnings (AIME). There are three percentages (i.e., 90%, 32%, and 15%) that are used with the bend points for that year to develop your PIA. So, if you only work 40 quarters (i.e., about 10 years) for employers that participate in the SS Program, you will become entitled to a SS Old Age Benefit (aka retirement) upon attainment of age 62. However, your 35 year average will have only 10 year of indexed earnings and 25 years of zeroes. That AIME will be very low. As indicated in the 2 page SS WEP Publication, before 1983, people whose primary job wasn't covered by SS had their PIA calculated as if they were long term low wage workers. They had the advantage (a windfall) of receiving SS Benefits representing a higher percentage (first bend point) of their AIME (i.e., 90%). The WEP reduces the 90% factor to as little as 40%. The WEP does not deduct the amount of government pension. This is fair. Most folks' PIA is about 40%. For example, for 2022, the first bend point is 90% of AIME up to $1024, The second bend point is 32% of AIME from $1024 to $6172. The sum of those two bend points is $7196 AIME. If you do the arithmetic,you will find that represents about 40.244580% of AIME. The percentage reduces to the 30% range the more your AIME exceeds $7196 because the bend points only provide 15% of the  AIME in excess of $7196. Based on the 3 million number of folks that you provided, it appears you are referring to educators in the USA. The median pension for educators in my state is about $55,000 per year. Some of the District Superintendents are receiving $200,000 to over $300,000 per year. This is public info. I realize that there are folks that are not paid at that level, but they may have lessor assignments or are part time. It would be foolish to eliminate the WEP for the benefit of small number of people. Perhaps they can work more hours or take on greater assignments. I am adding a link that will provide the Supreme Court's ruling regarding the SS Program. https://www.ssa.gov/history/nestor.html

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@CharlesU659303 

I do not know how to explain it to you any better.  From your questions, you do not seem to grasp the benefits formula of the SS system.  You do not seem to understand that to qualify for a SS benefit - a person has to work UNDER the Social Security system - pay payroll taxes (match by employer) - for a minimum number of years and at an earning amount that will get them a SS earned credit.

 

If you worked at a job where you (and your employer) did not pay contributions into the SS system - your get NO SS credits and thus NO benefit earnings.

 

There is a minimum benefit formula for those who work at a very low wage for 10 - 20 years - which is based on time rather than earnings.

For everybody else, their benefits are figured on the highest 30-35 years of earnings.  

 

The WEP and the GPO ONLY affects people who have NOT paid into the SS system for most of their career but who have some earnings (at least 10 years of higher earnings).  

 

The SS benefits formula only figures benefits in the above (2) ways - (1) as a low income earner or (2) as a regular person who has worked for 30-35 years at a decent salary above a low income one.

 

A person affect by the WEP or GPO adjustment DON'T fit into either of these benefit calculations and thus the WEP or GPO adjustment.

 

The WEP or GPO adjustment declines with length of time worked under a SS coverd job making an adequate salary so if a person has worked 30 years in a SS covered job, the WEP or GPO just goes away.  

 

If you want fairness in this matter - have ALL jobs covered under the SS system and pay contributions (employee and employer) into the system.

 

The term "windfall elimination provision" is the term assigned to the adjustment because until it was passed, people who had some SS earnings but had their primary # of working years NOT working under the SS system - they earned a government pension instead - the SS benefits formula looked at them as low-income earners and thus gave them the benefit of the progressive SS formula.  Thus, the link to "double dipping".

 

I have given you many links to help you understand why the WEP and GPO is there.  

 

I will say once again, this condition will always warrant an adjustment by the SS system - a separate type of calculation to figure any benefits - is the WEP/GPO the correct adjustment formula - I don't know - but probably pretty close.  

It's Always Something . . . . Roseanna Roseannadanna
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@GailL1 You did an outstanding job of explaining the WEP. IMO, the 40% factor is fair; and, in some cases, far exceeds the percentages that folks in the SS Program (for 35 years or more) receive. 

