WEP/GPO SS Webinar info

[mickeyd]

Not everyone will be impacted by WEP/GPO, but this may be informative for those who fall into this abyss and want to know more about why you will receive less.

How Some Public Employee or Teacher Pensions May Affect Social Security Benefits
In this webinar, we will walk you through how the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) may affect Social Security benefits of workers whose employers do not withhold Social Security taxes from their salary, such as some school systems and some local, state and federal government agencies.Watch the webinar on Wednesday, February 16, 2011 at 2:00 p.m. EST

Social Security Online - Webinars

 

[martyb]

Thanks for posting this. I'll be affected since I'm a federal employee covered by CSRS. I do qualify for SS, but greatly reduced by the WEP. I'm somewhat familiar with the WEP, but not so much the GPO.

 

[Rustward]

A couple of weeks ago I saw a very good presentation on the subject given by a guy from Social Security.

 

[youbet]

Both WEP and GPO come into play at our house since DW is a retired public school teacher but did accumulate 40 SS qtrs with part time jobs, primarily while in highschool and college. We've been very familar with both WEP and GPO for many years and have planned accordingly. I'm always surprised when someone with a long career in a job not covered by SS has somehow missed this information.

The primary impact for us is that I started SS at 62 since that is the only way I could provide some benefit/protection for DW in the event I die young. Since she can't collect SS as a widow based on my earnings (due to GPO), my collecting at 62 preserves more of our FIRE portfolio which would then be available to her.

At first we considered WEP and GPO to be unfair. But years ago when DW's union did a survey questioning whether members would rather participate in SS (pay the tax) and therefore not be subject to WEP and GPO, they responded overwhelmingly "NO!" So I guess if you don't want to participate in paying in, you shouldn't participate in taking out.

 

[mickeyd]

At first we considered WEP and GPO to be unfair.

That was my initial thought also, but after I read about it and thought about it logically, I realized that it is actually unfair to NOT penalize my wife in some way for flying under the SS radar for a few years while teaching.

 

[youbet]

That was my initial thought also, but after I read about it and thought about it logically, I realized that it is actually unfair to NOT penalize my wife in some way for flying under the SS radar for a few years while teaching.

And if your DW flew under the SS radar for only a few years, the penalty is small.

BTW, regarding my DW's union, they still feel strongly that teachers should not pay into SS but should be able to collect widow/widower's benefits from SS based on the earnings of a deceased spouse.

BTW, there are lots and lots of misconceptions about what WEP and GPO are and a significant amount of "Chicken Little" antics as well. They only impact folks with long careers in non-SS covered jobs contrary to the rumor that even a day of non-SS employment screws you.

Your advise for interested folks to check out the webinar is excellent.

 

[ronin]

Received my SS statement today so I plugged the numbers from the past years where I had SS taxable income into the online WEP calculator on the SS website to compare with what I have in my self-created spreadsheet planning file and it agrees to the dollar. So, like it or not, I have a pretty good idea of the coming haircut.

 

[Rustward]

Received my SS statement today so I plugged the numbers from the past years where I had SS taxable income into the online WEP calculator on the SS website to compare with what I have in my self-created spreadsheet planning file and it agrees to the dollar. So, like it or not, I have a pretty good idea of the coming haircut.

You must have had work "not covered by Social Security" from which you will get a pension along with 40 or more SS credits from other employment. How does the total of the pension + the SS you are projected to receive compare to the "unreduced" SS amount?

 

[ronin]

You must have had work "not covered by Social Security" from which you will get a pension along with 40 or more SS credits from other employment. How does the total of the pension + the SS you are projected to receive compare to the "unreduced" SS amount?

Yep, career teacher with an early minimum wage SS work history. The bottom line is you lose the max, around 374 per month on the WEP, but since there are a bunch of zeros in your SS taxable work history and the quarters you have are extremely low wage, you lose your shorts and are supposed to accept it as fair. But that is a value judgement and a lot of opinion says "screw you, you whiner" so I grab my ankles and take it.

Pension is cut about cut in half for the time out of teaching in SS covered employment, and SS is cut in half for working as a teacher. Oh well. Life is very good and that's the bottom line.

