Teacher Pension and WEP

[youbet]

In many cases people under WEP and GPO get a better deal than a similarly positioned private sector worker.

Can you give an example of one of these many cases?

 

[youbet]

dixonge asked:

I'm rather unsure how this will affect us. Both have government pensions, but both paid into SS *except* for my very last two years of work. Not sure if that will cause GPO to kick in or not...

No affect if you have paid into social security for 30 years. If you receive a pension from work not covered by social security that is, otherwise it does not apply to you.

Are you sure that applies to GPO? I thought the 30 years of creditable contributions to SS only applied to WEP.

 

[rothlev]

dixonge asked:







Are you sure that applies to GPO? I thought the 30 years of creditable contributions to SS only applied to WEP.

Yes, you are correct however -


It sounds like they both paid into social security as do 60% of teachers who also get a pension. If neither of them receive a pension relating to work in which they did not pay into social security then those offsets do not apply. I for example receive a small florida teachers pension and full social security. As florida does pay into social security. Thus , those offsets do not apply to me.

 

[rothlev]

Can you give an example of one of these many cases?

I think the idea is that you do receive social security ( albeit at a much lower rate, thus 2 streams of income , not one ) So, if you do put a full civil service career in or full teacher career in and receive a pension much higher than what you would have got from social security, which is often the case, you are ahead. ie ) a teacher who taught 30 years and put in 10 years under social security also.



However you come out very poorly if you have two partial careers as your pension is low and your social security is docked by GPO. In this situation the GPO is not fair.

 

[samm]

..... In Illinois, there have been a number of teacher-driven attempts to get teachers onto SS. Distrust of the extremely mismanaged state pension system is a primary concern but the fact that SS is a "good deal" because there is employer matching comes into play as well.

Chicago Teachers’ Pension Fund Releases 2019 Comprehensive Annual Financial Report, News April 1, 2020
The Chicago Teachers’ Pension Fund (CTPF) Board of Trustees has released its 2019 Comprehensive Annual Financial Report.
.....The funded ratio for pension benefits, based on the actuarial value of assets, decreased to 47.4% as of June 30, 2019.

Given that Illinois is already broke, losing population and jobs to many nearby states, and all public pensions are severely underfunded, I think that the future failure of these plans may lead to adoption of SS....which would be good on a go-forward basis.

 

[Chuckanut]

Can you give an example of one of these many cases?

See post 46 in this thread for an example of how under GPO the non SS payer can comesout ahead of the SS payer.

 

[ChrisC]

Can you give an example of one of these many cases?

I'm under WEP and GPO and I believe most of us Federal pensioners under CSRS fare better than similarly situated private pensioners. I have no fairness complaints under GPO about not being able to draft SS spousal or survivor benefits from my wife. In my view, GPO is designed to ensure that spousal or survivor benefits are targeted to those who were originally intended to benefit from spousal or survivors benefits, i.e. spouses with little or no income because of checkered wage employment histories frequently associated with stay-at-home parenting.

With WEP, I've taken my reduced benefits at 64.5 years old, and my wife at her FRA was able to draft spousal benefits on my PIA from SS -- she'll take her full retirement benefits next year at 70. (We were fortunate to be able to take advantage of her filing a restrictive application under the grandfathered provisions of the legislation that did away with these filings, prospectively.)

I haven't had the paperwork issues you mentioned earlier with Medicare premiums being much higher than the Social Security benefit payments (my wife is enrolled in Medicare Part B with IRMAA charges, I'm not enrolled in Part B). Medicare withholds her entire SS payment and sends us a bill in late November to tell us what shortage/payment is due for the next 12 months of premiums, including IRMAA. For the first few years, we were able to pay by credit card --the last 2 or 3 years we're instructed to pay by check by the following October.

 

[Rustic23]

2retireearly. First I had a hard time following your post. I don't mean that as any kind of challenge, It's most likely me.

So trying to keep my point simple:
A is married to B
A never payed into SS. B has, and retires with a $24,000 SS pension. A, therefore is entitled to a payment of $12,000 a year, and either surviving spouse to $24,000.

Now if A happens to have a pension from another job, they get do not get the $12,000. In neither case did A pay into SS. Up until about 199? A could work a day or so under SS and claim the $12,000. This was considered a loop hole and closed.