Periodic Contributor

1.  Teachers and other workers are not told about how they will be penalized when they retire by the WEP.  For many of these workers it comes as a nasty surprise.  I wonder why employers forget to tell them that?  Or why organizations that claim to be advocates for retired people don't warn them?

 

2.  Some admittedly anecdotal evidence here:  A friend of mine was receiving $1500/month through CalSTRS and would have received $500/month in Social Security, but WEP took $200/month away.  So in other words, the WEP was responsible for decreasing monthly income for someone receiving $24,000/year by 10%.  Is that really how we want to fund our government by going after former public servants who are now living on the bottom part of the income levels?  I suspect most Americans would find that unfair and morally objectionable.  If funding Social Security is such an issue, why not just remove the cap?

 

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@SueB9112 Are you providing benefit amounts for part time or short service folks? It appears that the CalSTRS pension amount is very low compared to the average CalSTRS pension. I am providing a link to an article from 2018 regarding teacher pensions from CalSTRS https://www.laschoolreport.com/antonucci-retiring-california-teachers-will-earn-more-than-working-te.... I realize that salaries and pension benefits will vary from State to State and by School Districts within the State. However, the amounts you provided indicate either part time work and/or short service. That appears to me to be the reason for the lower benefit amounts (especially for the SS Benefit amount) rather than the WEP formula that reduces the 90% SS factor to 40% which is the average percentage for most folks covered by the SS Program. That higher factor (90%) in the SS Benefit formula is to provide long term low income folks (i.e., minimum wage employees, etc.) with an amount that is greater than the poverty level, not to provide folks who primarily worked in non - covered employment with a windfall for just 40 quarters (approx. 10 years) but less than 30 years in covered employment. I was unable to develop the appropriate SS Benefit based on the amounts you provided. For example, the $500 SS Benefit is based on an Average Indexed Monthly Earnings (AIME) of about $555 ($555.55 X 90%= $500). The WEP reduces the 90% factor to 40% which is the same average percent that folks receive who primarily worked in covered employment. This is not a loss or take away, but is fair. Moreover, those folks paid FICA taxes for each year of covered employment which in many cases exceed the 35 years that are used to develop the AIME. So, doing the arithmetic ($555 X .40 = $222) provides a SS Benefit of only $222/month, not $300 that you indicated. Your friend may be overpaid SS Benefits. Perhaps there is additional info that may explain why the SS Program is paying more than $222/month. Why should folks who primarily worked in non-covered employment receive 90% when most folks who worked in covered employment receive about 40% on average. Please note that the higher income folks who primarily work in covered employment receive less than 40% inasmuch as the third factor in the SS Benefit formula (Primary Insurance Amount or PIA) reduces from 90% to 32% to just 15% as AIME increases. Those folks may receive a SS Benefit lon the 30% range of their AIME.

With regard to your first point, why would School Districts that do not participate with the SS Program be advising their employees about the SS Program? I think the answer is clearly "they would not". However, CalSTRS provides pertinent information about pensions as well as Social Security Benefits at their website. I am providing a link to their document, Understand Your Benefit, https://www.calstrs.com/understand-your-benefits Hope this helps your understanding of WEP which is a fair SS provision that eliminated overpaying (windfalls) folks who primarily worked in non-covered employment.

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The reality is that a huge number of people who are affected by the WEP are part-time and/or low wage workers.  Part-time and low wage workers make up a large portion of the workforce, even in government jobs. In fact the majority of community college faculty are part-time workers.  And they are not working part-time because they want to.  In California there is a cap on workload that keeps them part-time even if work is available.

 

Without looking at the data more carefully, I suspect that the $55,000 average pension statistic you gave is probably skewed up by the generous pensions of a few highly paid administrators.  A statistic of median pension would be interesting to look at.