 

[kyounge1956]

I work for local city government and am eligible for a public employee pension, but here, City employees also pay into Social Security. Am I correct to assume that my SS benefit will not be reduced by WEP/GPO?

 

[youbet]

I work for local city government and am eligible for a public employee pension, but here, City employees also pay into Social Security. Am I correct to assume that my SS benefit will not be reduced by WEP/GPO?

Yes, you are correct. Your SS will not be reduced by WEP and your ability to collect a survivor's benefit will not be reduced by GPO.

 

[yakers]

Yes, you are correct. Your SS will not be reduced by WEP and your ability to collect a survivor's benefit will not be reduced by GPO.

AFAIK that is correct but may require 30 years, not 10, under SS to get unrestricted SS and another pension.

 

[kyounge1956]

AFAIK that is correct but may require 30 years, not 10, under SS to get unrestricted SS and another pension.

Please clarify! I plan to retire with about 28 years of City employment, and I have a small amount of work history from before that.

Do I need to make sure my total work history is at least 30 years to avoid a reduction in SS?

 

[kyounge1956]

Yes, you are correct. Your SS will not be reduced by WEP and your ability to collect a survivor's benefit will not be reduced by GPO.

My ability to collect a survivor's benefit will, however, be severely reduced by my never having been married.

 

[martyb]

My case is this: I paid into SS from 1973 through 1981, when I separated from active duty. I began my federal career, where I didn't pay SS anymore, in 1981. I was covered by a CSRS pension defined benefit plan.

However, I also was in the Air Force Reserve, retiring in April 2010. For all of those years in the reserve, I did have SS witheld from my military pay each month. Through all of the 80's, 90's & through April of 2010, every month my military pay included Social Security payments.

The most $$ I ever earned from the reserves was $15000 in one year, but most years was $10,000 or less. So...while I did pay less than if all of my income was covered under SS, I still did pay SOMETHING into the system.

Yet, because SS has minimum requirements of covered (qualifying) income each year, I will be treated as if I paid nothing into the system for all of those years. So...they took my money for 28 1/2 years that I paid into the system as a reservist and I get credit for none of that time.

I can see why I shouldn't get full credit, because it wasn't full-time income, but I believe I should get some kind of partial, pro-rated credit. Either that or give back what I paid in. Of course, I know neither is going to happen.

 

[Tadpole]

I have done extensive calculations using the downloadable SS calculator (AnyPIA) from SSA. The way to look at the payout and the GPO/WEP is to look at wage cohorts. For example - what was is the ratio of benefit to "total payroll tax paid" for two people earning the exact same per year throughout their career, one paying into SS every year and the other paying in, say, 40 quarters. Although SS is not a ROI benefit, WEP is close to thinking ROI per year. It actually turns out that WEP is fairer than not having WEP.

I am not sure that I have ever understood GPO except that it addresses fairness too. Now, I guess you could argue that a spouse who never worked has the highest (unfair?) ROI since spouses that did work loose either their own or their spouse's entire benefit if they become widowed. I naturally went WTF for awhile because of non-working spousal benefits and GPO. I think maybe GPO is the spousal equivalent of a wage cohort rule for spouses and takes the non-working spouse out of consideration. If you think that way, it makes sense. I have never run these calculations so I can't report the relative ROI results for GPO.

What's odd, and even Orszag, when he was at Brookings made a similar point, is that today we have the ability to collect the data to do the exact wage cohort calculation instead of using a one-fits-all rule. One thing you notice if you run a few "what-if" scenarios is that, base on ROI, WEP is fairer but not the same "fairness" for each scenario. This could be fixed.

 

[youbet]

AFAIK that is correct but may require 30 years, not 10, under SS to get unrestricted SS and another pension.

No. Poster and his employer pay into SS at his current gov't job. Therefore a pension from that gov't job will not subject him to WEP or GPO. It's not the govt pension that triggers WEP, it's NOT paying into SS.

From the SS site:

The Windfall Elimination Provision affects how the amount of your retirement or disability benefit is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security ­benefit than you otherwise would receive

.

The "number of years" you're refering to applies if you work in a gov't job not covered by SS AND work at another job covered by SS. This is common with teachers who work SS covered summer jobs. If you work enough years (30) in the SS covered job, despite the non-SS covered gov't job, you can also avoid WEP. The SS covered earnings must meet a minumum called "substantial earning." You can look up the table giving the number of SS-covered job years vs. WEP on the SS web site.

