Repeal the Social Security Windfall Elimination Provision (WEP) - Support the Social Security Fairness Act

Draft letter to my representative below. Comments and criticism gladly accepted.

Dear Rep. X,

I’m writing today about HR 82, the “Social Security Fairness Act of 2023.”

As you know, Social Security provides retirement benefits to taxpayers who have paid Social Security taxes for ten years or more. Some workers are not covered by Social Security, either because their employer has a public pension program or they are employed outside the United States. The 12.4% tax that might otherwise go toward Social Security can be used to fund the pension. If these workers have also worked ten years or more in a Social-Security covered job, they may receive Social Security in addition to the pension.

As you also know, Social Security pays lower-wage-earners more on a percentage basis than higher wage earners, but earnings are averaged over 35 years. For example, someone who works for 10 years at $70,000/yr gets the same Social Security benefit as someone who works for 35 years (or longer, because additional years worked don’t increase the benefit except to the extent that the pay is higher than an earlier year) at $20,000/yr.

If the person who earns $70,000/yr works for 35 years, he’ll get more than if he works for 10 years, but not anywhere near 3.5 times as much (it’s closer to double because Social Security is intended to benefit lower-income workers the most).

But if that person works somewhere else that pays that 12.4% into a pension for 25 years, he’d get the (lower) Social Security payment plus his pension. That will total more than someone who works a SS-covered job for the entire 35 years. A pension with 25 years of work alone would probably be more than 35 years of Social Security at the same salary because the pension only funds workers (whereas Social Security also provides disability and other benefits, even for people who have never contributed).

The Windfall Elimination Provision (WEP) was passed in 1983 to prevent workers (mostly of state and local governments) from getting a “windfall,” i.e., having the amount of their Social Security payment based on a few years of wages that appear artificially low when averaged over 35 years, when they are getting a government pension based on many years of non-SS earnings. The WEP places the worker who works 10 years at a SS-covered job plus 25 years at a non-SS-covered job in a similar situation as the worker who works 35 years at a SS-covered job, by essentially considering both Social Security and the pension (intended to replace Social Security) together as a single benefit.

HR 82 is named in typical Congressional form as the opposite of what it actually does. That is, rather than “Social Security Fairness,” HR 82 seems to be nothing more than a money grab by public-sector unions on behalf of their members. If these unions wish their members to receive the same amount of Social Security retirement benefits as others, they should push to have their states remove the pension and contribute that pension money to Social Security instead, which has always been an option. As you know, public employees in [our state] contribute to [state pension plan], but also pay Social Security taxes. Thus, [state] public employees are not subject to the WEP. Most [people in state] would see zero benefit from the proposed change in Social Security. We would, however, be stuck with the headache when Social Security becomes insolvent even earlier than it is already projected to.

I am happy to see that your name is not on the list of co-sponsors for HR 82. In the event that HR 82 ever comes to a vote, I encourage you to oppose it.

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Thank you ratbert2k.
We agree to disagree.
Who is your representative so that I can write them in opposition to your flawed arguments?

Correction: You agree to disagree. You haven’t even told me which part of my analysis you think is wrong, so how can I either agree or disagree with you?

I’m happy to be persuaded if I’m wrong (and I could be). And no, I’m not telling you who my rep is. I guess you can try to narrow it down based on the details in the letter if it matters that much to you. But a letter telling my rep I’m wrong with anything like what you’ve provided here isn’t likely to be persuasive anyway.

Thank you ratbert2k.
I respect your right to disagree that we agree to disagree.
Perhaps your Rep will be persuaded by the many other Reps who understand the unfairness and already support the law change.

No. She cannot collect on the social security that she DID pay into, or the survivor benefit that her husband earned. The offset is significantly higher.

I just don’t understand why you think it’s unfair. Perhaps if you would explain, I would agree with you.

Had she worked at a SS-covered job, she’d be collecting her own Social Security in an amount comparable to (but probably less than) her pension. With that level of her own Social Security benefit, she’d get no survivor benefit based on her husband’s earnings–exactly the same situation she’s in now. Would you think that’s unfair? What about if she had died before age 62? She and her heirs can’t collect then either. If you want to talk about unfair, maybe we should start there.

I think the problem here is how you are framing the issue: “She cannot collect on the social security that she DID pay into.” Social Security taxes are just taxes. There’s no vested right or interest in any future benefit. Never has been. There are people who pay the taxes, and there are people who qualify for Social Security benefits. The groups are not the same.

Thank you ratbert2k.

