Become a teacher — and lose the Social Security benefits you paid for while holding other jobs!
A good recruiting slogan it’s not.
But a pair of three-decade-old federal laws, aimed at preventing “double-dipping” in government pensions, are penalizing some Californians who take public service jobs in teaching, firefighting and law enforcement.
U.S. Sen. Dianne Feinstein, D-California, who has been trying to get the federal laws repealed, estimated two years ago that the penalty could affect nearly one million persons nationwide, about 200,000 in California.
It’s called a “heroes’ penalty” by Assemblyman Tom Torlakson, D-Antioch. He is carrying yet another resolution in the California Legislature, AJR 10, urging Congress to repeal the penalty.
“This comes under a couple of possible labels,” Torlakson told an Assembly committee last month. “It would be a ‘Catch 22’ or it would be a massive rip-off.”
Torlakson told a Senate committee this week about Margaret “Peg” Cagle, a “wonderful, brilliant architect” who paid into Social Security for two decades before becoming a teacher in the Los Angeles Unified School District.
Cagle became an outstanding math teacher. Among her awards: LAUSD Teacher of the Year; the USA Today All-USA Teacher Team; and the Presidential Award for Excellence in Math & Science Teaching.
“She went to retire and found out she had lost about half of her Social Security because she was in STRS (the California State Teachers Retirement System),” said Torlakson.
In another example, said Torlakson, a woman whose husband died could have begun receiving about half of her husband’s $1,600 a month Social Security payment. But she was a member of CalSTRS.
“When she went in to reconcile she was surprised to learn she would only get a $225 death benefit to bury her husband,” Torlakson said.
As an Assembly committee heard Torlakson’s resolution last month, Rhoda McFarland of Sacramento told how she had taught for 25 years before working for 15 years in other public service jobs, this time paying into Social Security.
“When I got ready to get my Social Security, I was told I couldn’t have the whole thing because I had taught in California,” she said, which forced her to continue working and delay retirement until five years ago.
McFarland said it took her two years and four trips to a Social Security office to learn that her payment of $272 a month ($185 after a Medicare payment) would have been $568 if she hadn’t been a teacher.
“Even though I paid what someone else paid I’m told you can’t have it because you taught in California,” she said. “It’s so devastating to feel that way. I could not believe it.”
In a survey of its members last year, CalSTRS found that many are unaware of the penalty or “offset,” as it is formally called. About 32 percent of active members expected to have between 10 and 30 years of Social Security credits.
The survey found that 29 percent of those with Social Security credits were unaware of the income offset. In addition, 44 percent of active members were unaware of the spousal benefits offset.
A law that took effect in 2005 requires employers not covered by Social Security to tell new hires about the offsets. And the new hires are required to sign a statement saying they are aware of possible reductions in their Social Security benefits.
“Until recently, many educators were told they would not be affected by these penalties when they retired,” Dave Walrath, a lobbyist for the California Retired Teachers Association told the Senate committee.
“But when they did retire, when they did need the income, all of a sudden they were told, ‘No, we will penalize you. We will reduce your benefits that you paid for and earned,’” he said.
Why did Congress impose the penalties or offsets? Social Security replaces a greater percentage of the income of a lower-paid worker than of a worker who earns a higher income.
The theory is that if benefits such as CalSTRS are not counted, a higher-wage worker could be regarded as a lower-wage worker and receive a Social Security payment based on a greater percentage of the income.
In 1977, Congress passed the “government pension offset,” which reduces a spouse’s Social Security benefit by two-thirds. In some cases, such as the one cited by Torlakson, the result is that the benefit is totally eliminated.
In 1983, Congress passed the “windfall elimination provision,” designed to prevent workers from receiving higher benefits than they would if all of their earnings were covered by Social Security.
Once again legislation has been introduced in Congress to repeal these two Social Security penalties or offsets, S 484 by Feinstein and HR 235 by U.S. Rep. Howard Berman, D-Los Angeles.
