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Windfall Elimination Provision Bill Introduced by Texas Congressman

Category: Financial and taxes in retirement

October 30, 2019 — For years the curiously named Windfall Elimination Provision (WEP) has frustrated countless workers in the public sector. The WEP was created to try to help protect Social Security as well as prevent so called “double-dipping” by public workers who are eligible for pensions as well as Social Security retirement. Most public workers feel that the WEP unfairly takes away some of the benefits they earned from Social Security. Now a Republican Congressman from Texas, Kevin Brady, has proposed its elimination and replacement with a new system. This is his statement:

“For years, lawmakers on both sides of the aisle have called for a permanent solution to fix WEP. This arbitrary Washington compromise has resulted in unfair treatment for our teachers, fire fighters, and police officers; and Texans simply cannot afford Congress to remain inactive and let this unfair policy be the law of the land.
Now is the time for Congress to put forth a solution that can actually be signed by the President. This legislation permanently repeals the current WEP, and instead uses a fairer formula that treats public servants like all other American workers. Democrats agree that this is a problem we must address now, and we hope they join us in fixing this long-standing problem this year. While I am introducing a bill today, I am committed to staying at the table to get a bill to the President’s desk.”

The WEP is complicated, and relies on a formula. Basically, if you have less than 30 years of substantial earnings subject to Social Security, you will give up a portion of benefit. For example, if you had less than 20 years of paying into the system and became 62 in 2019, you would forfeit $463 of your promised monthly benefit. If you had 25 years the forfeit $231, and $0 if you had 30 years. SSA has a WEP chart to help you figure this out (see below).

Comments: It is anyone’s guess if Brady’s bill will ever become law. Are you affected by it, and do you think the current system is unfair? Let us know in the Comments section below.

For further reading:

Windfall Elimination Factsheet

Posted by Admin on October 30th, 2019

25 Comments »

  1. WEP has to be reformed. I am a fifth generation soldier and a veteran law-enforcement officer who has retired. As it is currently structured it penalizes us for working hard. We deserve to get paid for our labor and sacrifice.

    by Will Stokes — October 30, 2019

  2. The WEP was used to lower my wife’s S/S because she worked in Switzerland and earned a pension; even though, she earned it well before coming to the US and becoming eligible. She has worked over 10 years in the US and earned her S/S. One should not affect the other since she was not affiliated with any US company. If they are going to consider her outside US pension, then the total years she worked should be considered.

    by Alvin — October 30, 2019

  3. I retired after being a Texas public school teacher for 25 years. Because I did not enter the teaching profession until I was 36 years old, I worked in other jobs from ages 16 to 36, all of which paid into Social Security. Even when I was a teacher, I worked part time jobs and summer jobs that paid into Social Security. Because of the WEP, my hard earned Social Security benefits are reduced to almost nothing, not even enough to cover my Medicare payment, and that is grossly unfair. Just because I earn a modest teacher pension monthly, I should not be deprived of the benefit that I earned in my other years of employment. If an employee in the private sector changed jobs, he/she would still receive the accumulated Social Security benefit of years of employment, not one or the other The WEP punishes teachers in their retirement and should definitely be repealed or, at the very least, amended.

    by Kay — October 30, 2019

  4. I have been substantially impacted as I spent the first part of my career in the private sector and then moved to town education. Worked until almost 70 but not able to get enough years to receive maximum benefits. The final years were also during wage freeze years! I understand this provision was put in place to cover teachers who retired prior to paying Medicare. I doubt there are many of these teachers left.
    Feel small, disrespected and punished for working devotedly to educate and help our most precious resource ,our children.

    Thank you for trying

    by Agnes Riera — October 30, 2019

  5. I have been punished and substantially impacted in my well deserved SS earnings. I think it is very unfair this provision, punished hard workers in their fourth quarter of their lives.
    I support 100% this initiative.
    Thank you Congressman Kevin Brady.

    by Antonio Soto — October 30, 2019

  6. I worked as a public high school guidance counselor for 35 years in Massachusetts. I retired with a pension of 80% which is about $65,000/yr. This barely increases with COLA–maybe 1-3% on the first $13,000 only! I worked as a registered nurse off and on over those years while raising children. I worked full time at two jobs (guidance and nursing) for many years while paying my kids college tuitions. I continue to work full time and will until I retire at age 70. If I continue to work till I am 70, I will have 30 years of “substantial” earnings as there were years I did not work at all or did not make enough as a nurse in the private sector to be considered “substantial” earnings. I will be 66 in less than a week and would love to stop working but….the difference of $1000 a month for the rest of my life seems worth working till age 70. I add 5% per year to my SS from now till age 70. That is a considerable amount. Hope I live long enough to enjoy it!