Therefore I stand on what I said. When the payment to the spouse does not depend on weather they paid into SS, as it clearly does not. In both cases A did not pay in. Than the system seem unfair.

Added: I also realize this is a waist of time, as SS does not have the funds to pay their current/future obligations, and the probability of this changing I think is less than 0%.

Just to be open, I am married to a teacher, however, she taught in a private school and this has no effect on us. My daughter is a teacher in a private school and because her husband worked for M.D. Anderson Cancer Center, and was under the University of Texas retirement system, he will not be eligible to any SS based on his wife's salary, and while more money is always nice, it will not affect their retirement.

 

[bada bing]

2retireearly. First I had a hard time following your post. I don't mean that as any kind of challenge, It's most likely me.

So trying to keep my point simple:
A is married to B
A never payed into SS. B has, and retires with a $24,000 SS pension. A, therefore is entitled to a payment of $12,000 a year, and either surviving spouse to $24,000.

Now if A happens to have a pension from another job, they get do not get the $12,000. In neither case did A pay into SS. Up until about 199? A could work a day or so under SS and claim the $12,000. This was considered a loop hole and closed.

Therefore I stand on what I said. When the payment to the spouse does not depend on weather they paid into SS, as it clearly does not. In both cases A did not pay in. Than the system seem unfair.

Added: I also realize this is a waist of time, as SS does not have the funds to pay their current/future obligations, and the probability of this changing I think is less than 0%.

Just to be open, I am married to a teacher, however, she taught in a private school and this has no effect on us. My daughter is a teacher in a private school and because her husband worked for M.D. Anderson Cancer Center, and was under the University of Texas retirement system, he will not be eligible to any SS based on his wife's salary, and while more money is always nice, it will not affect their retirement.

The oversight in your scenario is that in order to qualify for their pension that triggers GPO, "A" obviously has worked at a job that was exempted from FICA tax. Those monies were redirected into a pension. Had the money been paid into FICA, like everyone else is forced to, "A" would only get the difference between their own earned SS and spousal benefits, In no case does anyone get both their full spousal benefit plus their own benefit,

GPO is an "offset", and only a partial one - unlike a spouse that works a career in a FICA covered job. For a FICA career the offset is 100% of career earned SS benefits against spousal benefits. Under GPO you are better off than you would have been if you had paid FICA on your government salary.

 

[Gumby]

GPO can reduce your spousal and survivor benefit to zero, as it has for my young wife. And, as I mentioned before, it is unfair to ME, since I have to buy an insurance policy to cover the loss of my SS when I predecease the young wife, while my neighbor, whose wife never worked at all, does not, even though he and I paid exactly the same into SS.

 

[rothlev]

[QUOTE=bada bing;2450009, In no case does anyone get both their full spousal benefit plus their own benefit,

That isn't what this is -- people who qualify for two pensions get two pensions. People who qualify, separately , for the social security system and a pension system should get both. A pension is not the same as social security. In GPO the social security benefit that was paid for and qualified for, is offset and reduced. This is a benefit that was earned. It is most definitely not the same as receiving the higher of two social security benefits.

The offset takes place to solve the issue of social security being skewed towards replacing a higher percentage of income for lower income folks. This is where the math gets tricky. as the uncorrected formula will weight a high income civil service worker with the minimum number of social security years as thou h/she was low income, for social security purposes.

At the very minimum people with two partial careers are penalized greatly. No way does this happen to people who earn two separate pensions

 

[ChrisC]

GPO can reduce your spousal and survivor benefit to zero, as it has for my young wife. And, as I mentioned before, it is unfair to ME, since I have to buy an insurance policy to cover the loss of my SS when I predecease the young wife, while my neighbor, whose wife never worked at all, does not, even though he and I paid exactly the same into SS.

Neither I nor my wife share your sense of unfairness, as GPO does reduce my spousal and survivor benefit to zero and my wife probably paid the same as you into SS. Spousal and survivor benefits under SS were primarily designed to provide benefits to your neighbor's wife, not me or your wife who benefit from pension programs where SS contributions were not made into those programs. Spousal and survivor benefits under SS were primarily designed so that your neighbor's wife would not be on the public welfare rolls when your neighbor is no longer around. Seems likes this approach in GPO bends towards societal fairness to me given the design of SS.

