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Windfall Elimination Provision |
Social Security Offsets And Reductions For
As a
Also, your STRS pension will offset, and usually eliminate, any Social Security benefits you might be due on a spouse’s Social Security record. The law requiring this is called the “Government Pension Offset.”
Windfall Elimination Provision
The key to understanding this provision is to realize that the word “social” in Social Security means something. Unlike private and other public sector pension plans, there are social goals built into the Social Security program. One of those goals is to raise the standard of living of lower income workers in retirement. This is accomplished through a benefit formula that is designed to give lower paid workers a better deal than their more highly-paid counterparts. Very low-paid workers could get a Social Security retirement benefit that represents up to 90 percent of their earnings. This percentage is known as a “replacement rate.” In other words, the Social Security benefits paid to low income workers are intended to replace up to 90 percent of their pre-retirement earnings. People with average incomes generally get a 40 percent replacement rate. Higher income people get a rate around 30 percent.
The problem is that as a
What does that mean in real money?
If you are affected by the windfall elimination provision, here’s a formula you can use to refigure your benefit. If the retirement estimate in your Social Security statement is:
$545 or more, subtract $303
$544 or less, multiply by 0.44
An exception – if you have more than 20 years of “substantial” Social Security earnings
The formula on the bottom of the front page only applies to people who have 20 or fewer years of “substantial” Social Security earnings. A chart giving a year-by-year breakdown of substantial earnings is available at www.socialsecurity.gov/pubs/10045.html. If you have between 20 and 29 years of substantial earnings, your Social Security benefit will be only partially reduced. Call us at 1-800-772-1213 to learn the reduction that applies to you. If you have 30 or more years of substantial Social Security earnings, the windfall provision won’t apply and your benefit will not be reduced.
There are other exceptions that apply to railroad workers, some employees of non-profit organizations, and people who worked in non-Social Security jobs before 1957. For a complete list of exceptions, go to the same web address indicated above.
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Government Pension Offset |
Note: This section explains how your government pension may offset any benefits you are due on a spouse’s Social Security record
If you will get a STRS pension, it will offset any benefits you might be due on your spouse’s Social Security record. We must deduct two-thirds of your teacher’s pension from any wife’s, husband’s, widow’s or widower’s benefits you might be due. Because STRS pensions are often substantially higher than spouse’s benefits paid under Social Security, this rule generally means you will not qualify for any benefits on your spouse’s Social Security record.
Why the offset?
Benefits we pay to wives, husbands, widows and widowers are “dependent’s” benefits. These benefits were established in the 1930s to compensate spouses who stayed home to raise a family and who were financially dependent on the working spouse. But as more and more couples both worked, they each earned their own Social Security retirement benefits. The law has always required us to offset one retirement benefit against another. In other words, if a woman worked and earned her own $800 monthly Social Security retirement benefit, but she was also due a $500 wife’s benefit on her husband’s Social Security record, we could not pay that wife’s benefit because her own Social Security benefit offset it. But if that same woman was a teacher who did not pay into Social Security, and who earned an $800 STRS pension, there was no offset and we were required to pay her a full wife’s benefit in addition to her teacher’s pension.
The Government Pension Offset rule exists simply to ensure that everyone is treated fairly.
Exceptions
This rule affects almost all
An important Medicare message
Even though you may not qualify for monthly cash benefits on your spouse’s Social Security record, you still can get Medicare on that spouse’s record if you are 65 or older and if you can’t get Medicare on your own record.