Getting rid of WEP and GPO?

[zl55lz]

Very interesting comments by all. Interesting to see the different opinions.

 

[Teacher Terry]

Terry; Were your calculations for WEP or GPO and if for WEP, did you do your math the way I did in my question above( Original WEP deduction scaled up by the COLA's since the original calculation)?

My calculation is for WEP and I didn’t take the colas into consideration. The bill does include back pay for one year.

 

[Texas Proud]

Don’t state employees also pay into Medicare? I don’t see the difference.

Well, interesting....

It seems that they did not have to until 1986... but many did...

Mandatory Medicare Coverage | State and Local Government Employers | SSA

Discusses Mandatory Medicare Coverage for State and local government employees

www.ssa.gov

There are some articles about how the changes to the state and local pensions have made them so bad that they do not qualify to be exempt... maybe pass a law requiring all to be in SS and get rid of the WEP etc...

 

[PERSonalTime]

The senate majority and minority leaders will find out if they actually will get 60 votes, if not, then filibuster will prevent getting onto the floor for a vote. Basically, if they don't get 60 votes, they won't get onto the floor for a vote. If they try without 60 votes, filibuster will kill it. Co-sponsoring a bill doesn't always translate to voting for the bill.

Well, if 60 votes is the threshold, why did the CS say he needed 15 republican votes?

 

[Chuckanut]

Well, interesting....

It seems that they did not have to until 1986... but many did...

Mandatory Medicare Coverage | State and Local Government Employers | SSA

Discusses Mandatory Medicare Coverage for State and local government employees

www.ssa.gov

There are some articles about how the changes to the state and local pensions have made them so bad that they do not qualify to be exempt... maybe pass a law requiring all to be in SS and get rid of the WEP etc...

We've certainly heard from some people that certain state's pension systems are not very good.

 

[RetiredHappy]

Well, if 60 votes is the threshold, why did the CS say he needed 15 republican votes?

Maybe 5 Democrats are out sick?

 

[Drake3287]

"Don’t state employees also pay into Medicare? I don’t see the difference"

Yes, but many have elected not to join/or drop out of Social Security simply because they felt a pension was better than SS and employees could simply save that money for themselves.

 

[youbet]

"Don’t state employees also pay into Medicare? I don’t see the difference"

Yes, but many have elected not to join/or drop out of Social Security simply because they felt a pension was better than SS and employees could simply save that money for themselves.

If you're talking about individual employees, they do not have a choice of electing not to join or drop out of SS.

 

[Mulligan]

If you're talking about individual employees, they do not have a choice of electing not to join or drop out of SS.

Our pension system held a one time vote for people in the system back in the 1940s to decide if they wanted to participate in SS also. They voted overwhelmingly against it and hasnt been addressed since…. I remembered about 15 years ago when I was retiring, my boss lamenting why so many retired people were still on the schools health insurance. I informed him any person employed prior to 1986 had the option to not participate in medicare. So they did not have the option to get off the insurance because they did not have the necessary medicare credits to qualify.

 

[Time2]

I'm confused, as I understand, you need to work 40 quarters to get Social Security. If you work 39, you are not eligible. So if a long term employee of an institution that is not required to pay SS, happens to have had a job where they did pay in for their 40 quarters, are the they penalized by the WEP or GPO. I suggest that would be wrong, but if you did work 40 quarters, you should at least get the minimum.

 

[Mulligan]

I'm confused, as I understand, you need to work 40 quarters to get Social Security. If you work 39, you are not eligible. So if a long term employee of an institution that is not required to pay SS, happens to have had a job where they did pay in for their 40 quarters, are the they penalized by the WEP or GPO. I suggest that would be wrong, but if you did work 40 quarters, you should at least get the minimum.

I can use myself as an example. My career did not pay into SS. But I worked in HS and college and various mickey mouse jobs over the years that all contributed to SS. So I have my necessary quarters to be eligible. At age 62 for example I would get around $225 or so after WEP knock down. If WEP provision is eliminated my statement showed I would get $505 according to SS. I used a WEP calculator a while back and that is where I got the first number. SS told me $505 in a statement, but it stated WEP/GPO if any were not reflected in that amount.

 

[Time2]

I can use myself as an example. My career did not pay into SS. But I worked in HS and college and various mickey mouse jobs over the years that all contributed to SS. So I have my necessary quarters to be eligible. At age 62 for example I would get around $225 or so after WEP knock down. If WEP provision is eliminated my statement showed I would get $505 according to SS. I used a WEP calculator a while back and that is where I got the first number. SS told me $505 in a statement, but it stated WEP/GPO if any were not reflected in that amount.

So, even though you worked your 10 quarters, you get a penalty for having not paid in during your other working years. Seems, if you compared two people one that only worked 40 quarters and one that worked 40 quarters and then worked at a job that didn't pay SS, they should get the same amount for their 40 quarters. One caveat I could think of would be, do the taxpayers add anything to the pensions of these workers, if the taxpayers do and it is more than an employers normal contribution 6.2%, then there should be some adjustment to their SS.

