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Old 03-28-2009, 10:06 AM   #21
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Anyone with a 401k that has an employer match could easily be identified as a "windfall" recipient next relative to another without access to the same. Would that be unfair?
I believe almost all people who have a 401K with an employer match also pay 6.5% of their income into SS--we did. So that is entirely different imho.
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Old 03-28-2009, 10:14 AM   #22
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I agree totally with you, but my point is Congress could easily decide that it isn't entirely different and fairness will have nothing to do with it.
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Old 03-28-2009, 10:19 AM   #23
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Oldbabe,

You're mingling parts of WEP with parts of GPO. I can forward you a well done Power Point presentation which explains each if you'd like. Or, the document SamClem referenced above does a good job too.
I'm interested in the Powerpoint, please.

My husband has 25 years service in the state's public employee pension system and 37 credits out of the needed 40 for SS. If he finishes his remaining credits we're hoping he'll get something from SS but I understand it will be reduced by WEP.

GPO is what would reduce what he would get as a spouse if he collected from my SS benefit. His spousal or widower benefit based on my record would be reduced by 2/3 of his pension.

Nevermind about the PowerPoint, samclems linked document explains it all.
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Old 03-28-2009, 12:06 PM   #24
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I'm interested in the Powerpoint, please.

My husband has 25 years service in the state's public employee pension system and 37 credits out of the needed 40 for SS. If he finishes his remaining credits we're hoping he'll get something from SS but I understand it will be reduced by WEP.

GPO is what would reduce what he would get as a spouse if he collected from my SS benefit. His spousal or widower benefit based on my record would be reduced by 2/3 of his pension.

Nevermind about the PowerPoint, samclems linked document explains it all.
We have a similar situation here. DW is a retired teacher. She did get her 40 qtrs under SS in due to part time jobs years ago as a high school and college student and teaching part time at a local college for a few years.

The small amount of SS she will receive is calculated using the WEP formula. She will not qualify for a spousal benefit because of GPO. Nevertheless, it really does not seem unfair. She only contributed to SS briefly and in small amounts and will receive a tiny SS pension based on that (actually still a pretty good ROI considering how little she put in). And it's hard to justify her receiving 50% of my SS when she has her own public pension, a pension I would have gladly opted out of SS to get!

If you look at your husband's situation objectively and quantitatively, you'll see he's better off, even with WEP and GPO, than if he had contributed to SS all his career. If you doubt this, ask him and yourself if you would do it differently with him belonging to SS instead of his public pension system.

I do readily admit that if the SS rules are changed and DW could collect 50% of my benefit, we'd gladly take it! Just a nice bonus gift of about $10k/yr we haven't planned on. That would buy a couple of cruises a year, no?
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Old 03-28-2009, 12:19 PM   #25
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I agree totally with you, but my point is Congress could easily decide that it isn't entirely different and fairness will have nothing to do with it.
Actually the "fairness" part is whether folks whose primary public pension is from non-SS covered work get to collect SS (based on working part time or for a short time in a SS covered job) at rates intended for the low income folks........ even though they are not low income.

I guess we'd all like to dine at the trough intended for the unfortunate low income earners even though we're not. Receiving those lucrative high returns for very modest contributions looks pretty darn good. But is it fair? Should public pension folks who contributed to SS briefly or at low levels or both be treated the same as folks who worked their whole life at low wages under SS?
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Old 03-28-2009, 02:03 PM   #26
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I worked 14 yrs at very low wages and dutifully contributed to the system. What happened after that is irrelevant. Except that it was decided that it isn't. It has been decided that if you earn over the limit, you don't pay any more SS tax. Until they decide that you do. Has nothing to do with me or what I want. You are entitled to what they say you are entitled to until you aren't. I am not unhappy either way.
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Old 03-28-2009, 02:12 PM   #27
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If you pay into a teacher retirement system for 20 years (or any of the government systems I have seen here in Texas) you will get a LOT more than I would paying into the SS system for 30 years... it is just a lot better system...
...
Of course you are right. Any exclusive pension plan will do better than SS, because you do not have to carry the lower brackets. It is the same with private 401k, your own IRA, etc... I was just trying to simplify the situation.

Which means that persons who have been paying for 30 or 40 years SOLELY into SS can now say it is really unfair, because the burden of "wealth redistribution" rests only on their shoulders, and not people with other pension plans.