    My husband is in a worse predicament. He worked in the private sector for 25 years and then went into education at age 55 when his company shut down. He entered teaching at the college level for the last 15+ years but will never obtain maximum retirement earning from either private (SS) or public (state pension). He will never put 30+ years at the college level and did not put in 30+ years into SS. At 73, he will have to work till he is 80 to get anything decent which is ridiculous.

    WEP is not fair. Pay us what we paid into it!!

    by Joanne — October 30, 2019

  7. I’m a retired firefighter with 33 years of service. I’ve worked a side job or two for while on the department. I’ve paid into SS since I was 16 and I’m 62. Where is my earned benefit going or to who?
    I’ve tried to instill a good work ethic in my kids and show them hard work pays off.

    by Daniel J Muder — October 30, 2019

  8. I was an SSA claims rep in Washington DC when the Windfall Elimination Provision was implemented in the 1980s. A friend wrote the initial instructions for SSA employees based on the legislation. The computation of social security benefits has always had a social welfare aspect in order to give a larger return to low-income workers. These are the workers least likely to have pensions or significant savings. When SSA retirement benefits are computed, a person’s FICA-covered earnings are indexed and then averaged over the number of months in 35 years even if the person has only the minimum 10 years of covered work and/or worked primarily in a job not covered by FICA taxes. This is the AIME, average indexed monthly earnings. To help low income people, a person gets a 90% return on the first $926 of their AIME in 2019 and a 32% return on any AIME between $927-$5,583. In other words, a person who worked entirely or primarily in covered work gets a 32% return on the majority of their earnings. When a person worked in non-covered work long enough to get a non-covered pension, their covered work averaged over 35 years will usually make them appear to be a low-income worker. The unintended “windfall” was getting the 90% return. Instead people with non-covered pensions get a 40% return up on the first $926 of their AIME which is still higher than the 32% return someone who always did covered work receives on most of their earnings.

    by Jean — October 30, 2019

  9. The windfall penalty is so unfair. Only if you are a federal worker are you exempt from this! I paid into SS for Fourteen years and will receive a small gov pension but I can’t afford to retire because my SS will be cut 50 to 60 percent and if something happens to my husband I won’t receive any of his SS who paid in for fifty years!

    by Cynthia — October 31, 2019

  10. I am a retired USPS since 2009. I started working at age 16, so I was able to collect SS, but 2/3 of it I did not receive. This bill h.r. 4540 will reimburse 150.00 a month which I do believe I earned and need. With health costs going up every year the cola raises are minimal and go toward the insurance or drug part D of Medicare I do not get a raise at all. So unfair to all of us. Please support this bill.

    by Mona — October 31, 2019

  11. The WEP act is based on my personal work record, and is bad enough to lose money, but, the GPO part is based on my spouses social security, using a different and worse formula, which reduces my survivors SS to 0! If your spouse makes a good amount, you will get nothing as it will be reduced by 2/3s!!! Losing your spouse’s income can put you into poverty or damn close to it. This really is not fair as your spouse aslo paid into SS for your benefit, especially for the woman who stayed home for some years to take care of the children. You go back to work as a government job and you are penalized for working. I know spouses who never worked getting more than me! This is wrong! We earned ours and our spouses did too for us.

    by Nancy — October 31, 2019

  12. Jean—-Thank you for that background and information on the calculations. That certainly explains the need for the WEP and why it is in fact equitable overall.

    by Pat Reynolds — October 31, 2019

  13. Federal employees are NOT exempt from WEP.

    by Karen K — November 1, 2019

  14. Cynthia
    This provision was enacted specifically to federal employees. They called it double-dipping.
    My Union (USPS) has been trying to get this law overturned for years (to no avail).
    It is unfair to those who have earned their credits and to spouses (GPO) who had the “misfortune” of falling in love with a federal employee……?

