Alert: If you have both private/public sector earnings, SS benefits can be reduced or eliminated

[radhika]

The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) deny fully-earned Social Security Benefits to more than one million second-career public servants when they retire or when a spouse dies.

At this point, 15 states (including my state, California) fall under this provision, which was enacted in 1983. This was long before many current public employees joined the workforce. The other 35 states have passed legislation to eliminate this loophole from their retirement plans. More toxic is the GPO provision which does the same to surviving spouses of a wage-earner under this provision. You can Google to see if your state is one of them.

Lip service was paid over the years toward repeal. Representative Howard Berman introduced HR 235, but it sits in committee. Dianne Feinstein is likewise aware of the matter, but has not acted to push it. Out here in there is intense public pressure to cut the public workforce, cut public pensions and jobs are totally scarce. A matter that skated along during the good years is now getting critical. A strong effort is being made by a group called Social Security Fairness to push for a floor vote during the upcoming Lame Duck Session. Before the Catfood Commissars and anti-government, anti-SS types get the gavel.

Here is the site of the group coordinating for repeal.

www.ssfairness.com

They have a great PowerPoint on the facts, and action plans and lots of linkages. A webinar is being planned for after Thanksgiving. Sign up, circulate the info and spread the word. It's not just a matter for near-retirees, it's a critical way of standing up for the public commons, unions, aging parents and surviving spouses who could be caught in a cruel trap.

[madfloridian]

1. Florida eliminated that for teachers in the 70s I think.

It was a good move for teachers.

[exboyfil]

2. I do not know if the law is structured fairly

especially in regards to spousal exclusion, but, with Social Security's staggered funding formula something needs to be done to prevent the inequities associated with opting into the system after a career working outside the system. An example:

Both workers work from 22-65 at $50,000/yr in current year dollars
One worker is inside the S.S. system the entire time.
The other worker gets a state pension for 30 years of work outside the S.S. system (note at least in our state everyone who has a state pension type job would take it over S.S. any day - the payback is much better).

The one inside the system their entire life - Pays $280K into system form their and employer's withholdings. Gets a check for $1775/mo. for retirement. (13 yr. payback)

Same scenario for other worker who pays $84,500 and gets check for $937/mo. for retirement if no penalty is enforced for being outside the system for 30 years. (7.5 yr payback)

Now in this case I would argue that the worker should get a check for $495/mo. for retirement. This reflects a 32% participation rate.

For partial work histories then the formula could be adjusted as needed.

I would be in favor of adjusting the law in this fashion.

Public sector workers should never have been excluded from the S.S. system.

Another interesting one. An immigrant comes into this country at 55 and makes $40K/yr. The person was covered by their own pension system (perhaps self funded etc). They work for 10 years, pay in $52K into system, and get a check for $857/mo (5 yr. payback)