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The
Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP)
The GPO and WEP are Social Security provisions which impact individuals
who have chosen to serve their school boards, towns, cities, counties
and states in public jobs. These provisions reduce retired public
employee's individual Social Security and survivor benefits. The
Government Pension Offset (GPO) eliminates or reduces the spousal
benefit by two-thirds the value of a teacher's retirement benefit. The
Windfall Elimination Provision (WEP) reduces, but does not eliminate, a
portion of an individual's Social Security earned from other work
outside of his/her public employment.
The GPO and WEP affect public employees in states that do not
participate in the Social Security system. These Social Security benefit
reductions affect public employees in virtually every state; however,
those states with the greatest impact are Alaska, California, Colorado,
Connecticut, Illinois, Kentucky, Maine, Massachusetts, Missouri, Nevada,
New Mexico, Ohio, Rhode Island, and Texas.
Non-public employees with private pensions get to keep their entire
Social Security benefit and their Social Security survivor benefits.
Take a minute to contact members of your congressional delegation to let
them know you do not appreciate being treated differently from your
family members and friends who worked in private sector jobs.
What is Being Proposed and What You Can Do
Each year, several bills are proposed by members of the U.S. Congress
which address the reduction or repeal of both the GPO and WEP. The
Coalition to Preserve Retirement Security has information regarding
these proposals posted on their website,
www.retirementsecurity.org.
In addition, a grassroots organization founded in California--Social
Security Fairness--has developed a web site that provides updated
information on the repeal initiative. That web site address is
www.ssfairness.com. The web site provides a thorough explanation of
GPO/WEP, and suggests steps you can take to further the cause for the
repeal of these federal statutes.
You can find the latest information on the proposals before the U.S.
Congress by searching for GPO repeal and WEP repeal on the web site of
the Library of Congress. That web site address is
http://thomas.loc.gov.
What
You Need to Know
The
Government Pension Offset
The
Government Pension Offset (GPO) eliminates or reduces the spousal
benefit by two-thirds the value of a teacher’s retirement benefit. This
reduction occurs whether the Social Security receiving spouse is alive,
deceased, or divorced. Remember, the GPO only impacts those individuals
who were not eligible to retire prior to December 31, 1982 (at least age
55 and twenty years of credible service). The following examples help
clarify how the GPO may affect an individual in these different
circumstances.
Michael collects a Social Security benefit of $800 per month. His wife,
Jan, who is a retired public school teacher worked for a school district
that did not pay Social Security on its employees. Jan receives a
monthly teacher annuity of $1,200. For the purpose of this example, both
Michael and Jan are age 65 or older.
Effect of GPO with Living Spouse
Jan’s potential Social Security: Benefit: $800 X 1/2 = $400
Amount Calculated for GPO reduction: $1,200 X 2/3 = $800
Total monthly Social Security benefit: $400 - $800 = No benefit
Effect of GPO upon Death or Divorce
Jan’s potential Social Security Benefit: $800
Amount Calculated for GPO reduction: $1,200 X 2/3 = $800
Total Social Security Benefit: $800 - $800 = No benefit
These examples illustrate a complete offset, whereas in other
situations, there may not be a complete offset. It is important to
remember that in cases where a complete offset has not occurred, any
increase in the teacher’s benefit, will result in a recalculation of the
Social Security benefit. In other words, as the teacher’s annuity goes
up, the Social Security benefit goes down.
The Windfall Elimination Provision (WEP)
The Windfall Elimination Provision uses a modified formula that may
reduce your earned Social Security benefit. The modified formula applies
to you when you attain age 62 or if you become disabled after 1985 and
first become eligible after 1985 for a monthly pension based in whole or
in part on work where you did not pay Social Security taxes.
The modified formula is used to figure your Social Security benefit
beginning with the first month you get both a Social Security benefit
and a teacher’s retirement benefit. However, you can be exempt from WEP
if you retired or were eligible to retire prior to December 1985 or have
30 years of substantial Social Security earnings.
The WEP reduction formula does not totally eliminate potential Social
Security earnings. In addition, the WEP reduction is not based on how
much you earned from other work not covered by Social Security (e.g.,
your teacher’s retirement benefit). The formula used for calculating the
first portion of the Social Security benefit will be reduced if you have
less than 30 years of “substantial” earnings in Social Security. Table A
in the sidebar illustrates the amount of earnings Social Security
considers “substantial” for various years. Table B illustrates the
reduced percentage used to calculate the first portion of your Social
Security benefit based on less than 30 years of “substantial” earnings
in Social Security.
Contact a Social Security representative to verify your years of
“substantial” earnings and request a calculation of your Social Security
benefit.
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