    by Roger H — November 2, 2019

  15. Federal employees under the current Federal Employees Retirement System (FERS) pay into Social Security and most would have substantial earnings each year so they would not be subject the the Windfall Elimination Provision (WEP). Older Federal employees under the previous Civil Service Retirement System (CSRS) did not contribute into Social Security and thus, they did not have substantial earnings covered by SS. Those CSRS annuitants are subject to the WEP unless they had other substantial earnings under SS through other employment.

    by LS — November 2, 2019

  16. LS, thank you for clearing that up.

    by Karen K — November 2, 2019

  17. My husband is set to retire (at age 70) in August 2020 and will be affected by WEP. Is there any real possibility that WEP will be reformed/eliminated? He has continued to work past his SS retirement age because of the effect WEP will have on his Social Security benefits.

    by Cheryl — November 2, 2019

  18. I was just talking with a friend about this last week! His wife is affected by the Windfall rule. I wonder what will happen?

    by Kathe — November 2, 2019

  19. My schoolteacher wife has worked the last 20 of her 35 years in CA. She doesn’t pay into SS, so no mystery her SS benefit would be very low. She is eligible for a CAL Supplemental Teachers Retirement System (STRS) pension for this time. However, it’s very inequitable that, upon my passing, she’d hardly get any survivor benefits from SS. We recognized this “bug” early enough to adjust our retirement planning. However, at every CAL STRS retirement seminar we attend, its heartbreaking to see how many teachers (especially widows whose late spouses didn’t plan finances well) learn they won’t get much SS, and are not getting their survivors benefits like they thought. The pension is not very much either, when they thought they’d also have SS.

    My wife strongly encourages her colleagues of all ages to attend these seminars, and to plan retirement early!

    by Greg W — November 3, 2019

  20. I spent thirty five years in the police department which did not collect social security. During that time and after I did work jobs that paid and I paid into social security. There are far too many people that have never paid into it and are collecting benefits. I served in the military and SS was withheld from my pay and all of the side jobs during that time and after retirement from the PD. This WE
    elimination has been around for a long time and sees to die on the vine each session. I really believe I and all the others should be as eligible as everyone else. Our ambition should not be taxed!

    by joseph kevin moran — November 3, 2019

  21. To Cheryl – November 2, 2019
    I retired from govt. service at age 70 in July 2018. It has been a financial nightmare. While working I attended a few retirement seminars where I was given formulas to calculate my annuity. I never did get a “personalized” estimate at any of those. I was told “oh, just send for an estimate from OPM (office of personnel management).” I did that, three times during my last five years of work; just to make sure I had a reliable figure. My wife and I crunched the numbers and it looked ok for me to retire. So I did, and then the nightmare began.
    When you retire they pay you an “interim” amount while they calculate and finalize your real annuity amount, which takes several months. Then you get a letter stating your annuity. My amount was short of what all my estimates had shown. Then I was informed that their interim estimate had been too high and I was required to pay back the difference. Then I was told that they had made a mistake and put me in the wrong retirement system (I should have been in CSRS-OFFSET) so they reduced my annuity because of that mistake. Then they told me that I was getting a reduction because I fall under the WEP (windfall elimination provisions) rule, so I owed them money back for the time they had not withheld that.
    Like I said, a nightmare. I would think that, given all the years people have been retiring from civil service, and the intelligence of today’s modern computer programs it shouldn’t be this difficult to get right. My advice is to only count on about 1/4 of what you think you are going to get, until the dust settles.
    By the way, a have a letter from my local S.S. office manager stating that according to his records I should not be penalized under Windfall.
    This is all under appeal with the Merit Systems Promotion Board. As far as your question about the future of WEP I hope and pray that that rule goes away and that you and I have a better outcome.

    by Vic Kernick — November 3, 2019

  22. I made full SSI contributions from age 16 to
    30. Then I became a police officer and made no contributions for 30 years. Now I net $134.00 from SSI—UNFAIR!!!
    I worked at manual labor to become vested in SSI and then served society for 30 years in Jersey City NJ. I’m being screwed by my own Gov’t. I appreciate your efforts …Thank you.