 

Also the reality is that commonly workers start out in jobs where they contribute into Social Security and then after a certain number of years, such as maybe 10 or 15 years, they go into teaching or firefighting or some other government job.  No one tells them that they will suffer a big penalty on their Social Security when they retire. 

 

If solvency of Social Security is the issue, then raise the cap on taxable earnings, rather than punish the many former public servants by taking a big chunk out of their meager Social Security payments out of a specious concern for "fairness".  In fact, I would argue that lifting the cap on taxable earnings of high earners is much more fair and just than going after poor Social Security recipients.

 

By the way, most of our nation is facing a teacher shortage right now.  Penalizing teachers by taking a big chunk out of their Social Security when they retire is not helping attract people to the profession.  In fact, I consider it to be the responsible thing to do to warn people who are considering going into teaching about this. 

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@SueB9112 I am providing a link to CalSTRS wherein the 2021 pension amounts for 297,578 participants are listed sorted by their employers which, in most cases, are school districts https://transparentcalifornia.com/pensions/2021/calstrs/employers/ The CalSTRS link also provides a sort of all 297,578 by pension amount. However, I was only able to access 50 pages. CalStrs requires setting up an account in order to download all 5952 pages. Although this information is public and part of transparent California, I did not set up an account. Instead, I took a look at two (2) employers; namely, LA Community College and Mt. Diablo Unified School District because both had similar number of participants (1985 and 1954) and it would be easy to find the median amount of pension. For LA Community College the average pension reported by CalSTRS for 2021 was $101,263.35. There were 424 participants (21%) receiving pensions greater than $100,000. The highest amount was $312,449. I found the median at number 993 (1985 divided by 2 = 992.5) and that pension was $57,403.17 for 17.56 years of service. For Mt. Diablo Unified School District the average pension reported by CalSTRS for 2021 was $70,635.38. There were 405 (21%)  participants receiving pension greater than $70,000. The highest amount was $195,387.69. I found the median at number 977 (1954 divided by 2 = 977) and that pension was $42,240.93 for 18.4 years of service. I am sure that if you review all the employers (i.e., school districts, community colleges, etc.) you will find similar statistics. In other words, if the applicable salaries were covered by the SS Program, SS Benefits (PIA formula) would be developed in the 30% to 40% range just like millions of folks with covered career earnings in the SS Program. So, why should highly paid educators have their SS Benefits, if any, developed at 90% when only long term low paid (i.e., minimum wage,etc.) folks have their SS Benefits developed at 90%? 

 

FYI, when I sorted by amount of pension and only had access to 50  pages, the pension amounts were at $149,437. At 50 names on a page, that amounted to 2500 participants and the average (about $55,000 as per CalSTRS) and possibly median was still about $100,000 less. There are a significant number of highly paid CalSTRS pensioners. More than "a few" that you mentioned. Lastly, there are only 15 States that do not participate with the SS Program. 

Periodic Contributor

1. Bottom line is that there are still hundreds of thousands of social security recipients who are at the lower end of the economic scale who are barely getting by who are hurt by the WEP.  Even if  the WEP only affects 15 states.  And let's face it, even receiving the median pension of $57,000 doesn't make one rich.

 

2. These teachers, first responders, and other government workers were not told about how their social security would be penalized if they took these jobs.

 

3.  Then there is still the issue of fairness, it is not fair to treat a state pension differently than a pension from a private system when calculating social security.

