Will you be penalized when you retire?
ACSA continues work to repeal WEP/GPO rules that affect public employees
May 29, 2023
Over the last two years, representatives from the ACSA Retirement Committee have been involved with a national task force that was convened to address a federal policy that can affect our members.
ACSA’s One Voice Platform references its support to repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). ACSA is supporting Senate Joint Resolution 1 (Cortese) and urges Congress to pass and the president to sign this resolution that would repeal the WEP/GPO.
Why are we concerned about the WEP/GPO? California is one of 15 states where educators, firefighters, police and other public employees can have their Social Security income unfairly reduced. These rules can also impact their current or surviving spouse’s benefit.
Across the U.S., there were 2,747,911 persons already retired whose Social Security retirement benefits have been reduced or eliminated as of December 2022. California has the most beneficiaries impacted by WEP/GPO than any other state at 385,614.
Nationwide, there are about 6.6 million current workers whose positions are not covered by Social Security who will be affected by the offsets when they retire. These rules contribute to the shortage of educators by penalizing privately employed individuals from entering public service jobs.
So what are the WEP/GPO? Some basics are as follows.
The rules
The WEP and GPO affect retirees who earn public pensions that are not coordinated with the Social Security program.
The Windfall Elimination Provision: If a worker earns a pension from a public agency that does not participate in the Social Security system but rather pays the worker a pension, the Windfall Elimination Provision reduces a person’s own earned Social Security benefits by up to $558 a month (2023 retirees). Retirees who have earned a pension in another country are also penalized by the WEP. The reduction amount cannot exceed 50 percent of the amount of the retiree’s public pension.
The Government Pension Offset: The current or divorced spouse of a Social Security earner, who has been married to them for 10 years or more, upon reaching retirement, normally is entitled to a benefit equal to half of the Social Security earner’s benefit. Upon death, the surviving spouse would get the deceased Social Security earner’s full benefit.
The GPO reduces both the spousal and survivor benefits of someone who has earned a public pension by an amount equal to two-thirds the amount of the spouse’s/survivor’s public pension. A public pension of $1,500 a month will eliminate a spousal or survivor’s benefit of $1,000 a month.
Double penalty
Retirees can be affected by both the Windfall Elimination Provision and the Government Pension Offset at the same time, losing part of their personally earned benefit as well as, usually, all their spousal/survivor benefits.
Cost of repeal
Social Security pays out around $1.2 trillion every year.
Repeal of both WEP and GPO would cost less than $15 billion per year, less than 2 percent of what is paid out to other Social Security earners.
How to get involved
The California Retired Teachers Association is also part of the national task force working to repeal the WEP/GPO. Sign up for their Legislative Alerts at calrta.org/advocacy-action to be notified of calls to action.
Windfall Elimination Provision Facts:
2,013,310 current retirees were affected by the WEP as of December 2022; 54 percent were men. 4 percent of all retired worker Social Security beneficiaries are affected by the WEP. The maximum reduction for new retirees in 2023 is $557.50 a month. The WEP cannot reduce Social Security benefits by an amount that is more than one half the amount of the non-participating pension. The penalty is decreased for people who have Substantial SS Earnings each year for 20 years or more. (“Substantial Earnings” for the 2023 year is $29,700.) Congressional Research Office report on the Windfall Elimination Provision, including statistics by state (pages 5-7): crsreports.congress.gov/product/pdf/RS/98-35
Government Pension Offset Facts:
734,601 current retirees were affected as of December 2022. 1 percent of all Social Security beneficiaries are affected; 83 percent are women. The GPO is calculated on the amount of the pension, and doesn’t figure in the years of a marriage above the 10 qualifying years for spousal benefits. 70 percent of those affected lose all their Social Security benefits. 52 percent lose spousal benefits. 48 percent lose widow’s or widower’s benefits. Congressional Research Office report on the Government Pension Offset, including statistics by state (pages 8-9): crsreports.congress.gov/product/pdf/RL/RL32453
Contact Us
© 2023 Association of California School Administrators