A major budget problem is that repealing the two laws would be costly. Recent estimates range from $61 billion to $80 billion over the next 10 years. And Social Security is already projected to run short of money in the decades ahead.
A major political problem is that California is one of only 15 states where some or all of the public employees are not covered by Social Security. So most states, including many of the big ones, do not have a problem with the penalties or offsets.
Legislation in 1961 allowed most California state workers to coordinate their pensions through what is now the Public Employees Retirement System with pensions they receive through Social Security.
Nearly two-thirds of the 800,000 active state and local government workers in the CalPERS system are also covered by Social Security. Among those not covered by Social Security are the California Highway Patrol and state firefighters and correctional officers.
In addition to teachers, other public employees in California not covered by Social Security include judges, University of California employees, and the employees of more than 450 cities, counties and special districts.
State and local governments are in a deep fiscal crisis now. But if repeal continues to fail, California might think about avoiding the devastating impact of Social Security penalties for future public employees by putting them all under Social Security.
The current Social Security contribution rates are 6.2 percent of payroll from employees and 6.2 percent from employers. For the uncovered public employees in California, that’s a lot of money that might be welcomed by Social Security.
A CalPERS analysis of Torlakson’s resolution said that repealing the offsets “could further exacerbate” the fiscal problems of a Socail Security program projected to run out of money in about 30 years.
“In addition, the greater the funding imbalance of Social Security, the greater the likelihood that lawmakers will consider other alternatives, such as mandatory coverage of newly hired state and local public workers to shore up the program,” said the analysis.
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at http://calpensions.com/ Posted 25 Jun 09
June 25, 2009 at 11:09 pm
Josh Richman’s blog had an entry about this. If you read through the comments you’ll see my criticism of news media that doesn’t explain the facts and allows politicians to exploit that lack of understanding. There are explanations from myself and another person as to the rationale behind the rules. This is opportunistic demagoguery by Feinstein and the like. I hope you will try to hold her and others accountable.
“Rally for ‘Social Security fairness for teachers”
http://www.ibabuzz.com/politics/2009/05/27/rally-for-social-security-fairness-for-teachers/
June 26, 2009 at 5:46 pm
Were was the California Teachers Association when these laws were passed?
June 26, 2009 at 6:02 pm
At one time I thought you were a balanced reporter. Clearly, that has changed, or perhaps was never the case as you now appear to be little more than a mouthpiece for civil service employees.
It isn’t hard to understand why the “windfall elimination provision” is appropriate. But, to make it simple, SS counts 35 years of employment in computing average pay. If you work 20 years in SS-covered employment and move on to civil service, the other 35-20=15 years are averaged in with zeros bringing way down your average pay. This results in a much higher ss wage replacement ratio, as though you earned the lower average pay for the full 35 years. But you didn’t, you started a new career. You think this penalized the employee. It doesn’t. It prevents them from abusing the system.
Start being more balanced …. or don’t call yourself a reporter.
June 26, 2009 at 8:43 pm
Ed, Tired of you is correct. You should better understand the basis for the windfall elimination provision before calling it a social sectuirty ripoff.
As to ripoffs, CALPENS opens supports a continuation (and often further improvement) of the generous benefits of CA workers with absolutely no consideration of the taxpayers who pay for most of these benefits and must make up for asset shortfalls. To me, that is the real ripoff, a ripoff of the state’s taxpayers.
June 28, 2009 at 9:35 pm
In defense of Ed, he put “ripoff” in quotes. That means the phrase is one attributed to the advocates, not Ed. That said, there is no interest groups with a self-interested stake comparable to those government employees and the dishonest politicians who are pushing this. And it is a matter of fundamental fairness, which was why it was implemented. Under such circumstances it seems appropriate to seek comments from experts on Social Security to balance the arguments that readers are exposed to so as to increase their understanding of the issue.
June 29, 2009 at 6:31 pm
“Become a teacher — and lose the Social Security benefits you paid for while holding other jobs!”
