Teacher Pension and WEP

[Mulligan]

She is required to notify SSA herself. This is one of the reporting responsibilities that she was told about when she filed for social security.

I am also affected by WEP and GPO. My social security check is not high enough for my Medicare premium, so I get my social security check withheld for the year and receive a yearly bill. I will not receive any social security widow's benefits from my DH if I outlive him. However, he will receive his social security check, a civil service pension from my working for the goverment and 2 small pensions he earned from private companies, if he outlives me. His income as a widower would be much higher than my income as a widow.

Dreamer, I was curious how that worked mechanically. Though still 9 years away, my SS will not cover medicare premiums either. So is what you do the standard practice in that situation? I was wondering the procedure on how I would cover the short fall each month.

 

[FIYes]

I am directly impacted by this since my primary income is a teacher pension. I knew all along that I would not receive SS and planned accordingly. I am grateful that my DH does receive SS.

I would hate to see any means testing/needs testing applied to SS. I feel that its broad support over the years is due to benefit to most people and the fact that it is by and large seen as a retirement program. I am glad that at least my pension doesn’t prevent DH from receiving his SS. I took a reduced pension so that if DH outlives me, he will continue to receive half of my pension along with his SS. If he goes first then I will have my full pension but no SS.

I am only indirectly affected by WEP. I chose not to finish out my quarters for SS eligibility since WEP would have reduced the amount so significantly. Finishing out my quarters wasn’t worth it and I am enjoying retirement too much to get a job.

I do know people who are hurt by WEP and GPO. I have a friend who worked approximately 15 years in a job covered by SS and 15 years in a teacher pension job. Her pension is small because of only about 15 years worked and her SS is subject to WEP. She will not receive survivors benefits due to GPO.

I do think some teachers get into trouble because they don’t realize the impact of these rules. Another friend was going through a divorce. Her attorney told her that due to the length of her marriage she would receive SS based on her husband’s (high) income. I told her that wasn’t going to happen and she refused to believe because of her attorney.

 

[Dreamer]

Dreamer, I was curious how that worked mechanically. Though still 9 years away, my SS will not cover medicare premiums either. So is what you do the standard practice in that situation? I was wondering the procedure on how I would cover the short fall each month.

Yes, this is standard practice. I paid the rest of my Medicare premiums by check last year. This year, I opted to put it on my credit card in order to get the rewards, but they have not billed my credit card yet. It is due by October, so I hope that they due it soon, so I can put it out of my mind.

 

[youbet]

The theory of WEP and GPO is understandable, but in reality it doesnt work in an equitable manner for many.

That seems to hit the nail on the head. The arguments for WEP and GPO, as those programs exist today, always seem to cherry pick the examples where there seems to be some common sense involved but never seem to address those situations where there seems to be no common sense involved at all.

I suspect many who face this problem might find their predecessors from decades ago like mine may have also voted to not participate.

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.

At our house, we very much wish DW could have participated in SS. But I doubt if the situation will ever change since the school districts, as employers, are dead set against contributing their half. I doubt if it will ever happen.

In regard to your question about billing if your SS is less than your Medicare premium, it works like this for DW. She receives a monthly bill to pay her Part D IRMAA. She receives an annual bill to pay a combination of her Part B IRMAA and the difference between her SS benefit and the larger Part B premium.

The montly bill has been generally straightforward. The annual bill (significant $$$) is a pita because the amount is unique to DW and manually calculated. DW has to call and beg for the number again and again every year. They're quick to send out letters warning that her Medicare will be cancelled if payment is not received but slow to let her know how much to send. Apparently there is no automated connection between the "form letter generator" and the guy who's stuck calculating the payment. You can imagine the phone tree nightmare when calling SS to work on this since 99.99% of the folks there have no clue what you're talking about.

In the worse case of this, DW was undergoing treatment for cancer and was nearing the end of an aggressive round of chemo. Radiation was to follow. When the letter arrived threatening to cancel her Medicare, she was devastated and jumping through all the hoops to get a bill (or at least get someone to acknowledge she was ready and willing to pay, just send a bill when the poor guy who does the manual calculation ever gets caught up) was more than painful.

I hope your situation never gets that complicated, and likely it won't. But it hasn't been a pleasant experience for DW.

 

[Chuckanut]

I do think some teachers get into trouble because they don’t realize the impact of these rules. Another friend was going through a divorce. Her attorney told her that due to the length of her marriage she would receive SS based on her husband’s (high) income. I told her that wasn’t going to happen and she refused to believe because of her attorney.