 

[youbet]

Please clarify! I plan to retire with about 28 years of City employment, and I have a small amount of work history from before that.

Do I need to make sure my total work history is at least 30 years to avoid a reduction in SS?

No, see my post above. And, importantly, go to the SS web site yourself and read about it. You should also go to an SS office and have them look up your records and ask.

I'm reasonably confident in my answer to your question but my knowledge is based on research I did a few years ago to help DW who was about to retire from a non-SS covered teaching job. She also worked in excess of 40 qtrs in SS covered jobs. My main interest was determining what to do about my SS given that it turned out she cannot collect a survivor's benefit based on my SS. Turned out the best thing, to provide protection for her, was to start my SS at 62 and therefore delay depleting our portfolio by the amount of my SS earnings. But that is a GPO, not WEP, issue.

I can assure you that if I am wrong and you mention that you got the faulty info from a participant in an internet forum, the SS folks will cut you zero slack and laugh you out of the office. So, go see them ahead of time. But, from the SS site:

The Windfall Elimination Provision affects how the amount of your retirement or disability benefit is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security ­benefit than you otherwise would receive

.

You said that your gov't employer does pay into SS for you and that you pay your share. So, WEP should not apply to you.

I can also mention one anecdotal example. A close friend recently retired from the Wis University System. He paid into SS as part of that job and also receives a govt pension from the state of Wis. Because he and the state of Wis paid into SS at all times while employed by the state, he says his SS is not reduced by WEP.

 

[youbet]

My case is this: I paid into SS from 1973 through 1981, when I separated from active duty. I began my federal career, where I didn't pay SS anymore, in 1981. I was covered by a CSRS pension defined benefit plan.

However, I also was in the Air Force Reserve, retiring in April 2010. For all of those years in the reserve, I did have SS witheld from my military pay each month. Through all of the 80's, 90's & through April of 2010, every month my military pay included Social Security payments.

The most $$ I ever earned from the reserves was $15000 in one year, but most years was $10,000 or less. So...while I did pay less than if all of my income was covered under SS, I still did pay SOMETHING into the system.

Yet, because SS has minimum requirements of covered (qualifying) income each year, I will be treated as if I paid nothing into the system for all of those years. So...they took my money for 28 1/2 years that I paid into the system as a reservist and I get credit for none of that time.

I can see why I shouldn't get full credit, because it wasn't full-time income, but I believe I should get some kind of partial, pro-rated credit. Either that or give back what I paid in. Of course, I know neither is going to happen.

This info is a tad confusing (hey, probably me, not you). Are you saying that your annual income from part time reserve pay was under the "substantial earning" level specified for each year as shown in the chart about half way down on this page:

Windfall Elimination Provision

Is that what you mean when you say you're not getting full credit? If that's the case, and I think it is, then the years your reserve pay was not up to the minimum amount will not count as "years of substantial earnings." So, yep, your reserve years SS benefit will be calculated at the WEP amount. Again, if that's the case and that's what you mean.

 

[martyb]

This info is a tad confusing (hey, probably me, not you). Are you saying that your annual income from part time reserve pay was under the "substantial earning" level specified for each year as shown in the chart about half way down on this page:

Windfall Elimination Provision

Is that what you mean when you say you're not getting full credit? If that's the case, and I think it is, then the years your reserve pay was not up to the minimum amount will not count as "years of substantial earnings." So, yep, your reserve years SS benefit will be calculated at the WEP amount. Again, if that's the case and that's what you mean.

Yes, that's what I'm saying. I'm saying that I DID pay into SS from my reserves pay for all of the years I was in, but due to the "substantial earnings" threshold as shown on that table you linked to, I get credit for none of it. I understand that I shouldn't get the same credit as someone with greater earnings, but if I'm not going to get ANY credit for all those years, then why should I have had ANY SS witheld from my reserve pay? The reduced (under WEP) SS that I will collect when I file at age 62 will be based on my earnings between 1973 & 1982 (or '83..I forget). But...for all of the SS I had witheld from my reserves earnings between 1983 & 2010, I'll get nada. Seems like I oughta get at least a lil sumpin' for that contribution. I'll get around $300 for the early earnings ('73-'83).