Not really. Since you are not paying SS taxes for the years you are teaching, you don’t get to count your teacher’s income for SS purposes. Whatever income you had before teaching, and paid SS taxes on, gets counted in determining your SS benefits. Too bad you can’t double dip anymore (like was possible before these adjustments were made). For the non-double dippers, seems eminently fair.
July 1, 2009 at 10:56 pm
Ridge Runner … though it seems like double dipping let me stress that your statement “Whatever income you had before teaching, and paid SS taxes on, gets counted in determining your SS benefits.” is exactly the problem.
These teachers paid into SS while working non-teaching jobs and they AREN’T getting the SS benefits based on that work – not their teaching years but the years that they did pay into SS.
If someone worked in a private sector job with a pension for 20 years and then a non-pension job for the other 15, that person would get his/her pension PLUS the SS benefits they paid for. But not teachers.
I don’t see how anyone can think that’s fair.
July 2, 2009 at 7:42 pm
“I don’t see how anyone can think that’s fair.”
Because you see what you want to see instead of looking at it honestly. Follow the link in the first post and read what was written. Then come back here and post why you think it’s unfair in light of that information.
July 2, 2009 at 9:55 pm
I’ve read ALL the posts both here and on the other site… it’s unfair because the feds made the change retroactive and changed the rules after people made decisions based on the rules in place when they paid into Social Security.
Here’s a different example … let’s say I played baseball for three innings and hit an RBI and my team was even with the opponents. I left after three innings under the belief the run would still be counted. After the game was over the umpire decided that only runs produced by people who had played all nine innings would count.
Would that be fair? Since when do we support changing the rules after the players have followed the rules? If the WEP/GPO had been made for new employees hired in Social Security after 1986, that would be a different matter but they were applied to people after the person left Social Security.
July 2, 2009 at 11:17 pm
It’s not a game. It’s the distribution of limited pot of money that already isn’t adequate to meet the existing obligation among those who paid and still pay into the system. Removing a unearned windfall that must come out of the pockets of those who get no such windfalls serves the cause of fairness more than preserving that unearned windfall because of the claim that people supposedly planned to get those unearned windfalls.
July 3, 2009 at 12:07 am
Quoting … “….. Removing a unearned windfall that must come out of the pockets of those who get no such windfalls serves the cause of fairness more than preserving that unearned windfall because of the claim that people supposedly planned to get those unearned windfalls.”
Excellent comment … and this same logic explains why pension formulas for current Civil Servants should be reduced for future years of service. Politicians are so scared of losing union support that they only suggest pension formula reductions for new civil servants. Changing formulas for new employees will save nothing for 25+ years. We need that savings today.
Granted that reducing benefits for past years of service seems unfair, but with everyone (except civil servants) agreeing that the current civil service pension formulas are too generous and unsustainable, why should the financial pain be further increased by continuing this excess for future years of service ???
It shouldn’t … !
July 13, 2009 at 8:26 pm
as far as I can tell my Social Security benefit will be reduced from four-hundred and some odd dollars to $56 a month with WEP. Not much considering how much I paid into Social Security.
Maybe WEP is good to keep the richer Admin from double dipping, but for part-time teachers who have low pensions and SS benefits (due to single parenthood) it really will be stripping some much needed money.
