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A Push for Social Security
For Retirees, Survivors

(This article was first published in the July/August 2005 issue of The American Postal Worker magazine)

Many federal employees and surviving spouses of government workers suffer reduced Social Security benefits because of the Government Pension Offset and Windfall Elimination Provisions adopted by Congress decades ago.

The effect of these measures has been to unfairly penalize civil service annuitants under the Civil Service Retirement System (FERS-covered employees are not affected by either provision).

Bills are currently pending in the House and Senate to repeal these provisions. Introduced by Sen.Dianne Feinstein (D-CA), S.619 has 18 co-sponsors; in the House, a measure (H.R.147) offered by Rep. Howard P. “Buck” McKeon (RCA), has more than 250 co-sponsors.

We urge you to contact your respective senators and representatives to ask them to support these bills.

Some Background

The Government Pension Offset (GPO) was enacted in 1977, with Congress reducing Social Security survivor benefits for anyone who qualified for a pension other than Social Security. The GPO affected Civil Service annuitants who became eligible to retire after 1985, or who reached age 62 or became disabled after 1985 and were the surviving spouses of workers who had paid into Social Security. Whatever survivor benefit they were entitled to was reduced by an amount equal to two-thirds of their civil service annuity.

For an example of how this works, consider the case of a widow eligible for a civil service pension benefit of $1,500 a month who also is eligible for a $900 a month Social Security payment as a surviving spouse. Current law requires that her survivor benefit be reduced by an amount equal to two-thirds of her civil service pension. Since twothirds of $1,500 is $1,000, an amount that is greater than the $900 “survivor” benefit, the effect would be to eliminate the spousal Social Security benefit entirely.

The result is a widow receiving $1,500 a month instead of $2,400.

WEP History

The Windfall Elimination Provision (WEP) was enacted by Congress in 1983 as part of a large reform package to shore up the financing of the Social Security system. The justification for the change was to prevent individuals who qualify for pensions outside of Social Security to also qualify for maximum Social Security benefits when their Social Security earnings may not have been substantial.

It is important to note that your Social Security pension- benefit calculation is based on a three-step process. The first step focuses on the first $627 of your average monthly career earnings in the private sector job in which Social Security taxes were paid. It is this portion of the Civil Service retiree’s calculation that is impacted by the WEP.

The WEP reduces the Social Security benefits of civil service annuitants who reached the age of 62 after 1985; or who became disabled after 1985; or who became eligible after 1985 for a pension based in whole or in part on work for which Social Security taxes were not paid.

The calculation of the Social Security pension benefits for retirees with at least some private-sector employment in their background is based on 90 percent of the first $627 in average monthly earnings (the first step). A retiree who also will receive a CSRS pension can have that first portion of their career Social Security monthly earnings reduced to 40 percent in that calculation — a potential penalty of more than $300 a month. (This modified formula does not apply to FERS employees.)

Patent Unfairness

We are seeking to have both the pension offset and the windfall provisions rescinded. It is patently unfair to deny surviving spouses their full survivor benefits just because they worked (and earned a pension benefit) outside of the Social Security system. It is also unfair to have the creditable Social Security work-years for civil service annuitants measured by a standard that no one else is held to. Anyone who worked for and earned both types of benefits should be entitled to both.

Despite the large number of sponsors, getting these measures passed will not be easy in fact, similar measures have been introduced in prior sessions of Congress without success. Please take the time and make contact with your elected representatives.

(For more information on whether you are potentially affected by these measures, contact Social Security and ask for your career earnings totals. The accompanying chart should prove helpful, and information is also available online, at www.ssa.gov.)

Formula Modifications

Since the beginning of the Social Security program, lower-paid workers have received larger benefits in relation to their earnings than higher-paid workers. However, because of the way benefits were computed, people who worked only part of their lives in jobs covered by Social Security had their benefits calculated as if they were long-term, low-wage workers. These workers received the advantage of higher Social Security benefits, in addition to their pensions from work not covered by Social Security. In 1983, the Social Security law was changed to eliminate this advantage.

How It Works

Social Security benefits are based on a worker’s average monthly earnings adjusted (“indexed”) for changes in national average earnings. When the Social Security Administration calculates your benefits, it separates your average indexed monthly earnings into three amounts, and multiplies the figures using three factors.

For example, for a worker who turns 62 in 2005, the first $627 of average indexed monthly earnings is multiplied by 90%; from $627 to $3,779 it’s multiplied by 32%; and more than $3,779 a month by 15%.

In the modified formula, the 90% factor is reduced. The reduction was phased in for workers who reached age 62 or became disabled between 1986 and 1989. For those reaching age 62 (or becoming disabled) in 1990 or later, the 90% factor is reduced to 40%.

However, if you have 30 or more years of “substantial” Social Security earnings, Social Security uses the regular formula to determine your benefit. If you have 21-29 years of substantial Social Security earnings, the modified formula is used — but it will affect you less than if you have fewer years of covered earnings.

For people with 21-29 years of substantial Social Security earnings, the first factor in the formula is reduced as follows:

Years of Earnings

First Factor

30 or more . . . . . . . . . . . . . . . . . . . . 90% 29. . . . . . . . . . . . . . . . . . . . . . . . . . . 85% 28. . . . . . . . . . . . . . . . . . . . . . . . . . . 80% 27. . . . . . . . . . . . . . . . . . . . . . . . . . . 75% 26. . . . . . . . . . . . . . . . . . . . . . . . . . . 70% 25. . . . . . . . . . . . . . . . . . . . . . . . . . . 65% 24. . . . . . . . . . . . . . . . . . . . . . . . . . . 60% 23. . . . . . . . . . . . . . . . . . . . . . . . . . . 55% 22. . . . . . . . . . . . . . . . . . . . . . . . . . . 50% 21. . . . . . . . . . . . . . . . . . . . . . . . . . . 45% 20 or less. . . . . . . . . . . . . . . . . . . . . . 40%

For the modified formula, you are considered to have a year of substantial earnings if your earnings equal or exceed the figures shown for each year in the chart below.

Year	Earnings	Year	Earnings
1937 - 50 . . . . $ 900 1951 - 54 . . . . . 900 1955 - 58 . . . . 1,050 1959 - 65 . . . . 1,200 1966 - 67 . . . . 1,650 1968 - 71 . . . . 1,950 1972 . . . . . . . .2,250 1973 . . . .. . . . 2,700 1974 . . . .. . . . 3,300 1975 . . . .. . . . 3,525 1976 . . . . . . .. 3,825 1977 . . . . . .. . 4,125 1978 . . . .. . . . 4,425 1979 . . .. . . . . 4,725 1980 . . . .. . . . 5,100 1981 . . . .. . . . 5,550 1982 . . . .. . . . 6,075 1983 . .... . . . . 6,675 1984 . . . . .. . . 7,050 1985 . . . . . .. . 7,425		1986 . . . . . . . . 7,875 1987 . . . . . . . . 8,175 1988 . . . . . . . . 8,400 1989 . . . . . . . . 8,925 1990 . . . . . . . . 9,525 1991 . . . . . . . . 9,900 1992 . . . . . .. . 10,350 1993 . . . . .. . . 10,725 1994 . . . . .. . . 11,250 1995 . . . . . .. . 11,325 1996 . . . . . .. . 11,625 1997 . . . . .. . . 12,150 1998 . . . . . . . .12,675 1999 . . . . . . .. 13,425 2000 . . . . .. . . 14,175 2001 . . . . . .. . 14,925 2002 . . . . . .. . 15,675 2003 . . . . . .. . 16,125 2004 . . . . . .. . 16,275 2005 . . .. . . . . 16,725

 

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