 

[RetiredHappy]

So, even though you worked your 10 quarters, you get a penalty for having not paid in during your other working years. Seems, if you compared two people one that only worked 40 quarters and one that worked 40 quarters and then worked at a job that didn't pay SS, they should get the same amount for their 40 quarters. One caveat I could think of would be, do the taxpayers add anything to the pensions of these workers, if the taxpayers do and it is more than an employers normal contribution 6.2%, then there should be some adjustment to their SS.

You've got it. Taxpayers pay the "employers" portion of the government pension. WEP ensures that it looks at both the non-SS paying government pension amount and the SS amount and knocks the SS down because of bend points - SS paying more for those with lower contributions, helping the poor.

 

[fosterscik]

You've got it. Taxpayers pay the "employers" portion of the government pension.

I worked for a state government and get both a state pension and SS. In my case the State and I paid the usual SS amounts (6.2% each) and I paid 9% of my salary into the State pension fund (the State paid 12% of my salary). I'm happy with the diversified retirement funding sources, but I would not be happy if others who did not pay into SS got WEP/GPO waived.

 

[Drake3287]

"If you're talking about individual employees, they do not have a choice of electing not to join or drop out of SS"

Correct, meant to imply the government agency, with the agreement of employee groups elected to either drop out or never belong to SS in the first place. In my case, when I started employment with a local government in the early 80's we paid into SS but shortly afterwards both the city and employee groups voted to pull out of SS with the city agreeing to pay each employee a yearly "bonus" check which was based on the money the city was saving by not paying the employer portion. In later years we agreed to give up this yearly bonus check in exchange for a better pension plan.

 

[Chuckanut]

"Don’t state employees also pay into Medicare? I don’t see the difference"

Yes, but many have elected not to join/or drop out of Social Security simply because they felt a pension was better than SS and employees could simply save that money for themselves.

Those of us who did pay into the SS system helped to pay the benefits of other older retired people as well as stash some savings for our SS benefits.

Note the difference.

 

[Mulligan]

So, even though you worked your 10 quarters, you get a penalty for having not paid in during your other working years. Seems, if you compared two people one that only worked 40 quarters and one that worked 40 quarters and then worked at a job that didn't pay SS, they should get the same amount for their 40 quarters. One caveat I could think of would be, do the taxpayers add anything to the pensions of these workers, if the taxpayers do and it is more than an employers normal contribution 6.2%, then there should be some adjustment to their SS.

For me, I have long understood the WEP and the bend points, etc. Also, what is factored into my significantly lower WEP SS check, is many of my previous credit quarters were of a “mickey mouse” variety at minimum wage and seasonal. I had a friend who had what they would define as “substantial” SS working year credits and for a longer period of time. Therefore, the WEP didnt cut his SS he is drawing as substantial percentage wise as mine will be.
Also had another friend who was in same position as the above person. Except he was still working his non SS pension job, but was 62, so he started drawing his SS while working. Since he hadnt retired yet, the WEP hadnt kicked in yet, so he was drawing his full age 62 reduced SS. When he retired about 6-7 years later a couple years ago, he didnt notify SS he had started drawing the non SS covered pension. Never fear he said, as about 3-4 months later, SS notified him and sent him a request to pay back the extra money he had been drawing. So it appears they have the means to figure this out on their own.

 

[Chuckanut]

So, even though you worked your 10 quarters, you get a penalty for having not paid in during your other working years. Seems, if you compared two people one that only worked 40 quarters and one that worked 40 quarters and then worked at a job that didn't pay SS, they should get the same amount for their 40 quarters.

Once again, this argument ignores the SS payment bend points that favor lower income earners compared to higher income earners. The SS payment is based not only the number of quarters worked, but also which side of the bend points the person falls on. The above argument ignores the bend points.

If SS paid the same percentage amount to high and low income people there would be no problem. But, it pays proportionally more to lower income earners than higher income earners. That means some people who did not pay as much into the SS system get the same higher payout as Lower-Income earners, even when they are higher-income earners. WEP corrects for that. If it needs fixing in some cases, then fix it. Repealing WEP is certainly unfair to the majority of SS recipients.

 

[Time2]

Once again, this argument ignores the SS payment bend points that favor lower income earners compared to higher income earners. The SS payment is based not only the number of quarters worked, but also which side of the bend points you fall on. The above argument ignores that.

Are you talking about just a regular lifetime SS paying employee? I'm not sure I understand. Does the bend point take into account the work income of a non SS taxed SS? I don't think so.

If SS paid the same percentage amount to high and low income people there would be no problem. But, it pays proportionally more to lower income earners than higher income earners. That means a few lucky people who did not pay as much into the SS system get the same higher payout as Lower-Income earners, even though they are higher-income earners. While the people who paid into the SS system all their lives get stuck being treated as they should be treated. Why is that fair?

