The Case to Repeal the Punitive Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP)
GPO and WEP Penalties
Your benefits may be cut by many thousands of dollars even though you and/or your spouse have paid the required minimum or more in Social Security contributions. It is not uncommon to be penalized by both GPO and WEP.
Government Pension Offset Provision (GPO)
Spousal benefits (must be spouse for a minimum of 10 years) are penalized by the Government Pension Offset (GPO) when you begin to collect your pension from a “non-covered” public position. Because of the GPO:
- Dependent spouses will probably lose all the benefits due them — a non-working spouse normally receives an SS payment equal to half that of the SS earner.
- Widows/widowers will lose at least part of or, more often, all of the Social Security retirement.
- Medicare premiums are higher if you lose all Social Security benefits.
Windfall Elimination Provision (WEP)
If you have had two jobs: one in which you paid Social Security taxes and therefore earned your own Social Security credits and a public sector job in which you did not pay Social Security taxes (referred to as “non-covered” public employment), you are penalized by the Windfall Elimination Provision (WEP), and may lose an amount up to 50% of your earned Social Security retirement benefits.
What is unjust about GPO and WEP:
Both the GPO/WEP are based on faulty assumptions. The offsets were based on a decision to treat pensions from certain public positions as if they were the same as Social Security benefits, despite the fact that these “non-covered” state and local positions have nothing to do with Social Security.
- Error #1. These pensions were earned separately and differently from Social Security, yet they are used to reduce the amount of Social Security benefits that a worker receives during retirement. When participation is required by both Social Security and also State and local pensions, the public pension is earned and collected separately. Therefore, it should have no effect on Social Security benefits earned elsewhere.
- Error #2. Social Security and public agency pension benefits are treated differently by Federal tax law. While federal income tax is collected on public agency pensions, Social Security benefits are sheltered, often completely, from this tax. State community property laws may treat them differently, also. Due to these two differences, a public pension should not be used to offset the amount of Social Security earned.
Unintended / undesirable consequences
Loss in earned benefits is severe, often resulting in substantial lifestyle reductions and even poverty, for formerly productive working citizens of middle/low class.
- GPO: 71% percent of those affected by GPO lose their entire spousal or survivor benefits.
- WEP: The WEP was not designed to affect the middle or low wage earners that it can deeply penalize. WEP cuts to earned benefits are substantial, commonly causing serious lifestyle reductions. Someone with a pension of only $900 a month from a “non-covered” government job can have his/her earned monthly Social Security benefits cut from $600 to $300.
The GPO, particularly, represents discrimination against women
The GPO currently penalizes more than one half million retirees; 83% of them are women. Of those affected by the GPO, the average non-covered government pension for men was $961 more per month than the pension paid to women. The women affected often have lower pensions to start with, and then the Government Pension Offset reduces their Social Security benefits by even more, an average of $9,500 a year for women, as opposed to $7,320 a year for men. (Congressional Research Service 3/7/2022, using SSA)
Penalties not well publicized.
Until recently no law existed to inform employees about the GPO/WEP penalties. Large numbers of current public employees (including pre-retirees) have never been told that public service employment is jeopardizing their already-earned Social Security benefits. Neither the SSA nor government sufficiently publicized these penalties, resulting in financially devastating decisions for many. Careers were chosen and retirement contracts entered without knowledge of the WEP/GPO penalties. The law to require notification of new employees about the WEP/GPO did not go into effect until 2005. Even with notification, the WEP/GPO are so lacking in logic, that many employees still do not understand their long term financial effects.
Who is affected by the GPO and WEP?
Teachers: One third of all America’s educators teach in positions affected by the WEP/GPO, negatively affecting teacher recruitment. With retirements and other attrition every year, our country always needs more high-quality new teachers. To provide a competitive educational system, we should be attracting those looking for a meaningful second career as well as bright young people. Discouraging them with penalties is bad public policy.
Federal workers before 1984, state and local workers: Americans working in 29% of state and local government positions and 18% of Federal positions can be affected by the offsets. These include first responders–fire and police personnel– who may have come from the military, as well as teachers, librarians, air traffic controllers, secretaries and others whose fully-earned Social Security from previous jobs will be cut back when they retire.
The $8-10 billion annual cost to repeal the GPO/WEP is minimal when compared to the total amount paid in Social Security retirement benefits annually. The annual estimated cost to repeal GPO/WEP amounts to less than 2% of the overall Social Security benefits paid to recipients each year. (Estimated Trust Fund Information at www.ssa.gov.)
The cost of not repealing these laws is to continue a gross governmental inequity!