1) It's not enough to work 20 years. You have to work 20 years of what is called "substantial earnings" and then the hit they take reduces. If you contribute 30 years of substantial earnings, then they don't take any money from SocSec. There's a really good writeup of it here: https://www.ssa.gov/pubs/EN-05-10045.pdf that includes the substantial earnings number for each year.
2) Mid career people can take a serious hit. I paid the limit in Social Security for 10 years and began teaching when I was 47. I had 26 years of substantial earnings, so I just need to work 4 more years at something to eliminate the hit--or decide not to and only get hit 15% more than I would otherwise. But if I'd started a pension job 10 years earlier, it'd be tough. So mid career people entering a pension job should be aware of this. The substantial earnings number is pretty low, so they could take a part time job and (if a teacher) summer job and hit the number, making it easier to make up the difference later. But it's pretty clear the law was written with (probably) teachers in mind, who work summer jobs making $10K a year, not for mid-career switchers, particularly highly paid mid career switchers.
3) Not sure why it isn't "double dipping" to give a spouse money just because she has a husband.
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.
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.
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?
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.
A couple comments:
1) It's not enough to work 20 years. You have to work 20 years of what is called "substantial earnings" and then the hit they take reduces. If you contribute 30 years of substantial earnings, then they don't take any money from SocSec. There's a really good writeup of it here: https://www.ssa.gov/pubs/EN-05-10045.pdf that includes the substantial earnings number for each year.
2) Mid career people can take a serious hit. I paid the limit in Social Security for 10 years and began teaching when I was 47. I had 26 years of substantial earnings, so I just need to work 4 more years at something to eliminate the hit--or decide not to and only get hit 15% more than I would otherwise. But if I'd started a pension job 10 years earlier, it'd be tough. So mid career people entering a pension job should be aware of this. The substantial earnings number is pretty low, so they could take a part time job and (if a teacher) summer job and hit the number, making it easier to make up the difference later. But it's pretty clear the law was written with (probably) teachers in mind, who work summer jobs making $10K a year, not for mid-career switchers, particularly highly paid mid career switchers.
3) Not sure why it isn't "double dipping" to give a spouse money just because she has a husband.
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.
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.
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?
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.