 

[CRLLS]

That isn't what this is -- people who qualify for two pensions get two pensions. People who qualify, separately , for the social security system and a pension system should get both. A pension is not the same as social security. In GPO the social security benefit that was paid for and qualified for, is offset and reduced. This is a benefit that was earned. It is most definitely not the same as receiving the higher of two social security benefits.

The offset takes place to solve the issue of social security being skewed towards replacing a higher percentage of income for lower income folks. This is where the math gets tricky. as the uncorrected formula will weight a high income civil service worker with the minimum number of social security years as thou h/she was low income, for social security purposes.

At the very minimum people with two partial careers are penalized greatly. No way does this happen to people who earn two separate pensions

Pensions are tricky. They are not all the same. There are traditional corporate-type pensions where yes, one can not be affected by SS's WEP and GPO rules. And then there are teachers' (and other government workers') pensions. They should have been given different names as they are, and never were intended to be, treated differently by SS. We shouldn't mix the two in this discussion IMO.

I follow this discussion because my 2 sons are both affected. One as a teacher and another as a military lifer. Both of their spouses are in SS system. I try to understand as much as I can about the GPO and WEP.

 

[Gumby]

Spousal and survivor benefits under SS were primarily designed so that your neighbor's wife would not be on the public welfare rolls when your neighbor is no longer around. Seems likes this approach in GPO bends towards societal fairness to me given the design of SS.

But the law does not determine whether or not my neighbor's wife will in fact be on welfare when he dies. Maybe she never worked because she is one of the Walton heiresses and did not need to work. If you want a means test, then push for that. Don't just assume the equities of the situation based on an anachronistic view of family economics.

 

[ChrisC]

But the law does not determine whether or not my neighbor's wife will in fact be on welfare when he dies. Maybe she never worked because she is one of the Walton heiresses and did not need to work. If you want a means test, then push for that. Don't just assume the equities of the situation based on an anachronistic view of family economics.

The law and policy was designed with a nuclear family model of home economics to benefit stay-at-home spouses, irrespective of whether the SAH was a Walton heir or a good-for-nothing, habitually unemployed spouse. Means testing for any SS benefits is simply a political non-starter -- so that's simply another strawman thrown about like your Walton heiress or my impoverished surviving spouse.

It appears one remedy for your unfairness angst would be to update that model to present day reality of two parent working families and just do away with spousal or survivor benefits -- would that make you less likely to feel you're unfairly treated? The point of GPO is that your wife and I, with our pensions, would be unfairly benefiting from a policy designed to broadly benefit non-working or wage challenged spouses. And this aspect of spousal or survivor benefits, originally called Old Age and Survivors Insurance (like family and other SS benefits) is more like a social services aspect of SS than "retirement" benefits that you believe you've paid.

 

[Chuckanut]

GPO is an "offset", and only a partial one - unlike a spouse that works a career in a FICA covered job. For a FICA career the offset is 100% of career earned SS benefits against spousal benefits. Under GPO you are better off than you would have been if you had paid FICA on your government salary.

+1

The offset for non SS payers under GPO is $3 for every $4 paid, IIRC. The offset for people who paid into SS is $4 for every $4 paid. In the example I cited earlier, the non SS payer actually ended up with over $600 more each month than the SS payer.

People complaining about GPO had better be careful. If Congress looks into it with the goal of fixing the unfairness, they might just make the non SS paying offset equal the SS payers. IOW, lower the total payout to the non SS paying person. As my old Grand Pappy used to say - Be careful what you ask for, somebody might give it to you.

The best solution to the WEP and GPO confusion is to make everybody pay into SS and eliminate the need for them. Given current state pension funding issues, I bet most of the current non SS payers would not mind that at all.

 

[Gumby]

Yours is probably the best solution. Everyone pays in, everyone gets something out. If you want to have a pension on top of that, then separately pay for that.

 

[retiredtuna1]

I could be mistaken, but the pension has to be above a certain minimum threshold in order for WEP to kick in. At least, it used to be. I can't find that rule via the internet now. If DW paid into SS for 30 or more years, WEP will not apply. For 20-29 years of work, WEP will be applied in a decreasing manner. Here is a document to start with: https://www.ssa.gov/pubs/EN-05-10045.pdf and look for WEP on the SS website. There is a lot more information there.