As you said in #291, the people who paid into the SS system all their lives, helped to pay the benefits of other older retired people, vs the non SS paying worker. So maybe not fair. However, I doubt I paid in enough to helped to pay the benefits of other older retired people, as both side of my SS payments will be paid back to me in less than 4 years. If we don't factor in any growth or inflation. But then we are getting into, should there be tiers in the system. Tiers may not be fair, but I think they are good for society.

 

[Chuckanut]

"If you're talking about individual employees, they do not have a choice of electing not to join or drop out of SS"

Correct, meant to imply the government agency, with the agreement of employee groups elected to either drop out or never belong to SS in the first place. In my case, when I started employment with a local government in the early 80's we paid into SS but shortly afterwards both the city and employee groups voted to pull out of SS with the city agreeing to pay each employee a yearly "bonus" check which was based on the money the city was saving by not paying the employer portion. In later years we agreed to give up this yearly bonus check in exchange for a better pension plan.

I think main point above is that the non SS payers took home more money at the end of the year than those who paid into the SS system. That is a point that is often overlooked by those who think WEP is “unfair”. A valid question would be “What happened to the extra take home pay? How was it used?”

I had no extra take home pay. Much of my SS tax payments were used to fund the retirement of older people such as my parents, grand-parents, as well as people I never knew. Meanwhile those who did not pay into the SS system did not have to help fund the payments to the then current retired people.

 

[Chuckanut]

Are you talking about just a regular lifetime SS paying employee? I'm not sure I understand. Does the bend point take into account the work income of a non SS taxed SS? I don't think so.

Non SS work is apparently invisible to the SS computers that figure our benefits. Thus, a person who did not pay much into SS looks like a lower income person who would be paid a higher proportianal benefit. But, in reality he/she may have earned the same amount or even more than a person who paid fully into to SS for their entire working lives. That is the problem that WEP is supposed to correct.

If WEP’s correction is not working correctly, then it would be fixed. Not repealed. Repeal is throwing the baby out with the bath water.

 

[CRLLS]

I'm confused, as I understand, you need to work 40 quarters to get Social Security. If you work 39, you are not eligible. So if a long term employee of an institution that is not required to pay SS, happens to have had a job where they did pay in for their 40 quarters, are the they penalized by the WEP or GPO. I suggest that would be wrong, but if you did work 40 quarters, you should at least get the minimum.

That is an often-quoted requirement here. I recently learned that it is wrong. You need to earn 40 credits.

From SSA:

You must earn at least 40 Social Security credits to be eligible for Social Security benefits.

In 2024, you earn 1 Social Security and Medicare credit for every $1,730 in covered earnings each year. You must earn $6,920 to get the maximum 4 credits for the year.

 

[youbet]

Taxpayers pay the "employers" portion of the government pension.

Well........... maybe in some situations. In Illinois, there is little evidence of the state actually contributing to the state pension fund. Over the years, there were often announcements of legislature approved "contributions" but then much more subdued announcements of the state "borrowing" or "diverting" that amount or more back from the fund.

It should be noted that in Illinois, there isn't a set percentage of salaries that the state is mandated to contribute. Rather, each year the actuaries of the state pension system calculate the amount that needs to be contributed to keep the plan viable. The state legislature then considers that amount but approves something less, usually much less, or even zero.

For example, teachers paid about 9% of their salary into the fund over the years. The state some years paid something in, some years not, and always "borrowed" from the fund with sketchy records of repayment or "diverted" the money to other uses. A real shell game.

Governor Rod Blagojevich, from his prison cell, tried to explain it all years ago, but it never made sense. Meanwhile the fund, 40-some percent funded, appears to have only effectively received monies from employees and little/none from the state government. Your state may be different of course.

In recent years, there does seem to have been some effort by the state to contribute. The amount is always far below the actuarial amount called for, but at least it's a token effort and appreciated by the employees.

 

[Texas Proud]

That is an often-quoted requirement here. I recently learned that it is wrong. You need to earn 40 credits.

From SSA:

Is that from the site?

I ask because you do not get 4 credits for making over $7000 in the first 3 months and not working the rest of the year... that stmt seems to say you do..

WELLLLL, I did look it up and it appears I might be wrong!!! Interesting...

 

[youbet]

Is that from the site?

I ask because you do not get 4 credits for making over $7000 in the first 3 months and not working the rest of the year... that stmt seems to say you do..

WELLLLL, I did look it up and it appears I might be wrong!!! Interesting...

Tex, you and I are too old to keep all this stuff straight. (And we don't need too!) I also remember "back in the day" when you earned "quarters" quarter by quarter. No amount of money earned in one quarter would buy you the whole year's four quarters. But I noticed that changed. Now it's an annual amount that if met buys you all four quarters regardless of how it's spread over the year. And they now call the "quarters" credits to remove the time period aspect.