 

4.  If solvency is the issue, raise the cap on taxable earnings.

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@SueB9112 When you state there are folks who are barely getting by who are hurt by the WEP, are you referring to folks at or near the poverty level? If so, the reason is not due to the WEP. It is because they have not worked long enough (i.e., short service, part time, etc.) and/or had low earnings (i.e., minimum wage, etc.) in covered and non covered employment. The Social Security Program and Pension Plans replace a percentage of your earnings via a benefit formula based on your earnings. The SS Primary Insurance Amount (PIA) formula requires 35 years of earnings from covered employment which is a "career based" formula as opposed to a "final average" based formula which uses 1 to 5 years of earning (varies per pension plan). CalSTRS uses a "final average" formula. Folks that have 40 quarters (about 10 years) of earnings with covered employment will receive zeroes for the remaining 25 years even though that person may have had high earnings with non covered employment during that 25 year period. Because there wasn't a system to capture non covered earnings, the SS Program overpaid folks that appeared to be long service low earning SS beneficiaries that had average earnings within the first "bend point" of the PIA formula. That stopped in 1984 when the PIA formula was amended to reduce the 90% first "bend point" to 40% for folks with non covered earnings and a government pension. This is not a penalty. It should be noted that the 40% factor is the average for most SS beneficiaries. It should be further noted that higher earning folks (beyond the second "bend point" currently $6,172/month) actually receive less than 40% because the PIA pays less the more earnings you have. Because non covered earnings can now be tracked by computers programmed to do so, there have been discussions/thoughts about amending the WEP. However, it will possibly provide small increases for some folks (lower earners) and reductions for others (generally the higher earners). The SS actuary provided estimates for both increases and reductions. Based on the assumptions that were used, the amounts are less than $100 per month for increases and reductions I am providing a link to a letter to Representative Brady https://www.ssa.gov/OACT/solvency/KBrady_20211103.pdf for your review. Gail already provided this info on September 19, 2022 when she attached the link to Center on Budget and Priorities. I do not believe Congress will eliminate the WEP and increase the 40% back to 90% which will provide windfall SS benefits to folks with government pensions already paid at 2 to 3 times the average SS payment.

With regard to a $57,000 pension that may be payable as early as age 57, the present value at 3% is 1,075,977 based on  age 84 life expectancy. Of course, if one lives longer, the present value increases. For comparison purposes, at 4%, the present value is $968,019. The present value of folks who receive $100,000 or more is in the millions. This is why CalSTRS is approximately $80 billion underfunded. This amount may be greater this year since the stock market is going through a correction. 

I do want to point out that most pension plans that do not participate with the SS Program will cap pension amounts at about 66.7% to 75% of final earnings. Most private pension plans (if they still exist) provide about 1.1% per year of service (33% for 30 years of service - 30 X .011=.33). There is that 40% factor again for the SS Program. Although I illustrated 75% for government pension and 73% for private pension with SS Benefits, the government pension approach is significantly greater inasmuch as it may start earlier than age 62 at full benefits. SS Benefits are reduced at age 62 and one receives zero prior to age 62 unless disabled.

Honored Social Butterfly

@SueB9112 

The end result is that people who have worked under the SS system for 10 - 29 years and have worked at a government job outside of the SS system long enough to get a pension from that entity - are outside of the SS formula for computing benefits - so even if the WEP / GPO is removed, there would have to be a new formula to take its place to figure any benefit for their particular situation.  What if that turns out to be lower than what the WEP/GPO does now - ?  It could.

 

35 years of earnings is a long time; that's what is used to compute a regular benefit under SS.   If such a government employee as described above has 30 years under the SS system, their SS retirement benefit is affected little; if at all.

 

Yes, solvency of the Trust Fund is a concern but so is getting benefits correctly figured.  But I think you and others here who are involved in this WEP / GPO might think the benefit for those 10 - 29 years is worth more than it actually is - it is just hard to figure it because the SS benefit formula can't be used to accurately figure it.

 

Telling them about it??? They knew they weren't paying into the SS system while working the government job that didn't participate in the SS system.  Where was the complaint when NO withholdings were being deducted - not by the employee and not by the employer.  Do people not know how SS works?  You (and your employer) pay into the system for 35 years and then get a benefit that is figured very progressively to replace one's earnings when they retire (or become disabled).

