In an exciting turn of events, some workers are looking forward to the possibility that they will get more Social Security benefits than they do now. In a vote last week, the House of Representatives threw out two bills that would have limited the benefits of retirees who also get pensions.
The two provisions, which get rid of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), affect about three million Americans. This includes teachers, police officers, firefighters, and postal workers.
When Rafael Sanchez heard the news, he said, “Billions of dollars have been withheld from public workers who earned both a public pension and Social Security benefits for the past 50 years.” Sanchez had worked for the state of California for 30 years before moving to Idaho to work in the private sector and pay into Social Security for three years.
How the WEP and the GPO affect Social Security benefits
People who get so-called “non-covered” pension income from jobs (usually in the public sector) that didn’t pay Social Security payroll taxes will have their benefits cut by the WEP. It can cut the pension by as much as half.
If a person’s pension isn’t covered by the GPO, it cuts their survivor or spouse benefits by two-thirds of the pension amount. It also cuts their Social Security benefit. This means that your Social Security benefit could be cut in half if two-thirds of your government pension is more than it.
These rules may seem cruel, but they were made during a time when pensions were strong and many workers got a salary that would allow them to live on for the rest of their lives after 20 years of service. These days, pensions aren’t even close to what they used to be, and workers need every penny they can get when they retire to keep up with their bills.
One example from real life is Sara Fischer, 65. After 25 years working for the federal courts, she retired early at age 44. She planned to get a job in the private sector and continue to pay into Social Security for the rest of her career because she thought she would get a benefit from those payments.
That did not happen the way she thought it would. She said that because of WEP, her monthly Social Security check will be cut by about $600.
The amount of money I earned and paid into Social Security is the same as what anyone who worked for 11 years would get.
I don’t expect Social Security to pay me more than that. WEP tells people like me, “We don’t care how much you paid into Social Security or what you’re entitled to based on how much you paid into Social Security during the years you contributed.”
Because you worked for the government, we are going to cut your Social Security check. Always. That’s the only reason. There is still some time for her to work as a paralegal in Detroit, Michigan.
Another person who was affected Bill Callahan, 67, a retired teacher from Middlebury, Connecticut, says that when your Social Security benefit is cut, you also lose the annual cost-of-living adjustment (COLA). “Our COLA is calculated after the deduction for either the GPO or WEP, which means we lose out every year,” he says. It stinks when you think about this over 20 years of COLA.
Callahan’s 2025 COLA will be applied to the amount of his benefit that is less after the $480 WEP deduction, not the $839 that was taken out at first. This means that his 2.5% raise will be based on $359, which is less than $9 more a month.
He would get an extra $21 a month if the COLA was based on the full benefit. That’s more than double. It gets even worse: in 2025, Medicare Part B premiums will go up by $10.30, from $174.70 in 2024 to $185. For Callahan, that raise more than makes up for the change in his COLA.
The Senate needs to vote on the bill soon, but they only have until December 31 to do so. It won’t happen if the vote isn’t set up or passed.
Maya MacGuineas, president of the nonpartisan, nonprofit Committee for a Responsible Federal Budget, said in a statement, “These provisions aren’t perfect, and there are lots of ideas to fix them.” But getting rid of them completely would be the wrong thing to do.
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