Any coercive or obligatory social system that does not provide benefits proportionally to the contributions will be perceived as unfair to the people whose wealth has been "redistributed" from.


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Anyone with a 401k that has an employer match could easily be identified as a "windfall" recipient next relative to another without access to the same. Would that be unfair?
That would be scary, wouldn't it? There is another thread about keeping a low profile in these times to avoid being targeted. If you are labeled as "rich", you are next! The definition of "rich" may be very fluid.
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Old 03-28-2009, 09:41 PM   #28
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Be very afraid when the govt throws around terms like fairness,free, rich, greedy, and a few other ones I am probably forgetting.

I absolutely HATE that I have to pay SS. I would not only gladly opt out of the SS program if possible, but I would even gladly donate any and all earnings I had accumulated to that point for the right to opt out. We all want to retire early here in this forum right? Does anyone here believe that SS is a good investment, and that we could not do better with the money ourselves?

This is what I mean when I have spoken of the "Tyranny of the majority" in previous postings I have written. I am now being forced to pay into a system that I do not want, and when the time comes will probably be of no benefit to me anyway.

This also clearly demostrates the problem with all govt welfare type programs. They all start with good intentions. To help people. Yet that help and that budget NEVER gets revoked. Every time they try, someone who is deriving some benefit from it, says it is not fair to them, and so the cycle continues. I think I just read the other day that some Katrina "victims" are STILL collecting checks of my tax money...
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Old 03-28-2009, 09:58 PM   #29
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Be very afraid when the govt throws around terms like fairness,free, rich, greedy, and a few other ones I am probably forgetting.

I absolutely HATE that I have to pay SS. I would not only gladly opt out of the SS program if possible, but I would even gladly donate any and all earnings I had accumulated to that point for the right to opt out. We all want to retire early here in this forum right? Does anyone here believe that SS is a good investment, and that we could not do better with the money ourselves?

This is what I mean when I have spoken of the "Tyranny of the majority" in previous postings I have written. I am now being forced to pay into a system that I do not want, and when the time comes will probably be of no benefit to me anyway.
I doubt anyone considers SS a good investment, but at the current time it's better (for the majority) than nothing. Perhaps in time we can phase out SS to allow for more choice, but there are so many people that will be depending on it that there's no way to get out. And yes, I know they should have planned better, but I'm talking "is", not "should be".

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This also clearly demostrates the problem with all govt welfare type programs. They all start with good intentions. To help people. Yet that help and that budget NEVER gets revoked. Every time they try, someone who is deriving some benefit from it, says it is not fair to them, and so the cycle continues. I think I just read the other day that some Katrina "victims" are STILL collecting checks of my tax money...
I don't think most of these programs are necessarily started with good intentions. I think most of them are intended as vote getters, or bribes to the populace. Not to pick on the current administration, because I don't hate them, but there's no way I can believe they don't know what they're getting us into. But they "have" to do something, anything. To keep their party in power. And they think maybe, just maybe, it will work.
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Old 03-29-2009, 01:35 AM   #30
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I doubt anyone considers SS a good investment, but at the current time it's better (for the majority) than nothing. Perhaps in time we can phase out SS...
Are you sure it is not phasing in? I thought some members of this forum (Samclem?) have posted info about a proposal to merge 401k's into a new SS. Come on, put it into the lock box!!! Your personal IRA is next.

Why do I cry when I am laughing so hard?
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Old 03-29-2009, 09:07 PM   #31
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Are you sure it is not phasing in? I thought some members of this forum (Samclem?) have posted info about a proposal to merge 401k's into a new SS. Come on, put it into the lock box!!! Your personal IRA is next.

Why do I cry when I am laughing so hard?
Wow, you've got a good memory! Here was the thread about the Congressional committee testimony concerning the advantages of rolling 401K money into SS. I think it would only happen if maybe people got riled up against some people having too much wealth and if government saw a need to get more money from someplace to prop up entitlement programs. No chance of that. . .
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Old 03-29-2009, 10:16 PM   #32
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Of course you would remember if some legislators "promise" to put much of your life savings (401k) into the "lockbox", despite your already contributing to SS all your life.