Perhaps every non SS job should state on the list of job requirements and the application - "You will not be paying into SS and be part of SS. You may find expected future SS payments substantially reduced in the future if you get them at all. You are advised to seriously consider investing the money you don't pay to SS in some form of retirement account. See a financial divisor if necessary. "

And then repeat the investment advice once a year.

 

[Fermion]

I always thought that the non-working spouse provision of SS was to cover a person who stayed at home, taking care of kids and doing things needed to support the working person.

Similar to other things, like a working person with no kids having to pay school tax. Just a society thing.

 

[youbet]

I always thought that the non-working spouse provision of SS was to cover a person who stayed at home, taking care of kids and doing things needed to support the working person.

Similar to other things, like a working person with no kids having to pay school tax. Just a society thing.

While I generally agree with the "society thing" comment Fermion, there is a difference between that and a childless person still having to pay a school tax. In the case of the school tax, the childless person still gets a benefit. For example, every time he/she visits their doctor, takes the car to a mechanic, visits their CPA, etc., etc., they get a benefit. It would be a sad world if everyone around us was illiterate/unskilled.

I know, I know, in other countries and in other times, there were no tax funded public schools. But personally, I don't think that going back to that would improve my world. Maybe yours?

 

[Gumby]

I always thought that the non-working spouse provision of SS was to cover a person who stayed at home, taking care of kids and doing things needed to support the working person.

Similar to other things, like a working person with no kids having to pay school tax. Just a society thing.

Let's change a few key facts and see what you think then. A married woman works and contributes to SS for 40 years. She earns a benefit. Her non-working spouse is male and there are no children. For 40 years all he has done is sit around and play video games. He's a trust fund baby, so they didn't need the money. He is still going to get a spousal SS benefit equal to half of hers and a survivor benefit equal to her full SS if she predeceases him.

 

[oldphd]

Both DW and I have worked our careers in both SS covered jobs and non SS covered jobs. Not quite 50/50, but not 95/5 either (roughly 60/40 for one, 67/33 for the other). While there is a legitimate place for the concept of WEP and GPO, the powers that be had to make one set of rules that applies to everyone. Such a broad brush doesn't work out the same for all. And one of the weak points, IMHO, is for those who work substantial partial careers in each. The rules are designed more for 100/0.

There is something that I've always wondered about, but never found a concrete answer. How did the public pension get to qualify to not have to pay SS? I found something to the effect of - "Pension provides benefits substantially equal to SS". I saw this a couple of years ago somewhere on the SS site, but unfortunately I can't find it again to reference here. Aside from being unable to find an objective calculation for that qualification which I was looking for at the time, I wonder what happens when things change?

In my case, both DW and I have a modest pension from work in Ohio (though different plans, one is STRS and the other is OPERS). There have been cuts to COLAs, amounts payable, years to qualify, etc. Is there some point where the reductions in pension benefits get to the point that the SS waiver gets revoked? I would imagine that would be a big deal to have happen.

And a little off topic, but her SS position was working as a teacher for a religious school. She has a modest pension through them, as well. But as a religious organization they are exempt from ERISA and PBGC. I couldn't even get enough info to see how well funded they are. That doesn't seem to be in the best interest of the employee.

One final comment... we, like many others, did not understand all this when we were starting out or took these positions. I wouldn't say they hide it, but it's certainly not volunteered. I agree with a prior comment that they should have to volunteer this info. I recall being at a state pension retirement info meeting for those close to retirement, and when WEP/GPO subject was brought up, first thing the presenter asked was who had heard of it. Only a couple of hands went up. One was mine.

Fortunately, we saved heavily and are of the belt and suspenders mindset, but I could see where some could be hit hard by unexpected declines.

 

[Mulligan]

That seems to hit the nail on the head. The arguments for WEP and GPO, as those programs exist today, always seem to cherry pick the examples where there seems to be some common sense involved but never seem to address those situations where there seems to be no common sense involved at all. 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.

At our house, we very much wish DW could have participated in SS. But I doubt if the situation will ever change since the school districts, as employers, are dead set against contributing their half. I doubt if it will ever happen.

In regard to your question about billing if your SS is less than your Medicare premium, it works like this for DW. She receives a monthly bill to pay her Part D IRMAA. She receives an annual bill to pay a combination of her Part B IRMAA and the difference between her SS benefit and the larger Part B premium.