July 21, 2009 at 9:11 pm
soni and Debbie, you won’t scratch the surface of the whiners on here with logic or morality. Logic and morality says if you make a set of rules and someone follows the rules, you have to comply with the promises you made. The dim wits that post here whining about public employee benefit plans that were designed and implemented with zero complaints over the years suddenly is idiotic and unsustainable. These ‘neo-econs’ have no problem underpaying public servants and using pensions to bridge the gaps when everyone else is making money hand over fist and stuffing their retirements month after month. But let the economy dip and you won’t hear them calling for shutting their police patrols down or leaving their kids without educators. You won’t hear them begging to close their fire station or turning off the electricity to the signal light at their intersection, but by God, watch and see if they won’t renege on the benefits package that they held out there to get you to WORK those years at substandard pay. Yeah, the people who want you to give up your SS benefits that you would be entitled to if you had made different career decisions don’t seem to want to boost your pay retroactively to what it should have been when they were LURING you with those benefits. These blogs are chock full of people who are immoral and self serving. Period. When you mind the business of making their lives safe and educating their most prized entities for ridiculously low wages where often you have to commute long distances to serve those populations because your wages will in no wise support your actually residing in your area of employ, these whiners have no problem with that. But when you’re wiping their kids nose, educating them, putting that pesky fire out in their attic, mopping up that disturbing hazardous material spill over on the railroad, or wrestling some meth head with a knife, their paying you substandard wages and making it appealing by promising to put part of the difference toward a very desirable retirement seems completely logical and desirable to them. To those citizens I say STFU and pay your bills. When you get ready to change the commitments you made to me 20 years ago then file the paperwork, declare bankruptcy, close the departments down and teach your own damn kids, clean up your own damn railroads, cardiovert your own damn arrhythmias, vest up and wade into the crime infested crack house your own damned self, and I’ll gladly go about competing for your job just like I did for this one.
July 22, 2009 at 6:07 pm
If people don’t want to be subject to WEP and the GPO, then they ought to be able to pay Social Security the net present value of all the taxes that would have been collected had they been in the system when they weren’t. Then their benefits could be calculated on all their income, just like everyone else.
July 26, 2009 at 6:26 pm
I agree with Ed that this is a ripoff. I work for a school as a secretary and also have worked 4o years in the public sector. I am also a widow. I checked with social security and cannot receive the widows pension because i make to much money and am a school employee. I have only worked part time in public sector and did not make substantial earnings to cover the credits. Out of 40 years, I have a total of 6 substantial years of earning. This is not right.
July 28, 2009 at 7:33 pm
Bev, it wasn’t Ed who termed it a “ripoff.” I can’t understand your case from what you wrote. But according to the SSA, your survivors benefit is reduced by 2/3′s of the amount of your government pension that came from work where you weren’t part of the Social Security system.
http://www.ssa.gov/pubs/10007.html#how
For those in the system, “The law has always required that a person’s benefit as a spouse, widow or widower be offset dollar for dollar by the amount of his or her own retirement benefit.” The purpose of the GPO is to bring the treatment of government employees who are ought of the system with those who are in it.
August 24, 2009 at 7:36 pm
I PAID into social security for twenty years before I became a teacher. I will recieve less teacher retirement than the teachers that started teaching right out of college… but I can’t get the social security I PAID for????
Screw that!
August 29, 2009 at 4:49 pm
I was widowed after 31 years of marriage, 26 of which I stayed home to raise 4 children and look after a mother-in-law. I received no “child are credits.” Before marriage and along the way I earned a minimum SS on my own meagre minimum wage SS record. When my husband died I went to work at a public non-ss covered job and worked 18.9 years. When I retired at age 70, my modest pension (38% of my salary) caused me to lose ALL of my widow’s benefit, leaving me with only a SS benefit of $144 on my own record under the WEP. But if my husband had not died, and I did at 70 he would have collected a pension on my record and still kept HIS SS. Where is my compensation for my 26 years of child raising? Isn’t that what a spousal benefit is about?
October 26, 2009 at 2:30 pm
I worked for 39 years, paid into SS for the first 15. As I figure it, my SS gets reduced to ZERO due to my pension coming partly from wages that did not have a SS deduction. Is there a maximum that WEP reduces SS ??
November 11, 2009 at 4:34 pm
How do we get the full benefits for all of those jobs we needed to survive when we were young. Now receiving a very meager teachers pension and being penalized 50% of a very,very meager social security pension which I worked so hard to obtain. What a rip off. I took ss at 62 expecting not to live past 65 with cancer.
March 6, 2010 at 9:51 pm
Get this folks:
I am a former federal worker (CSRS) who worked for 14 years in the private sector before being federal. AND, now,as a state worker, I am fully paying my share of social security taxes (last five years) only to find out that when I retire I will receive the grand total of $275 per month, whilst having $225.00 per month taken out for Social Security.