How about other pension plans, like CALPERS and various other governmental pensions? Come on, spread the pain. Put them all in there! Roth and Traditional IRAs too. The more the merrier!

Am I going to get moderated?
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Old 03-30-2009, 08:02 AM   #33
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Don't forget all the IRAs (Roth and Traditional) belong in SS too, and whatever you have in money market accounts or passbook savings. And what about that cash you've stockpiled in your bank's safe deposit box? Cough it up and send it in too!!!!
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Old 05-21-2009, 09:05 PM   #34
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Well, now that my better half is going to be a newly-hired teacher's aide who will apparently be snared by this in the Texas TRS, I had to do a lot more research on this whole issue and resurrect a dead thread.

My conclusion is: Sometimes the reduction seems fair, and sometimes it doesn't. The people who worked enough to earn their own benefit (40 credits) AND also worked where there was a retirement system instead of SS seem to be getting hosed the most. It's totally fair that they don't get any SS credits for the work they do under the pension plan that doesn't pay SS taxes, but it doesn't seem right that there's a good chance they'd lose almost all of their SS benefit despite having paid into it enough quarters to qualify. They should still get at least most (if not all) of the credit they *earned* while paying into SS.

I don't think the GPO/WEP necessarily needs to be completely repealed, but it looks like it definitely needs to be reworked. Even assuming my wife spends 20 years in this new position until age 60 (which would be her earliest full retirement date as someone hired in today -- 80 points and at least age 60), it's not likely to have a major impact on us (some but not a lot, maybe a couple hundred bucks a month in current dollars). But I can see someone who spent 15-20 years in a good job covered by SS who later becomes a teacher for 20+ years getting royally screwed by the WEP. In other words, they could put 6.2% of their own money into SS for many years and (currently) 6.4% of their pay into the Texas TRS and come out a LOT worse than someone who put 6.2% to 6.4% of pay into one or the other systems the whole time. Those who split their time fairly evenly between "SS covered" and "SS exempt" jobs seem to get the longest shaft.

Still not sure full and total repeal is a good idea. But I can construct enough scenarios of people working for a lifetime getting royally screwed that it needs at least some modification.
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Old 05-21-2009, 10:06 PM   #35
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They should still get at least most (if not all) of the credit they *earned* while paying into SS.
But because of the "progressive" benefit computation formula, if a worker only puts in enough years to barely qualify for SS, he gets a huge payback compared to what he paid in. Then, he could go somewhere else and skim the cream off that program, too. Everyone else (who are not allowed to opt out of SS, so they work and pay in for 45 years and get maybe just double the benefit of someone who pays for ten) would be subsidizing these people.

I think the most patently "fair" options are the ones I stated in my previous post (#13). Another option would be to consider the employee's entire income history (both the part in which the employee paid into SS and the part he paid into an external system), compute the SS monthly check he/she would be due on that work history if it had all been taxed under SS, then multiply by the fraction of the total income that was covered under SS. So an employee who earned 99% of his income under SS would still get 99% of the SS check he would have received if all the work had been under SS, and same for the guy who only paid into SS on 10% of his income. But the 10% payer doesn't get to look like a pauper to SS and draw a huge benefit at everyone else's expense.

I would think having the option to earn money and not have it taxed under SS (and therefore not contribute to the support of the disabled and poor) is a significant boost to one's bottom line, and that should be part of any "fairness" calculus. The rest of us can't opt out of paying for this SS welfare system
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Old 05-22-2009, 06:46 AM   #36
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I can see someone who spent 15-20 years in a good job covered by SS who later becomes a teacher for 20+ years getting royally screwed by the WEP..
It sounds like you haven't done the math and worked any examples Zig. Folks who work 20 yrs under SS and then 20+ yrs under another public pension system (which excuses them from SS) experience only a very small WEP reduction.

The "FAIR" thing to do with WEP and GPO is to legislate that ALL workers belong to SS and therefore there would be no need for WEP and GPO to exist.

Are you campaigning to have the provision that excuses your DW from SS eliminated so she can join the program like other employees? That won't be popular with the teacher unions, but it is the FAIR thing!
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Old 05-22-2009, 08:15 AM   #37
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Are you campaigning to have the provision that excuses your DW from SS eliminated so she can join the program like other employees? That won't be popular with the teacher unions, but it is the FAIR thing!
The funny thing is, in her case it won't matter one way or the other since she spent a fair amount of time not in the work force or in school and stuff, so she barely qualifies for SS on her own anyway, and whatever pension would be coming is pretty small.