The montly bill has been generally straightforward. The annual bill (significant $$$) is a pita because the amount is unique to DW and manually calculated. DW has to call and beg for the number again and again every year. They're quick to send out letters warning that her Medicare will be cancelled if payment is not received but slow to let her know how much to send. Apparently there is no automated connection between the "form letter generator" and the guy who's stuck calculating the payment. You can imagine the phone tree nightmare when calling SS to work on this since 99.99% of the folks there have no clue what you're talking about.

In the worse case of this, DW was undergoing treatment for cancer and was nearing the end of an aggressive round of chemo. Radiation was to follow. When the letter arrived threatening to cancel her Medicare, she was devastated and jumping through all the hoops to get a bill (or at least get someone to acknowledge she was ready and willing to pay, just send a bill when the poor guy who does the manual calculation ever gets caught up) was more than painful.

I hope your situation never gets that complicated, and likely it won't. But it hasn't been a pleasant experience for DW.

Thank you Dreamer and Youbet. Geez, nothing ever is as easy as it is supposed to be is it. For me I guess they got 9 years to make it better for me...or worse, ugh.

 

[NXR7]

WEP and GPO are discriminatory. My wife has 17 years of SS credit. She also has a 15-year permanent partial disability public pension from the fire department where she worked and got injured on the job.

Her SS will be significantly reduced because of the disability public pension. I worked for two companies and have a pension and 401(k) from both based on what I worked for and what I contributed. Why are public employees treated differently? If you earned it you should be paid it.

Ray

 

[2retireearly]

This has to be one of the most unjust laws on the books. Person never works a day and they get a monthly payment equal to one half of their spouses SS. Teacher works her entire life, and get and is not entitled to the same SS. It makes no since to me.

It makes sense to me. the person getting the Public Pension, has never paid a dime into SS. So why should they get SS? SS is a 'pension' based on the money you pay in. And therefore your net pay is lower than someone not paying into SS. Now for the actuarial math of SS: The spouse of someone who paid into SS is getting an amount, based on an Annuity Factor of joint with survivorship which causes a smaller payout than a single person's annuity factor would calculate. And, the spouse gets half of this. When spouse dies,the living person, continues to get this smaller payout, than he would have gotten if single. So, if person A is single, he will get a higher SS than a person B, who is married. SS is just like a pension..which is just like a SPIA. So if my Pension pays me $100 as a single person, with no survivorship. Then a person who is married gets $85 with survivorship, so spouse gets $42. Then when spouse dies, this married person, still only gets $85. He never gets $100, like I do. The annuity factors are different if it is a single, or joint with survivorship. Its all math. And being fair. Don't have SS pay people who never had anything removed from their checks to pay for it! Please..

 

[ychuck46]

Special interests always benefit

This has to be one of the most unjust laws on the books. Person never works a day and they get a monthly payment equal to one half of their spouses SS. Teacher works her entire life, and get and is not entitled to the same SS. It makes no since to me.

If you trace history you will find some Congressperson or persons gained votes by making changes such as these to SS. Nothing is ever done at the Federal level because it is "the right thing to do". Everything is about pandering for votes.

 

[imnontrad]

There is a book called "The Hero's Penalty" by Devin Carroll that addresses WEP. If that person has 20 years of substantial income where they contributes to SS, the WEP penalty is reduced - and goes away completely after 30 years.

 

[2retireearly]

There is a book called "The Hero's Penalty" by Devin Carroll that addresses WEP. If that person has 20 years of substantial income where they contributes to SS, the WEP penalty is reduced - and goes away completely after 30 years.

which actuarially is correct. All of us, have our SS based on the top 30 years of years you paid into SS. So of course, if you get a govt pension AND in addition you paid 30 years into SS , of course you get your SS! I think people are looking for some nefarious 'scheme'. It is just math..actuarial annuity factors. And the fact if you pay into something you get a stream of income. If you don't...you don't.

 

[imnontrad]

All of us, have our SS based on the top 30 years of years you paid into SS.

Actually, it is the top 35 years - and each year until you reach 60 is indexed for inflation. So an income of 20K 10 years ago may have more "weight" than an income of 40K this year.

Devin has a FB group called "Social Security intelligence" and we answer not only WEP questions but other questions about SS.

 

[2retireearly]

Actually, it is the top 35 years - and each year until you reach 60 is indexed for inflation. So an income of 20K 10 years ago may have more "weight" than an income of 40K this year.

Devin has a FB group called "Social Security intelligence" and we answer not only WEP questions but other questions about SS.

True, I knew it was 35, but I didn't want to get into why their saying '30 years' was a pretty good deal! Thanks for making me honest!!

 

[imnontrad]

True, I knew it was 35, but I didn't want to get into why their saying '30 years' was a pretty good deal!