Sure helps to be a law abiding legal American citizen, huh?
Think we can get this crazy law repealed?
July 20, 2010 at 6:19 pm
Rhoda McFarland was my teacher. I still remember how the blackboard looked when she taught us about Classical music within classical music, that’s it, one is a subset of the other. Whenever I think of the segueway between the Classical and Romantic periods, I think of her blackboard and how the light shone on it.
July 22, 2010 at 5:06 pm
Camilla
You were rearing children for 26 years? Give me a break. You were living the life of luxury and expecting other people to pay for it.
The spousal benefit rewards marriage and nothing else. A married mom whose husband dies young has to go out and earn her own Social Security. A married mom of four whose husband makes $50,000 will get less Social Security than a married mom of one child whose husband makes $100,000. So no, the benefit is not about child-rearing.
The public workers can’t make the argument that they are owed what they think they earned in Social Security AND what they didn’t earn but think they deserve just because they married someone who paid the taxes. Single people and two-income couples shouldn’t have to subsidize the lifestyle choices of couples who can afford to keep one partner out of the work force.
Plus, I bet you did some under-the-table stuff all those years and never paid taxes on the income. Why would you when you know you can freeload off hard workers just by being married?
August 2, 2010 at 6:21 pm
My understanding is that SS benefits are based on your SS earnings. So if SS retirement benefit calculation is solely based on the non-teaching earnings, why shouldn’t an individual be entitled to the legitimately earned benefits? The benefit is lost after-the-fact when taking a teaching position? Or in my case, my wife is a teacher who also continues to work a part-time job in addition to her teaching position. Based on this limited income, her last SS statement showed her retirement benefit estimate to be $206/month at age 62.
Now consider her incomes individually. If she ONLY worked her part-time job, she’d receive $206 at retirement. On the other hand, if she ONLY worked as a teacher, she’d receive only receive her pension. But if she does both, her SS benefit gets docked? Retroactively? I could understand if she received a “windfall” benefit by working both jobs, but that is not the case. Basically, if you become a teacher you lose formerly earned benefit, but if you become a stay at home spouse you receive the full SS paycheck? If this is the case, shouldn’t a teacher be eligible to at least get their SS contributions refunded? Or in my wife’s case, shouldn’t she be able to opt-out of SS deductions from her part-time employment since she will not receive benefits later?
August 19, 2010 at 11:18 pm
http://www.ssa.gov/pubs/10045.html#percentage
Is anyone considering the SS benefit amount shown on the annual SS statement of benefits is based on the assumption the employee will continue to earn the same annual SS covered wages until the age of retirement? So if I receive a statement at age 45 saying I will receive $700 in SS benefits and then stop working or begin earning non SS covered wages, the SS benefit amount will, naturally be substantially less. The arguments above on either side of this argument don’t seem to address this fact.
The formula of exactly how WEP is applied is at the above link. That information read, it seems that these arguments either don’t hold water, are leaving out critical details, or Social Security is already violating laws. If the latter is true, perhaps we should be worried about accountability rather than more laws or the repeal of laws.
Of course, I am concerned because I am State employee covered by CalPers but still paying social security. If I stay at this place of employment until retirement, I will have 20 years in civil service and more than 20 years in the private sector.
August 26, 2010 at 6:10 am
Reading some of these entries are scary. Did you ever hear of divide and conquer?
I worked as a per diem for several years in a school district not knowing that contributions were not being made to Social Security. Later I was hired full time at another district and contributing to Social Security as well as a state pension. I am a victim, yes victim of WEP crime. If a private insurance company pulled this off it would be considered a crime and the perpetrators punished. Let’s face it; if you put money in for a number of years that’s the amount you should pull out, with no deductions for the pension. People who have several careers and contribute to several private pension systems are not penalized by one or other of the systems.
