Retirement insights from a Colorado PERA perspective

Issues & Perspectives

Correcting the Math on the Windfall Elimination Provision

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On October 1, the Social Security Advisory Board (SSA Board) released a position paper describing a proposal to modernize the formula used to calculate Social Security benefits, “The Windfall Elimination Provision: It’s Time to Correct the Math.”

In the paper, the SSA Board recommends that beginning in 2017, Congress change the current Windfall Elimination Provision (WEP) formula to one that uses actual earnings data. The report states that data-based approach would be more fair for all workers and could be communicated to affected employees in a way that is more straightforward and easier to understand.

The position paper criticizes the current WEP formula, arguing that “it does not work as it should for people who work part of their careers in jobs not covered by Social Security.”

In 2017, Congress will have access to 35 years of data on earnings from covered and non-covered employment since WEP was implemented in 1983. A new formula could be applied to benefits of all retired worker and disabled worker beneficiaries newly eligible for benefits after December 2016.

Under this approach, a replacement rate would be calculated using both covered and non-covered earnings. Two workers with the same earnings, one from work that is all covered by Social Security and one from work that is only partially covered by Social Security, would have identical replacement rates of covered earnings, which is a fair outcome.

Representatives Kevin Brady (R-TX) and Richard Neal (D-MA) co-sponsored Congressional legislation introduced earlier this year that uses a proportional “Public Servant Fairness Formula” for beneficiaries with non-covered employment.

The Social Security Advisory Board recommends implementation of the new proportional formula. “Congress should change the WEP so that replacement rates are based on total earnings, regardless of whether they are from covered or non-covered employment,” the position paper states. “The process will appear to be and, in fact, will be more fair.”

The Social Security Advisory Board was created in 1994 when Congress passed legislation establishing the Social Security Administration as an independent agency. The seven-member bipartisan board advises the President, the Congress, and the Commissioner of Social Security on matters related to the Social Security and Supplemental Security Income (SSI) programs.

The SSA Board plans to release a future paper discussing the Government Pension Offset.

PERA encourages members and retirees to let their elected officials at the federal level know how the WEP and GPO have or will impact them.

Read more about the proposed WEP legislation on PERA on the Issues.

Comments

  1. Alfred F. Schossau Jr. says:

    This is simply a way for the regressive elements (neo-con and neo-liberal legislators) within the US government to
    quicken the demise of the SSA retirement system. Deplete the system as quickly as possible so that it can be transferred
    to a suitable ‘for profit’ financial institution which will make Wall Street really, really happy. The beneficiaries of the
    current system should think about those who have not secured a retirement……….. They may not be able to do so.

    • EPB says:

      If you earned credit under social security for work covered by social security you should be paid a proportional amount of those earnings regardless of other pensions you also qualify for.

      Penalizing one or reducing the credits you acquired while working under mandatory social security taxation and then telling you at retirement you aren’t eligible for what you originally earned is wrong.

      The yearly social security benefit estimate sent every year leads one to believe they are entitled to a certain amount and only later does one find out the toll the WEP extracts from ones earnings. This is not transparent nor complete data from the government.

      There should be a benefit minus WEP penalty number clearly stated and a refund of a portion of the 6.2% social security tax withheld since your not going to receive the benefit you were taxed at 6.2% for.

      you were required to pay for social security coverage but are now denied at retirement. The WEP needs removed now.

      • Patti says:

        I agree WEP should not exist at all. Not every state has it and it is unfair if you worked all of the years for both social security AND public service that paid into a retirement fund. Just plain wrong!

  2. T. White says:

    Alfred,
    It’s too late, social security was drained along time ago. It’s all printed money now!!!!

    • Margaret England says:

      Because of WEP I am a widow, receiving $295.00 per month from Social Security because I was denied the benefits I earned after working for over 13 years in the private sector. I was also denied benefits from my deceased husband’s Social Security because of WEP. I worked many years in the public sector, both my husband and I paid into Social Security – his 35 working years were all in the private sector and yet WEP has denied me all but this disgraceful monthly benefit because I draw a pension from PERA for working as a school secretary for 31 years. This is just plain WRONG and WEP needs to be repealed.

    • Alfred F. Schossau Jr. says:

      T. White,

      You should really try to read more about what you speak of…… But not in the printed media of the main stream
      press or on the totally lacking televised version of the same in this country.……. Be well………

      Alfred F. Schossau

  3. VJB says:

    Isn’t it interesting that employees of the Federal Government do not pay into Social Security?