Personally I'd like to see all new hires in the system put on SS and a 403B rather than DB pensions we can't afford any more, including my wife. That tune hasn't changed. But that's not the case right now, so someone's going to get it. Anyway, that's a separate issue (albeit related). In any event, I've seen the TRS benefit formula and it's not that outrageous compared to some of the ones I've seen. It looks like if she were to put in 20 years and retires at 60, she'd get 46% of her salary (based on an average of the last five years). And since her pay will be less than half the starting pay of a new teacher, we're really talking fairly small potatoes here (hence the reason WEP/GPO isn't likely to hit her hard unless she does something crazy like decide to become a certified teacher so the benefit becomes considerably higher).

As for the progressive benefit formula of SS, you're correct, but if they earned the credits and paid the tax for (say) 15-20 years, they shouldn't get less than someone who worked those same 15-20 years and then stopped working completely. That, IMO, is where the problem comes in. I guess it's that "progressive" spirit that says if you have other retirement annuity income (even if you "paid" as much for it as you did SS), you get some of your benefit wiped out.

I can think of a few ways to better resolve this than the status quo, though. My understanding is that many public sector employers had a one-time chance to permanently "opt out" of SS back in the 1980s, and what we have today is that legacy. Perhaps they should have just grandfathered those already in the retirement system and told the rest they'd be in the SS pool. Isn't that similar to what the feds did when they moved from CSRS to FERS?
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Old 05-22-2009, 09:56 AM   #38
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Ziggy....

The reason for the change in SS is that there were a lot of people who worked their whole life in a state run retirement system, qualified for a fantastic pension... and then wanted to get spousal benefits based on their spouse working their whole life in a job that paid into SS... this was considered a 'windfall' for the couple...

The first law to get around this had a 'loophole'... and said something like if you retired while paying both SS and to the retirement system you could get both... So, teachers who had worked their whole life as a teacher would get a job for one day at a school district that had jobs that paid into SS, such as a janitor... and then qualify for SS under the best formula... since they only had one day of service, the spousal benefits was what they were qualified to receive....

So, now they wrote a law to get rid of that loophole... and maybe it might hit your wife.... but it is because SHE does not pay into SS on her own.. you are looking at the spousal benefit...

I have a sister who is in the system... but she also paid full SS her whole working career... so she will get both her pension and HER SS benefits...
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Old 05-22-2009, 10:04 AM   #39
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Ziggy....

The reason for the change in SS is that there were a lot of people who worked their whole life in a state run retirement system, qualified for a fantastic pension... and then wanted to get spousal benefits based on their spouse working their whole life in a job that paid into SS... this was considered a 'windfall' for the couple...
I agree that there are cases when it a form of "double dipping" that can screw the taxpayer royally. If someone gets $30-40K per year from a DB pension plan and they never paid SS, I don't think they really need the spousal SS benefit based only on their spouse's work. And if you think of how SS worked, that would be consistent -- because if they paid into SS instead of their own pension plan, they wouldn't get the spousal benefit but the old age pension based on their own record, which is similar to what pensioners are getting -- a retirement annuity based on their own work and their own contributions to that plan.

On the other hand, if this person worked 10, 15, maybe 20 years paying a fairly high level of SS taxes and THEN went to work for an SS-exempt employer with a pension plan for another 25 years or so, they'd probably lose most of their SS benefit (I think the WEP in this case could reduce their SS to 40% of what it would have been). That's where I think the law is a bit flawed. If someone paid enough into SS after 20 years to be eligible for (say) $800 a month even if they never worked another day in their life, I don't think that should be dropped to $320 because they went to work for (say) a public school for another 20 instead of not working at all. I don't see how it's fair that someone who may have paid into SS for 10-20 years gets less SS benefit than someone who never paid a cent in SS taxes on their own work record.
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Old 05-22-2009, 10:15 AM   #40
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How about making it fair for every working american man and woman by abolishing the government pension and benefits. Pay everyone the same amount of SS payment based on the number of years worked.

Why do government get full pay after 20 years of service and private workers don't?

I believe in equal pay for equal work.
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