As far as widows deserving their husband’s benefits, they are entitled. The system is “Old Age, Survivors and Disability Insurance.” While married the deductions came out of paychecks, which supported the household. Think of it in terms of insurance. Mary, I don’t think it is fair to judge why a woman stays home, there are many stay at home moms who work harder than some high ranking figureheads with paychecks that match the size of their titles. I don’t think Camilla and her husband were living the life of luxury on one paycheck, raising 4 children and caring for a mother-in-law. And to suggest she was doing something illegal shows what little regard you have for someone you feel doesn’t deserve benefits. Tell me do you think people who are out on permanent disability don’t deserve it either because they didn’t contribute fully? This is what the Social Security System is, a guarantee of money at a time when you need to depend on it.
The rules where changed in the middle of the game and the majority of the people were not notified until they went to their local SS office shortly before retirement and were shocked to find out. I think the best way to describe WEP and GPO are: putting money into two banks but being told you can’t make the interest your are entitled to in both banks you have to be penalized
December 28, 2010 at 4:17 am
for all of you who say wep and gpo is a good thing….i put 20 years into paying social security. i am now a teacher. if i teach until i am 62 i will have 12 year in. please tell me how it is fair that my social security is gone and you expect me to live on 12 year pension of about 300 dollars a month? do you understand now that not everyone becomes a teacher at 20 years old??? do you see how i dont know how i will live? i was not told about wep or gpo when hired or going to school. i am single. how will i survive? give me my social security!!!!
December 28, 2010 at 7:06 am
One thing related to this subject, that causes a lot of loss of income, is taking full benefits, and not insuring the surving spouse. People very stupidly figure when they are going to die. When it it does not happen that way, if full benefits are taken, the surviving spouse gets nothing. Seen it happen over and over, done by people who should know better.
February 7, 2011 at 7:46 am
If teachers paid into SS, which they do not, presumably they would
receive SS benefits if otherwise qualified but their benefits might be
reduced. One solution would be to allow California teachers to pay into SS. This would, however, encourage “double dipping.” But there now are far more double dippers+ than most people realize. Incidentally non teaching school employees (classified) do pay into SS. Military receives an SS pension and a military pension when qualified and do pay into SS.
March 21, 2011 at 12:31 am
I have taught all over the country for 40 years. I have been in Nevada for 12. Although I paid into Social Security for many years, my years in Nevada will prevent me from drawing full benefits. My husband retired from Alaska as an administrator, which didn’t take out S.S. contributions, but had 30 years of substantial contributions in other years, so got full benefits. There has been no mention of that thirty years exemption. If you pay in for a full 30 years, you don’t have to worry about WEP.
March 21, 2011 at 4:49 am
I hope that all realize that SS has been hijacked by BOTH Republicans and Democrats. Never mind the taking of contributions of those who paid, money taken out for other programs, easy give aways, such as SSI, etc, have taken far more. Drop your membership in either of these corrupt political groups. They deserve nothing, even our names, from those who once supported them. One good benefit in California is a choice when voting in primary elections. Lets stop the finger pointing game of Bush did it, Obama did it, they all did it. If a politician cannot keep promises they need to be one term only. Here is something that was just sent about the problem that we all have.
Congressional Reform Act of 2011
1. Term Limits. 12 years only, one of the possible options below..
A… Two Six-year Senate terms
B… Six Two-year House terms
C. One Six-year Senate term and three Two-Year House terms
2. No Tenure / No Pension.
A Congressman collects a salary while in office and receives no pay when they are out of office.
3… Congress (past, present & future) participates in Social Security.
All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people.
4. Congress can purchase their own retirement plan, just as all Americans do.
5. Congress will no longer vote themselves a pay raise. Congressional pay will rise only by the CPI.
6… Congress loses their current health care system and participates in the same health care system as the American people.
7… Congress must equally abide by all laws they impose on the American people.
8. All contracts with past and present Congressmen are void effective upon ratification.
The American people did not make these contracts with Congressmen. Congressmen made all these contracts for themselves.
Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.
If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Maybe it is time.
THIS IS HOW YOU FIX CONGRESS!!!!! If you agree with the above, pass it on. If not, just delete
Never give in. Never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.
Sir Winston Churchill