 

I don't think that raising the cap on earnings is gonna solve the solvency problem of the Trust Fund because the purpose of the cap is to limit the top benefit.  So raise the cap, evening adding more bend points, is still gonna give these folks who are paying in more (+ their employer) a much bigger benefit - unless you think the SS system should be means tested - which opens up another can of worms and makes it more of a charitable program than an earned benefit.  None of the SS solvency suggestions to date have made that work unless they don't give a benefit to those high-income earners paying into the system.  Again, that's why there is a cap now - to restrain the benefit.

 

 

 

 

It's Always Something . . . . Roseanna Roseannadanna
Regular Contributor

If you are not a group or more than one, then are you being paid to write this stuff?
Are you some retired or current Social Security employee? I can assure you that I, like most here, is just one person and unpaid for our replies.

 

@CharlesU659303
Gail says: I do not know how to explain it to you any better. From your questions, you do not seem to grasp the benefits formula of the SS system. You do not seem to understand that to qualify for a SS benefit - a person has to work UNDER the Social Security system - pay payroll taxes (match by employer) - for a minimum number of years and at an earning amount that will get them a SS earned credit.

 

Comment: I grasp enough to know my Average Indexed Monthly Earnings, (AIME), and the bend points among other crucial things. You are saying stuff that we all know about our Primary Insurance Account or PIA. My questions weren’t about our AIME or PIA but rather about the justifications for the WEP and GPO which are neither fair nor just. Please reread my comment and questions.

Gail says: If you worked at a job where you (and your employer) did not pay contributions into the SS system - your get NO SS credits and thus NO benefit earnings.

 

Comment: … Or if your earnings were too low and you did not earn the credits for your quarters.

Gail says: There is a minimum benefit formula for those who work at a very low wage for 10 - 20 years - which is based on time rather than earnings.
For everybody else, their benefits are figured on the highest 30-35 years of earnings.

 

Comment: No, I think that you must earn something like $6,000 a year to satisfy this minimum benefit formula regarding wages plus time but please feel free to correct me on this. Nevertheless, the calculation formula is individual driven as each person has a different work history and this formula can be found here:

 

https://www.ssa.gov/oact/cola/QC.html

Gail says: The WEP and the GPO ONLY affects people who have NOT paid into the SS system for most of their career but who have some earnings (at least 10 years of higher earnings).

 

Comment: The WEP and GPO affects people who worked in federal, state and local governments and worked in covered pensions at the same time or before and after. So for those employees, who DID pay into SS, this seems to be a contradiction. It DOES affect those who DID pay into the SS system

Gail says: The SS benefits formula only figures benefits in the above (2) ways - (1) as a low income earner or (2) as a regular person who has worked for 30-35 years at a decent salary above a low income one.

 

Comment: Perhaps but the SS benefits formula needs to be updated and improved due to ossified outdated rules like the WEP and GPO to make it fairer for low income earners who sometimes have up to 50% of their SS taken from them when they have a mere $900 a month SS benefit. This leaves them with $450 a month and if they had a low income local, state, federal job (short career, part time, etc.) of say $800 a month pension, then their combined SS and pension is but $1,250. One can hardly understand the fairness of the WEP and GPO when this results. Moreover, one can have a work record stretching back 50 years when stuff like this happens. These low income earners need ALL of their SS to make ends meet and many counted on that only to be devastated by the WEP and GPO. Many victims of the GPO are surviving spouses who happen to be a majority of women.

Gail says: A person affect by the WEP or GPO adjustment DON'T fit into either of these benefit calculations and thus the WEP or GPO adjustment.

 

Comment: I believe that they do fit into the benefit calculations before the WEP and GPO are figured in to arrive at their AIME and PIA.

Gail says: The WEP or GPO adjustment declines with length of time worked under a SS coverd job making an adequate salary so if a person has worked 30 years in a SS covered job, the WEP or GPO just goes away.