    • Harriet says:

      That is not true…I retired from us navy reserve and had lots withheld from my paycheck (which was greatly reduced by WEP,along with other prior SSN positions). A total of 30years of sSN earnings, reduced by about 30% due to PERA

    • LSS says:

      Anyone who starting working for the Federal Government after 1983 pays into Social Security. Same goes for members of Congress. Many Federal employees worked before and after they became Civil Servants. Many worked part time jobs.
      Same goes for Teachers, City and State employees.

  4. Steve says:

    The effectiveness of Mr. Schossau’s argument is reduced by his use of “neocon and neoliberal” terms, which broadly paints elements of the media as liberal; no original thought here. And, no practical solutions. Just diatribe.

    As I read the (above) comments, I see people who have worked for a living, served their country, or who are suffering from an unjust system that needs to be corrected. I do not see liberal nor conservative. Their comments appear to have real life situations or suggestions. I, too, have taught school and worked on a farm. I paid into both programs. But, since I did not meet the “Annual Earnings Threshold (I’m not sure if that is the correct title) issued by Soc. Sec., I will NOT get an adjusted-incremental Soc. Sec. benefit, based on the work I performed, even though I worked for the benefit. I would like to see an incremental plan brought to bear, as suggested in the article.
    How about fixing the system, for the widow at least, who worked, as opposed to suggesting she “read more?” Peace.

  5. Carole says:

    So those of us that have been screwed for years under the WEP are just left out if it goes into affect in 2017 and we retired prior to 2016? How convenient for the government.

  6. Pam Brauer says:

    WIDOWS NEED HELP NOW! Kent Conrad and James Lockhart….think that Soc Security should be MORE FAIR to Widowed Women! Conrad thinks widowed women should GET THEIR OWN BENEFITS and 3/4 of their DECEASED SPOUSE’S BENEFITS! This model for Soc Sec would keep Widowed Women OUT OF POVERTY!!! REPEAL: WEP & GPO for Widowed Women WHO TEACH IN MISSOURI! Tell Congressmen to PASS: HR 973 & S 1651. OR….Time To Correct the MATH FOR WEP….per Kevin Brady’s HR 711.

    Social Security Advisory Board should be publishing a POSITION PAPER on the GOVERNMENT PENSION OFFSET….and the harmful effects it causes for widows…by the end of this year! Just as BRADY has said…TIME TO CORRECT THE MATH FOR WEP…the SSAB….should be documenting that it’s TIME TO CORRECT THE MATH FOR WIDOWS!!! WE EARNED AND DESERVE OUR SURVIVOR BENEFITS!!!

    I asked NEA lobbyist…Al Campos…questions about GPO….and he couldn’t answer my questions !!! I have paid NEA union dues for 25 years! I need to know about the 60 months exemption for GPO. Supposedly…if you work the LAST 60 MONTHS…IN A POSITION THAT PAYS INTO SOC SECURITY…AND THE JOB IS IN THE SAME RETIREMENT SYSTEM….YOU CAN BE EXEMPTED FROM GPO . Has anyone tried this? What do you know about GPO….that I don’t know ?????

    Oh—-Pat Toomey (Penn) supports S 3303….but it would ONLY REPEAL…WEP & GPO….FOR POLICE OFFICERS AND FIREFIGHTERS. WHY DOESN’T S 3303…INCLUDE HARD-WORKING TEACHERS……ESPECIALLY WIDOWS ???????

    There’s suppose to be a law…that all new teachers in Missouri…are suppose to SIGN A PAPER….stating that the SCHOOL DISTRICT…has INFORMED THEM ABOUT SOCIAL SECURITY…AND THE 2 LAWS….WEP & GPO. I just asked a NEW TEACHER….if she signed her paper….SHE SAID SHE DIDN’T KNOW WHAT I WAS TALKING ABOUT! I personally don’t think the LAW is being followed. I know NEA….NEVER TALKS ABOUT WEP & GPO!!! Whenever I tell someone about these 2 LAWS…..they don’t believe me! My Fnancial Planner and Tax advisor….were completely unaware of WEP & GPO !!!

  7. GM Santo says:

    Although this article is approaching two years since originally published, the issue(s) are still relevant! I suggest a polite and to-the-point letter mailed to each member of Colorado’s U.S. delegation, which simply states that YOU support and want THEM to support nothing less than repeal of GPO & WEP (as anything less would not be fair, and fairness should not compromise with inequality).

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