Social Security is intended to provide a greater level of income replacement for poorer members of society. The formula could not differentiate between those who worked in low-paying jobs their entire career and those who appeared to have received low pay because they worked for many years in jobs not covered by Social Security. Congress believed that the non-Social Security pension benefit would be an adequate retirement even if the earned Social Security benefit was cut.
The Formula
The typical Social Security benefit is figured by a three-step formula. The first step provides 90 percent of the first $816 of average monthly earnings; the second step provides 32 percent of the next $4,101, and the final step provides 15 percent of the remaining earnings.
For a retired teacher, the benefit is figured on a modified formula. Instead of 90 percent of the first $816, the benefit is calculated on 40 percent of those earnings – a reduction of 50 percent!
The WEP affects those educators who have work experience both in the CalSTRS system and in Social Security covered employment. For someone who has 20 years or less in Social Security jobs, the WEP reduces the Social Security benefit by 50 percent.
The Reality
Teaching is not a highly-paid profession and imposition of the WEP formula results in significant losses of earned retirement income. Most agree that the amount of the reduction was an arbitrary figure, and since it applies only to the first increment of earnings it is a highly regressive formula. It is essentially the only means-testing in Social Security, but without taking into account the actual income of the recipient.
The WEP also significantly reduces the ability to recruit private industry workers to bring their skills and knowledge to California’s classrooms. This transfer of knowledge is particularly important in some of the high technology areas for California high schools and community colleges.
The typical Social Security benefit is figured by a three-step formula. The first step provides 90 percent of the first $816 of average monthly earnings; the second step provides 32 percent of the next $4,101, and the final step provides 15 percent of the remaining earnings.
For a retired teacher, the benefit is figured on a modified formula. Instead of 90 percent of the first $816, the benefit is calculated on 40 percent of those earnings – a reduction of 50 percent!
The WEP affects those educators who have work experience both in the CalSTRS system and in Social Security covered employment. For someone who has 20 years or less in Social Security jobs, the WEP reduces the Social Security benefit by 50 percent.
The Reality
Teaching is not a highly-paid profession and imposition of the WEP formula results in significant losses of earned retirement income. Most agree that the amount of the reduction was an arbitrary figure, and since it applies only to the first increment of earnings it is a highly regressive formula. It is essentially the only means-testing in Social Security, but without taking into account the actual income of the recipient.
The WEP also significantly reduces the ability to recruit private industry workers to bring their skills and knowledge to California’s classrooms. This transfer of knowledge is particularly important in some of the high technology areas for California high schools and community colleges.
I contributed to SS for 22 yrs prior to enactment of WEP in 1985. I assumed I had met the requirement when my public agency voted to stop the SS participation. Essentially they moved the goal posts. My SS WAS SUBSTANTIALLY REDUCED BY WEP. I'm a single 81 year old. My SS net is $456 a month. Prior to the cola increase, $356. I'm sure all of us get upset by being victims of SS unfairness, especially hearing illegal immigrants who have contributed nothing are receiving funds from the program. Simply wrong.
ReplyDeleteI paid into Social security for many years before taking a job as a police officer, no I did not pay into Social security for 27 years, but when I signed into Social security it showed I paid in enough to draw just shy of $1000 a month.
ReplyDeleteThen I added in my pension and it brought my payment down to $3××.00
WTH were lawmakers thinking when this was passed?
After working as a public servant and taking abuse for 27 Years I feel like this penalty for getting a pension is more painful than all those years.
I hope today's lawmakers have at least half a brain and repeal this.
I paid into Social Security for 29 years before becoming a teacher and 1/3 is taken away before Medicare costs are removed. This penalty was set into motion because Ronald Reagan (who didn't worry about retirement income) deemed it unfair to receive fully paid for SS benefits if you paid into a government pension such as CalStrs. I constantly worry about paying for the basics and don't know what I'll do if my husband dies before me.
ReplyDeleteI loved teaching and worked hard to become a good teacher. So, why am I being punished for making a decision to pay-back to society during the last 17 years of me work life? I honestly believe that the politicians who made WEP and GPO a reality didn't understand the devastation they caused. These elected decision makers are not affected by the brutality of losing paid for benefits based of a political ideology. Yet, people who haven't paid into SS get preferential treatment. Why is that?