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Social Security AdministrationSocial Security Administration
Windfall Elimination Provision&
Government Pension Offset
Windfall Elimination Provision&
Government Pension Offset
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Today’s Objectives
Fifteen minutes from now you will know:
• If I will be eligible for retirement benefits
• How my benefits are figured
• If I am eligible for Spouse or Survivor benefits
• If I will be eligible for Medicare
• If I will be eligible for retirement benefits
• How my benefits are figured
• If I am eligible for Spouse or Survivor benefits
• If I will be eligible for Medicare
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And Those Pesky Offsets
• One reduces your own benefit
• The other reduces any benefits you might be due on your spouse’s Social Security record
• You will learn why they were enacted.
• One reduces your own benefit
• The other reduces any benefits you might be due on your spouse’s Social Security record
• You will learn why they were enacted.
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Two Important Points
If you have 40 credits you will be eligible for a monthly retirement benefit
If you have paid Social Security taxes for fewer than 30 years, your benefit will be reduced
If you have 40 credits you will be eligible for a monthly retirement benefit
If you have paid Social Security taxes for fewer than 30 years, your benefit will be reduced
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How We Figure Your Benefit
Based on your highest 35 years of wages
Not high 3 or last 5
Based on your highest 35 years of wages
Not high 3 or last 5
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Windfall Elimination Provision
Social Security is not a pension plan but a Social Insurance plan. As such, it has “social” goals, among which is to:
Social Security is not a pension plan but a Social Insurance plan. As such, it has “social” goals, among which is to:
Raise the standard of living for lower income workers
Raise the standard of living for lower income workers
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How We Do This
• A weighted
benefit formula
• Lower income workers receive a higher rate of return
• A weighted
benefit formula
• Lower income workers receive a higher rate of return
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How Social Security Determines Your BenefitHow Social Security Determines Your Benefit
Social Security benefits are based on earnings
Step 1 Your wages are adjusted for changes in wage levels
Step 2 Find the monthly average of your 35 highest earnings years
Step 3 Result is “average indexed monthly earnings”
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If your average monthly earnings are = $5,200Then your monthly benefit would be = $1,919
Average Monthly Earnings $5,200
90% of First $711 = $639
32% of Earnings over $711 through $4,288 $3,577 = $1,144($4,288-$711=$3,577)
15% of Earnings over $4,288 $912 = $136($5,200-$4,288=$912)
$5,200$1,919
If your average monthly earnings are = $5,200Then your monthly benefit would be = $1,919
Average Monthly Earnings $5,200
90% of First $711 = $639
32% of Earnings over $711 through $4,288 $3,577 = $1,144($4,288-$711=$3,577)
15% of Earnings over $4,288 $912 = $136($5,200-$4,288=$912)
$5,200$1,919
Retirement Benefit Computation ExampleRetirement Benefit Computation Example
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Non Covered Earners Look Poor
The addition of all those “zero” years give non covered earners an artificially low average wage
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But you’re not “low wage earners”
A non covered employee is not the kind of low-income worker the weighted benefit formula is trying to compensate
A non covered employee is not the kind of low-income worker the weighted benefit formula is trying to compensate
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Modified Formula
The Windfall Elimination Provision says we must refigure your benefit giving you the 40% (average) return rate instead of the 90% (low income) return rate
The Windfall Elimination Provision says we must refigure your benefit giving you the 40% (average) return rate instead of the 90% (low income) return rate
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Social Security Statement
It is inaccurate if you are a non covered employee
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Exception to the Windfall Elimination Provision (WEP)
WEP recognizes the more years a non covered wage earner has paid Social Security taxes, the closer you should be to the standard benefit formula
WEP recognizes the more years a non covered wage earner has paid Social Security taxes, the closer you should be to the standard benefit formula
30 years = standard formula with 90% as return rate
21-30 years = modified formula with return rate between 40-85%
20 years or less = full WEP formula w/40%
30 years = standard formula with 90% as return rate
21-30 years = modified formula with return rate between 40-85%
20 years or less = full WEP formula w/40%
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The Other Offset
It’s called “Government Pension Offset” (GPO)
GPO takes two-thirds of your non covered pension and deducts that from any spouse / survivor benefit you might be due
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Key To Understanding GPO
Dependent benefits
Consider history of spouse’s benefits under Social Security
Dependent benefits
Consider history of spouse’s benefits under Social Security
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Social Security: Yesterday
• One spouse worked
• The other spouse did not work outside the home
• One received a Social Security check
• The other received a “dependent” spouse benefit
• One spouse worked
• The other spouse did not work outside the home
• One received a Social Security check
• The other received a “dependent” spouse benefit
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Social Security: Today
Both spouses work and pay into Social Security. Since both work neither is “dependent”
Both spouses work and pay into Social Security. Since both work neither is “dependent”
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Unless One Was a Non Covered Employee … Before “GPO”
If one spouse was a non covered employee…They received their own non covered pension … ANDa “dependent” Social Security benefit.
If one spouse was a non covered employee…They received their own non covered pension … ANDa “dependent” Social Security benefit.
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GPO Insures Fairness
GPO treats covered and non covered workers the same way.
The rule states you cannot get a dependent benefit unless you are dependent.
GPO treats covered and non covered workers the same way.
The rule states you cannot get a dependent benefit unless you are dependent.
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Medicare & Non Covered Pension
• Even if you are not paying Social Security tax, most of you are paying Medicare tax.
• Even if Social Security is reduced because of WEP, Medicare is unchanged.
• For those who do not pay Medicare tax, you may be eligible on a spouse’s Social Security earnings record.
• Even if you are not paying Social Security tax, most of you are paying Medicare tax.
• Even if Social Security is reduced because of WEP, Medicare is unchanged.
• For those who do not pay Medicare tax, you may be eligible on a spouse’s Social Security earnings record.
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Alternate Retirement Program
• Hired After 07/13/1990: Covered under Social Security = No WEP
• Hired Before 07/13/1990: Employee decided to be Covered or Not Covered under Social Security = All or Partial WEP
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ARP Account Value
Value of Account:
• Effective Day of Termination (regardless of when funds are actually disbursed)
• Based on Mandatory Contributions Only (do not include voluntary contributions)
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Account Value Verification
• TIAA-CREF: 1-800-842-2776
• ING: 1-800- 584-6001
• ING took over State of Connecticut contract 01/01/06
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Monthly Pension Amount
• Life Expectancy Tables Determine a Monthly Pension Amount
• For Covered and Non-Covered Employees = Pension is Prorated
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WEP Effective Date
• First Month Entitled to Both Social Security and Pension Based on Non Covered Employment
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QuickEasySecure
QuickEasySecure
Social Security OnlineSocial Security Online
www.socialsecurity.govwww.socialsecurity.gov
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How Apply For Benefits
www.socialsecurity.gov
1-800-772-1213
Local Social Security Office
www.socialsecurity.gov
1-800-772-1213
Local Social Security Office