Andrew, I applaud you for creating awareness on this important issue. The naming of the act and its public positioning risks creating misleading impressions in the mind of the uninformed.
This is a contentious issue but I find it disturbing that such a measure could sail through Congress, burning another $200 billion over ten years, on a program already headed toward insolvency.
As the fertility crisis spreads we have two options 1) Dramatically cut benefits to retirees or 2) Raise taxes. Both options have largely the same effect; adding financial burden to young people and further discouraging children.
The math no longer works, something has to give. The burden of financing retirement must be transferred back to the individual/household.
I would just like to point out that many people get both a social security check and a private pension. Each benefit was independently calculated based upon the formula used by each system. The Social Security check was calculated based upon a formula that totally ignores what a person may be receiving from a private pension. I am a retired federal employee I contributed to my Civil Service Retirement system and receive a pension based upon the number of years of service and my highest three years of earnings. I also worked in jobs that didn’t qualify me for a pension but were covered by Social Security and I was required to contribute to the system. I was able to qualify for a minimum Social Security payment that was subject to the WEP. Never understood why my government pension was treated differently than an individual with a private pension. In fact I know many private pension systems never required an employee contribution. They are simply based upon years of service and salary. This is why the legislation is called the Fairness Act because it attempts to right the disparate treatment of receipt of a public versus a private pension.
Isn't it also true that many public sector employees' contributions to their pension plans are much smaller (or non-existent) than the 6.2% payroll contributions for social security? That's a lot of extra take home pay over decades, and that kind of money invested over time can generate teal wealth. So...triple dipping?
It actually varies a lot; in some places (like Oregon) most government employees pay nothing but in others they pay more. But the meaning is hard to take away because the benefits are different as well; in most cases public pensions are more generous than Social Security.
I earned my social security benefit after working 3 jobs for 25 years. Because I received a pension, I was penalized after retirement of 1/3 of my social security. Where is that wrong for me to receive what I earned?
It's hard to say without knowing the precise numbers. But the short story is that, because Social Security's benefit formula doesn't "see" your salaries from a non-covered job, it thinks you're poorer than you actually are. And, because Social Security is progressive, it then gives you higher benefits than your actual lifetime earnings warrant. The WEP is designed to correct for this. It's not perfect, but it's approximately correct. There is legislation to use new and better data to make the WEP more precisely correct in every case. But that's not the bill that actually got pushed. What people wanted was simply to eliminate the WEP and GPO. Any fair-minded analysis shows that, without them, certain public employees do in fact get a windfall. That's been known since the 1970s.
You would be affected by the WEP/GPO only if you were hired prior to (I think) 1984. Every federal employee hired after that pays into Social Security and so WEP/GPO rules don't come into play.
Great explanation. Please keep up the great work writing about this!
Andrew, I applaud you for creating awareness on this important issue. The naming of the act and its public positioning risks creating misleading impressions in the mind of the uninformed.
This is a contentious issue but I find it disturbing that such a measure could sail through Congress, burning another $200 billion over ten years, on a program already headed toward insolvency.
As the fertility crisis spreads we have two options 1) Dramatically cut benefits to retirees or 2) Raise taxes. Both options have largely the same effect; adding financial burden to young people and further discouraging children.
The math no longer works, something has to give. The burden of financing retirement must be transferred back to the individual/household.
I would just like to point out that many people get both a social security check and a private pension. Each benefit was independently calculated based upon the formula used by each system. The Social Security check was calculated based upon a formula that totally ignores what a person may be receiving from a private pension. I am a retired federal employee I contributed to my Civil Service Retirement system and receive a pension based upon the number of years of service and my highest three years of earnings. I also worked in jobs that didn’t qualify me for a pension but were covered by Social Security and I was required to contribute to the system. I was able to qualify for a minimum Social Security payment that was subject to the WEP. Never understood why my government pension was treated differently than an individual with a private pension. In fact I know many private pension systems never required an employee contribution. They are simply based upon years of service and salary. This is why the legislation is called the Fairness Act because it attempts to right the disparate treatment of receipt of a public versus a private pension.
Yep, that's how it works. Even spouses are affected, which is nuts.
Isn't it also true that many public sector employees' contributions to their pension plans are much smaller (or non-existent) than the 6.2% payroll contributions for social security? That's a lot of extra take home pay over decades, and that kind of money invested over time can generate teal wealth. So...triple dipping?
It actually varies a lot; in some places (like Oregon) most government employees pay nothing but in others they pay more. But the meaning is hard to take away because the benefits are different as well; in most cases public pensions are more generous than Social Security.
I can tell you it doesn't come close to 12.4%
I cannot say for certainly but I imagine you could be right. This system is unfair and broken on so many levels.
I earned my social security benefit after working 3 jobs for 25 years. Because I received a pension, I was penalized after retirement of 1/3 of my social security. Where is that wrong for me to receive what I earned?
It's hard to say without knowing the precise numbers. But the short story is that, because Social Security's benefit formula doesn't "see" your salaries from a non-covered job, it thinks you're poorer than you actually are. And, because Social Security is progressive, it then gives you higher benefits than your actual lifetime earnings warrant. The WEP is designed to correct for this. It's not perfect, but it's approximately correct. There is legislation to use new and better data to make the WEP more precisely correct in every case. But that's not the bill that actually got pushed. What people wanted was simply to eliminate the WEP and GPO. Any fair-minded analysis shows that, without them, certain public employees do in fact get a windfall. That's been known since the 1970s.
I’m a public service worker for the fed govt and I pay into a pension fund and social security. How does this apply in my situation?
You would be affected by the WEP/GPO only if you were hired prior to (I think) 1984. Every federal employee hired after that pays into Social Security and so WEP/GPO rules don't come into play.