The WEP penalty ends at the 30 year point. The "top 35"is used for SS calculation.
So if someone starts working at 22, works at a job that does not contribute to SS for 20 years, but has a side job with "substantial income" where they contribute to SS for 15 of those years, and then goes to work full time contributing to SS for 20 years, at age 62, they could be eligible for that non-ss pension without any WEP penalty from SS plus the SS amount equal to the 35 top years of the SS income.

 

[NXR7]

It makes sense to me. the person getting the Public Pension, has never paid a dime into SS. So why should they get SS?

That's not even close to reality for many people because not everyone starts out in public service. My wife has 17 years of credit in SS and only 15 in public service due to a disability (she was a firefighter/paramedic and sustained on-the-job injuries).

Yet her meager SS is still getting cut significantly.

Ray

 

[Niuatoputapu]

DW has worked 20 years paying into SS (only 9 of those years deemed "substantial" for the WEP calculation) and 16 years paying into California teacher pension system. We hope she will collect about $500/mo SS after WEP adjustment and $2500/mo from her pension. We consider the total of the two and say "Great, it's more than she would receive from SS with the same work history paying 100% into SS" .

It is not as good as the pension a CA teacher receives for 30 or 35 years of service, nor as good as someone who earned a corporate pension plus their SS, but we have no complaint about WEP causing her to collect less SS than her account suggests or being ineligible for 50% of my SS benefit, because $3000/mo is more than either.

 

[Sunset]

WEP and GPO are discriminatory. My wife has 17 years of SS credit. She also has a 15-year permanent partial disability public pension from the fire department where she worked and got injured on the job.

Her SS will be significantly reduced because of the disability public pension. I worked for two companies and have a pension and 401(k) from both based on what I worked for and what I contributed. Why are public employees treated differently? If you earned it you should be paid it.

Ray

But surely you are happy that the person who worked 17 years for SS and earned the same as your wife, and then sat on their butt drinking beer will get MORE SS than your wife.

 

[bada bing]

WEP and GPO are discriminatory. My wife has 17 years of SS credit. She also has a 15-year permanent partial disability public pension from the fire department where she worked and got injured on the job.

Her SS will be significantly reduced because of the disability public pension. I worked for two companies and have a pension and 401(k) from both based on what I worked for and what I contributed. Why are public employees treated differently? If you earned it you should be paid it.

Ray

SS itself is discriminatory. The bend points and the 35 year cap are very discriminatory, by design. WEP and GPO are just consequences of the payout formulas. People under WEP and GPO are treated mathematically no worse than they would be, had they worked their career under FICA (which those of us in the private sector have no choice in). In many cases people under WEP and GPO get a better deal than a similarly positioned private sector worker.

 

[Carlos2]

It makes sense to me. the person getting the Public Pension, has never paid a dime into SS. So why should they get SS? SS is a 'pension' based on the money you pay in. And therefore your net pay is lower than someone not paying into SS. Now for the actuarial math of SS: The spouse of someone who paid into SS is getting an amount, based on an Annuity Factor of joint with survivorship which causes a smaller payout than a single person's annuity factor would calculate. And, the spouse gets half of this. When spouse dies,the living person, continues to get this smaller payout, than he would have gotten if single. So, if person A is single, he will get a higher SS than a person B, who is married. SS is just like a pension..which is just like a SPIA. So if my Pension pays me $100 as a single person, with no survivorship. Then a person who is married gets $85 with survivorship, so spouse gets $42. Then when spouse dies, this married person, still only gets $85. He never gets $100, like I do. The annuity factors are different if it is a single, or joint with survivorship. Its all math. And being fair. Don't have SS pay people who never had anything removed from their checks to pay for it! Please..

This is not totally accurate. First, not all people who receive public pensions have not paid into SS. In New York City, teachers pay into their pension system and SS. In California, those In CALPERS, pay into their public pension and SS.

Secondly, there are people like myself, who have worked in the private sector before and during my teaching career in public schools. I have paid into SS and am eligible to receive payments but they will be greatly reduced. I’m fortunate because have taught and been an administrator in the California system for over 30 years and will have a substantial pension that will by far exceed the highest amount that SS provides. However, it does not feel good when you see that money taken from your check and you won’t see the full benefit from it. In addition, my wife’s quite a few year’s younger than me, and we have a young daughter. If I should pass, fortunately she’ll receive the pension benefits but it would be helpful for her to get the full spousal support. If I’m paying for it, I should be able to receive full payment back from it.

 

[dixonge]

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...

 

[rothlev]

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.