The GPO and WEP struggle
ATPE
State President Sue Melton traveled to Washington, D.C.,
in January 2008, to testify
at a U.S. House Ways and Means Committee hearing on the
Government Pension Offset (GPO) and Windfall Elimination
Provision (WEP). The GPO and WEP are two provisions in
federal law that can reduce Social Security benefits for
public employees such as Texas educators.
ATPE has advocated for a full repeal of the GPO and
WEP and will continue to do so. We believe that
educators deserve to be rewarded for their service to
students and the public. Educators also deserve to
receive retirement compensation from the state and
federal government that keeps up with inflation and
allows them a decent quality of life.
ATPE also believes that in order to successfully
advocate for any issue, one needs to understand all
sides of a debate. That can be a difficult task when the
debate surrounds an emotionally charged issue. The
debate surrounding the GPO and WEP certainly incites
passion in the Texas public education community, and
understandably so. Educators often don’t become aware of
the effects the GPO and WEP will have on them until late
in their careers. This situation can complicate and even
ruin carefully made retirement plans at a particularly
vulnerable stage in life.
If we are going to bring about change on this issue,
it is important to try and set aside passion and work
toward understanding the other side of the debate so
that we can better prepare an effective case for change.
January’s hearing provided a firsthand account of the
debate surrounding this issue; the following is a
breakdown of the debate from both sides.
Many educators believe the GPO and WEP single out and
punish educators simply for being employed in public
schools.
The GPO and WEP apply to all government employees who
collect benefits from a publicly subsidized pension
system such as the Teacher Retirement System (TRS).
The GPO punishes teachers just for being teachers. If
an educator had chosen not to be a teacher and instead
stayed at home, she could collect full spousal Social
Security benefits.
Spousal Social Security benefits were created for the
express purpose of providing security to dependent
spouses. If you’re employed in any occupation, you’re
not a dependent spouse. Being employed as a teacher and
receiving a benefit from TRS means you are not a
dependent spouse. Even though someone who pays into TRS
might not receive spousal Social Security benefits due
to the GPO, that person is still receiving her own
publicly funded benefits through TRS. Furthermore, if an
educator had chosen not to work, she would not be
eligible for TRS benefits. Because the GPO only reduces
spousal Social Security benefits by two-thirds of the
amount of an educator’s TRS benefit, it is impossible to
end up worse off financially for choosing to work. If
two-thirds of an educator’s pension is less than her
spousal benefits, she will receive what’s left over. If
two-thirds of an educator’s pension is greater than her
spousal benefits, then she is getting more from TRS than
she would have in spousal benefits had she chosen not to
work.
Private-sector employees are not subject to the GPO,
so public employees such as Texas educators should not
be either.
Private-sector employees are not subject to the GPO
because they are subject to dual entitlement rules. Dual
entitlement rules work almost the same as the GPO,
except that dual entitlement rules reduce a person’s
spousal Social Security benefits the entire amount of
the person’s own Social Security benefit, whereas the
GPO reduces spousal Social Security benefits by
two-thirds of the amount of a person’s government
pension. All employees, in both the public and private
sectors, are required by law to pay into either Social
Security or a government pension, so all employees are
subject to either dual entitlement rules or the GPO. The
point again: No one can receive spousal benefits without
reduction except actual dependent spouses.
If an educator’s spouse paid into Social Security,
that educator should be able to collect the benefits his
spouse rightfully earned.
Paying into Social Security only entitles you to your
own earned benefits. The only way to earn spousal
benefits is by being a bona fide dependent spouse. That
is because Social Security is not a pension system; it
is a social welfare program.
Private-sector employees can collect pensions from
their employers without being subject to the GPO.
It is true that private-sector employees can collect
pensions through their employers without being subject
to the GPO. However, private retirement plans are
privately funded and not subsidized with public money as
TRS or Social Security are.
The WEP robs second-career educators of benefits they
rightfully earned while working in Social
Security-covered employment simply because they chose to
enter the public sector as educators.
The standard formula used to figure Social Security
benefits is designed to provide low-income workers with
a larger percentage of their pre-retirement earnings
than what is provided to high-income workers. For
example, someone who earned an average of $50,000 per
year throughout her career might get back 40 percent of
that amount through Social Security. Someone who earned
an average of $75,000 per year might only get back 25
percent. The Social Security system figures employees’
incomes based on the total amounts of their Social
Security contributions. Therefore, second-career
employees who work in jobs that do not pay into Social
Security, such as most Texas educators, appear to have
made less money than they actually did. This means they
would get more back from Social Security than they
actually earned under the standard formula. The WEP is
meant to correct this “windfall” for these employees by
accounting for their employment in jobs not covered by
Social Security.
Questions? Contact ATPE Governmental Relations.
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