 

[youbet]

The reduced (under WEP) SS that I will collect when I file at age 62 will be based on my earnings between 1973 & 1982 (or '83..I forget). But...for all of the SS I had witheld from my reserves earnings between 1983 & 2010, I'll get nada. .

That does not seem correct per my reading of the SS site. (I have no qualifications to be an expert. I only read the SS site and other SS presentations extensively figuring this out for DW.) I think you should receive credit for all your, and your employer's, SS contributions, both the '73 to '82 years as well as the following part time years. The part time years will not count as "years of substantial earnings" per SS rules. But they should count in your WEP formula calculated payout.

If someone at SS gave you the information that those less than "substantial earnings" part time years wouldn't count, I'd go challenge that with another person.

I hope I'm right, and I think I am, because that means you're going to be getting a larger payout (still calculated by the lower paying WEP formula) than you're expecting.

Edit: Have you used the WEP calculator on the SS site to check the payout yourself? It's possible that the $300 you're expecting does include WEP level credit for the part time years and there is simply a misunderstanding over semantics. That is, a misunderstanding over what "counting" and "not counting" means.

 

[tmelinaraab]

I work for local city government and am eligible for a public employee pension, but here, City employees also pay into Social Security. Am I correct to assume that my SS benefit will not be reduced by WEP/GPO?

Because you and your employer participate in Social Security, you are NOT subject to any benefit reduction under the WEP or GPO.

For more information see Social Security Online -- Information for Government Employees, which features prominently the following statement:

If you didn't pay Social Security taxes on your government earnings and you are eligible for Social Security benefits, the formula used to figure your benefit amount may be modified, giving you a lower Social Security benefit.

Working for public employees in Texas--first state employees and now school employees, I've followed closely issues concerning the WEP and GPO for the last twelve years.

In Texas, state employees participate in a state pension plan (Employees Retirement System of Texas) AND participate in Social Security. Texas state employees are NOT subject to WEP or GPO as a result of their state employment.

School district employees in Texas participate in another state pension plan (Teacher Retirement System of Texas). About 95 percent of Texas school employees work in districts that do NOT participate in Social Security and thus ARE subject to WEP and GPO. The small number of school employees who work in Social Security participating districts (Austin and San Antonio being the only large ones) are NOT subject to WEP and GPO as a result of their district employment.

Bottom line: You've nothing to worry about on this front. Enjoy your retirement if you afford it.

Ted

 

[widowe]

widow benefits and wep

I have been working as a teacher for 11 years and pay into a teacher retirement; no payments to ss. My husband passed away at age 55 after working for more than 30 years and paid into ss. I would like to retire in two years. Will I be able to collect my husband's ss or will WEP wipe it out?

 

[jdw_fire]

I have been working as a teacher for 11 years and pay into a teacher retirement; no payments to ss. My husband passed away at age 55 after working for more than 30 years and paid into ss. I would like to retire in two years. Will I be able to collect my husband's ss or will WEP wipe it out?

WEP wont affect it at all but GPO will ( Government Pension Offset)

How much will my Social Security benefits be reduced?

Your Social Security benefits will be reduced by two-thirds of your government pension. In other words, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits. For example, if you are eligible for a $500 spouse’s, widow’s or widower’s benefit from Social Security, you will receive $100 per month from Social Security ($500 – $400 = $100).
If you take your government pension annuity in a lump sum, Social Security still will calculate the reduction as if you chose to get monthly benefit payments from your government work.

even though the example uses a civil service pension it applies to any pension earned on work not covered by SS.

 

[nun]

I have 17 years of SS payments, but I'll get a double WEP whammy as for the last 7 I've been a state employee paying no SS but paying a mandatory 11% of my salary into a DC plan, and I've been paying into UK state retirement system for the past 25 years. So both of those are retirement plans associated with non SS work. If I take SS at 62 I'll get $1400/month.

The UK pension should give me lifetime COLAed payments of $1500 a month from age 66.The great thing is as I'm an expat my annual contributions in UK SS tax are only $300 and I only have to have 30 years of contributions (ie 5 more years) to qualify for the full pension. So I'll have paid $7500 in overall to qualify, it's a great deal.