 

Comment: No, it’s 30 years of SUBSTANTIAL earnings which you left out. Moreover, very few can satisfy those 30 years due to the SUBSTANTIAL earning prerequisite. Moreover, few have 30 years AND a decent local, state, federal uncovered job to begin with. Is this fair? I hardly think it’s fair or progressive for such a high hurdle to “just go away”.

Gail says: If you want fairness in this matter - have ALL jobs covered under the SS system and pay contributions (employee and employer) into the system.

 

Comment: NO, if you want fairness in this, SEPARATE the two and treat public entities that are not covered pensions like PRIVATE ones.

Gail says: The term "windfall elimination provision" is the term assigned to the adjustment because until it was passed, people who had some SS earnings but had their primary # of working years NOT working under the SS system - they earned a government pension instead - the SS benefits formula looked at them as low-income earners and thus gave them the benefit of the progressive SS formula. Thus, the link to "double dipping".

 

Comment: If the term “double dipping” is applied to those who worked for and EARNED their keep AND paid into Social Security, then it is merely a term used as a political football and little more. We need to go back and reset prior to when the WEP and GPO were formed since they are so egregiously unfair. There have been many definitions of what double dipping meant back then, but it still amounts to the same, a political football to gamble with people’s lives. Today, we have perhaps millions with more than one retirement. A retired military person can have another career afterwards with a private retirement or even a local, state, uncovered pension AND a private one, ON TOP OF his/her military one… 3 retirements. Get rid of this dastardly WEP and GPO. Double dipping means different things to different people. For instance, if you repay all that you’ve taken from SS, and reapply for SS then that too is referred to as “double dipping”. If you take your SS and suspend and then take your spousal SS, that too has been referred to as “double dipping”. I refer you to a few articles to help clarify what you might believe “double dipping” is and you can come to your own conclusions. Literally it simply implies unethical things of reaching into the till twice but here its meaning is convoluted and vague for what is going on: Double Dipping:

 

https://www.ncpathinktank.org/pub/ba625


https://www.thegoodlawgroup.com/blog/double-dipping-on-social-security-benefits/


https://www.cbsnews.com/news/social-security-strategies-double-dipping/


https://garretgraves.house.gov/media-center/in-the-news/social-insecurity-rules-meant-prevent-double...

 

Gail says: I have given you many links to help you understand why the WEP and GPO is there.

 

Comment: Perhaps a clarification of the term “Windfall” in the acronym WEP will help to show it is a misnomer. According to the dictionary, “Windfall” in our context means: “A sudden, unexpected piece of good fortune or financial gain”. Thus, it couldn’t be further from the truth that one’s hard earned keep would be “sudden, unexpected…. Etc.” since that individual worked all those years only to be walloped by the WEP if they are low income or regardless of income if they PAID INTO AND EARNED IT. Please look at the definition once again:

 

https://www.thefreedictionary.com/windfall

 

Gail says: I will say once again, this condition will always warrant an adjustment by the SS system - a separate type of calculation to figure any benefits - is the WEP/GPO the correct adjustment formula - I don't know - but probably pretty close.

 

Comment: Well, it did not warrant an adjustment by the SS for nearly 40 – 50 years and worked just FINE. Now nearly 3 million Americans are cheated out of their hard-earned labor and efforts that they PAID INTO AND EARNED. Heavens knows what the collateral effect might be since those effected also live with loved ones and support help with bills, food, raising children, etc. The “windfall” should be DEBT OWED instead since the WEP and GPO have been hurting so many for so many decades now.

 

 

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Thank you @GailL1 for this clear and concise explanation on the "why" of the WEP and how this relates to the progressive nature of SS retirement benefits.

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@VictoriaM361190 Think about your WEP Catch-22 next time you vote for your congressional representative or Senator.

 

Ask yourself who among my voting choices is in favor of strengthening and expanding Social Security. Because WEP isn’t going to get fixed for you or anyone else if we don’t first fix the funding and resilience of Social Security beyond 2034 when it is scheduled to run out of money.

 

Make strengthening social security your priority issue next time you vote.

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