    by Peter Gallagher — November 4, 2019

  23. I have shared my thoughts about the WEP previously on this website and it absolutely boggles my mind how many folks have no idea that this exists. All of my retired friends who worked in the private sector are stunned when they hear the details. This bill must pass! I know too many of my retired widow teaching colleagues from Maine that shop at Goodwill and Food pantries, or attempt to get substitute teaching jobs here and there at 85 years old! Personally I worked before my teaching career in the private sector and worked second jobs during my 34 year teaching career. I qualified for full SS benefits when I returned based on the many qualifying years in the private sector. THEN they applied the WEP and now I receive $52.00 a month in SS benefits! And my Maine retirement pension places me squarely below the poverty level. And when my husband passes, and I lose that spousal benefit, that other public service retirees lose, you can believe that I will make sure that I follow him the next day, one way or the other

    by sandyz — November 5, 2019

  24. The problem with the WEP is that the formula it uses is an arbitrary one–a formula which actually cuts out MORE of a person’s SS benefit than if he or she had been an average non-public worker. We now have 20 years of data to examine the application of the current WEP formula. What this reveals is that the majority of people affected by the WEP lose on average from $77 to $84 more of their SS benefits each month than they should. This is why the WEP formula needs to be replaced with a formula that is fair. A teacher should not receive LESS of their SS than Joe the Plumber. They should not receive more, either. However, currently, this is exactly what happens. This is why we need to try and create a more equitable formula. Please read the actual bill and the documentation in support of it so you can understand the math. It IS fair, and that is why it has bipartisan support. The arbitrary formula created 20 years ago is taking MORE of most teachers’ Social Security than it should and is very punitive. It punishes people for going into education. Of course, there does need to be a WEP formula (otherwise public employees would look poorer than they really are on paper–due to the fact that their social security earnings are generally lower), but the formula should be fair. Hence the need for the WEP. (And by the way, teachers in most states won’t receive $65,000 a year! They need to have a formula that is better-adjusted so they receive a fair part of their SS benefits.)

    by Cheryl from Texas — November 6, 2019

  25. Here is a short take on the WEP formula. (This is very brief, but you get the idea.)

    “Normally, Social Security benefits are calculated using a formula in which an individual’s average indexed monthly earnings (AIME) are multiplied by three progressive factors – 90 percent, 32 percent and 15 percent – at different levels of AIME, resulting in a primary insurance amount (PIA) that becomes the basic monthly benefit.

    Under the WEP, the 90 percent factor is reduced to as low as 40 percent. For 2019, this results in a monthly benefit that is $463 lower than the regular benefit formula.”

    The WEP actually reduces the benefit a public worker should receive by TOO MUCH!

    Here is the reasoning (below)as to why the WEP has a greater impact on lower-income teachers and why the formula needs to be changed (My husband falls into this category. He spent 20 years in education and earns about $25,000 for a teacher pension. He spent 14 years paying into Social Security but he was not a highly-paid worker–he was a teacher at a for-profit technical school. He will receive some social security, but it will be much reduced, and when he dies, I as a retired teacher will not receive any of it. Trust me, even in Texas, he could not live on $25,000.)

    Here is a more detailed explanation from the Congressional Research Service:
    https://fas.org/sgp/crs/misc/98-35.pdf

    The WEP’s Impact on Low-Income Workers
    The impact of the WEP on low-income workers has been the subject of debate. Jeffrey Brown
    and Scott Weisbenner (hereinafter “Brown and Weisbenner”) point out two reasons why the WEP
    can be regressive.21 First, because the WEP adjustment is confined to the first bracket of the
    benefit formula ($926 in 2019), it causes a proportionally larger reduction in benefits for workers
    with lower AIMEs and benefit amounts. Second, a high earner is more likely than a low earner to
    cross the “substantial work” threshold for accumulating years of covered earnings (in 2019 this
    threshold is $24,675 in Social Security-covered earnings); therefore, high earners are more likely
    to benefit from the provision that phases out the WEP for people with between 21 and 29 years of
    covered employment.
    Brown and Weisbenner found that the WEP does reduce benefits disproportionately for lowerearning households. For some high-income households, applying the WEP to covered earnings
    even provides a higher replacement rate than if the WEP were applied proportionately to all
    earnings, covered and noncovered. Brown and Weisbenner found that the WEP can also lead to
    large changes in Social Security replacement rates based on small changes in covered earnings,
    particularly when a small increase in covered earnings carries a person over the threshold for an
    additional year of substantial covered earnings, leading to an adjustment in the WEP formula
    applied to the AIME.

    This is why we need a fairer formula for the WEP.

    by Cheryl from Texas — November 6, 2019

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