Information for 'Feds'
November 23, 2019
All about WEP. You have certainly heard much over the years about WEP and GPO. If you are under the Civil Service Retirement System (CSRS) these two programs can affect how much annuity you or your spouse receives at retirement. The Windfall Elimination Provision (WEP) reduces your earned Social Security benefit. The Government Pension Offset (GPO) reduces your spouse’s Social Security benefit by 2/3 of your annuity pension. They do not apply to those under the Federal Employment Retirement System (FERS) because they paid a payroll tax to Social Security throughout their career.
These programs can get complicated, so let’s take a closer look at just WEP and what’s being done about it. WEP was introduced in the 1980s to remove an unintended advantage that the regular Social Security benefit formula provided to persons who also received a pension from non-Social Security covered employment.
Here’s the reasoning behind WEP. By design, the calculation of Social Security (SS) benefits favors lower-income workers: the percentage of benefits paid to lower-income workers is higher than for higher-income workers. Let’s say you worked part of your career where you earned SS benefits, as well as working as a CSRS federal employee. Since you only paid Social Security tax on some of your earnings, it would appear to SS you were a low-income worker, when in reality you weren’t. Thus you would automatically get a higher SS benefit (“windfall”) than you deserve. WEP therefore reduces your SS allotment in an attempt at fairness. However, over the years it has been known to over compensate, and reform is needed. Many bills to reform or eliminate WEP were introduced in the past, with support from both sides of the aisle, but generally have died in committee and none were enacted.
But hope springs eternal! This year three new bills were introduced: the Social Security Fairness Act of 2019 (H.R. 141), the Equal Treatment of Public Servants Act (H.R. 3934) and the Equal Treatment of Public Servants Act (H.R. 3934). H.R. 141 would fully repeal WEP. The other two are alike; they would not repeal WEP but would offer either a monthly rebate or a revised and fairer computation of SS benefits, depending upon when the individual reached the age of 62. (Check the NARFE website for the details.) Do they have any more of a chance of passage than prior attempts? The website, http://www.Govtrack.us, gives these bills only a two to three percent chance of being enacted. Given the history of WEP reform, it sounds like déjà vu all over again. So don’t expect much.
The Tehachapi chapter of NARFE keeps up to date on this and all legislative matters affecting Feds. The chapter meets on the third Saturday of each month upstairs at the Village Grill, 410 E. Tehachapi Blvd. at 8 a.m. Join us for breakfast! Or call Steve Smith (661) 305-6217 to learn more about our chapter.