The Windfall Elimination Provision (WEP) of the US Social Security law is considered unfair because it can lead to a substantial reduction in Social Security benefits for individuals who receive a pension from work not covered by Social Security. This primarily affects individuals who have worked in a non-covered position, such as government employees or workers in other countries, and subsequently worked in a covered position for less than 20 years. The WEP was introduced in 1983 to address perceived inequities in the benefit calculation for individuals with pensions from non-covered work. Critics argue that the provision overcorrects the supposed “windfall” and can result in significant benefit reductions for affected individuals, leading to calls for its modification or repeal[1][2].

The WEP is based on a formula that adjusts Social Security benefits for individuals who receive “non-covered pensions” from work not subject to Social Security taxes. This can result in a reduction of the individual’s Social Security retirement or disability benefits. The provision was introduced to address the advantage that individuals with pensions from non-covered work had in the benefit calculation before 1983. However, critics argue that the WEP can lead to disproportionate benefit reductions for affected individuals, which they consider unfair[1][3].

The WEP primarily affects individuals who have worked in a non-covered position, such as government employees or workers in other countries, and subsequently worked in a covered position for less than 20 years. If the individual’s second career results in less than 20 years of substantial earnings, the WEP can lead to a substantial portion of their Social Security benefit being reduced, which some consider unfair given that they were taxed for this benefit[2].

In summary, the Windfall Elimination Provision is considered unfair due to the significant reduction it can cause in Social Security benefits for individuals who receive a pension from work not covered by Social Security, particularly those who have worked in both non-covered and covered positions for less than 20 years. Critics argue that the provision overcorrects the supposed “windfall” and leads to disproportionate benefit reductions, prompting calls for its modification or repeal[1][2].

Citations:
[1] https://www.ssa.gov/pubs/EN-05-10045.pdf
[2] Public Workers Call for End to Social Security Windfall Elimination Provision | ThinkAdvisor
[3] Program Explainer: Windfall Elimination Provision
[4] The Social Security Windfall Elimination Provision: Issues and Replacement Alternatives
[5] International Programs - Windfall Elimination Provision and Foreign Pensions
[6] Social Security Beneficiaries Affected by the Windfall Elimination Provision in 2006
[7] Pros and Cons of Cutting Social Security’s Windfall Elimination Provision
[8] https://bipartisanpolicy.org/explainer/wep-gpo/
[9] See how your pension may affect your benefits | SSA

One pays into Social Security via FICA taxes. One receives Social Security insurance benefits if one meets specific qualifications.

For retirement benefits, you must have paid FICA taxes for 40 quarters (approximately 20 years). You must be at least 62 years old. Along with earning a retirement benefits if you meet the qualifications, you also earn spousal benefits for your spouse, survivor benefits for spouse and minor children, and disability benefits if you become disabled before attaining age 62. For disability benefits, you may need fewer quarters depending on how young you are when you become disabled.

A spouse or widow/widower does not get the benefit in addition to their own earned benefit, but there is an even tradeoff that amounts to the higher amount (deceased’s amt - widow’s retirement amt = widow’s survivor benefit, which added to her or his retirement amount is the same as the deceased’s higher amount). A similar calculation is used with spousal benefits, except that it based upon half of the workers earned retirement benefits.

Thank you LarryFine for bringing this up. Many public service employees are not even aware of this until they retire. And then they find out that the social security pension they depended on getting will be cut by up to 45%. I try to discourage young people from going into public service. It is unfair and WEP/GPO needs to be repealed. All public employees are asking for is what they have already paid into social security, no more, no less.

I don’t know why Clark does not do a segment on WEP/GPO to educate people who are thinking about going into public service. Maybe he can help put pressure on Congress to pass the Social Security Fairness Act HR 82.

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My wife started SocSec last year, and was NOT badly hit by GPO / WEP despite being an Adjunct College Faculty Member, after having a career at a place which collected SocSec tax. Still, we had some tense weeks waiting to see her retirement benefit letter. Thanks for keeping this thread alive, GPO and WEP are terrible taxes which need to die.

How long did she work at the job where she paid into Social Security? They require that you work 35 years before the effects of WEP or GPO are practically erased. Unfortunately I’d be in my 80’s if I did that…

Larry:

I would be willing to bet that a majority of your earnings were in the teaching profession. You paid very little into the system. Instead contributing into a teachers retirement fund. Thats where you old age retirement comes from. Because you worked a few odd jobs an had SS withheld from your check does not entitile you to get a double pay out. (Both teachers retirement and social security). Unless you earned more and contributed for 30 years than your teachers salary. The name of the bill is a misnomer because fairness already exists in your case. Most states that have teachers retirements have unions and it is a negotiated benefit. Southern states have no unions and those terachers get social security pay outs.

Jim

Jim,
You are incorrect. I did not earn a teaching retirement.