13 Replies Latest reply on Mar 1, 2013 12:17 AM by thatch

    State Pension & Reduction of SS Benefits

    PJacho
      My wife will receive an IL State Pension.  She has not contributed to SS for the 15 years that she has worked for the state.  She did, however contribute for the 20 prior years.
       
      Her SS benefits will be reduced considerably from what she has put into the system and she is not eligible to receive any of my benefits after  I die.
       
      Is there any progress on the Windfall Reduction Act under discussion? 
        • Re: State Pension & Reduction of SS Benefits
          SaraSally
          Why is she not eligible to receive any of your benefits. I was an Illinois state retiree with the same Windfall issue but I collect on my deceased husband's SS (as well as his pension) and my own pension. Could you explain?
          • Re: State Pension & Reduction of SS Benefits
            PJacho
            We went to the SS office and received an estimate of @ 40% of what she had accrued.  They also told us that she would not be eligible for any of my benefit.
             
            What you are telling me is contrary to what we were told.
             
            Her Union & SURS are to are lobbying to change the Windfall act but we have not heard anything lately.
             
            Are you receiving his full pension amount? and is yours reduced? 
              • Re: State Pension & Reduction of SS Benefits
                jocee
                My husband also retired from IL but he also had 30 years of payments to SS before and after IL so his SS was not reduced for this factor.  If you have less than 30 years of contributioins to SS, your benefits are greatly reduced. 
                 
                It may be that your wife is getting too high a pension from IL to collect on your survivor SS benefits.  My mother had a state school pension and could not get any SS benefits for herself because she never paid in.  When my father died, she only received about $100 of his SS benefits but it fluctuated every year depending on what raises she got through her own pension.  If her own pension would have been higher, she would not have received any survivor benefits based on my father's earnings.  My sister-in-law said she is in the same position and sees no way she would ever collect from my brother's SS if he died.   
                 
                It is always worth checking again to verify this information.
                 
                • Re: State Pension & Reduction of SS Benefits
                  jkom51
                  There are specific pension amount limits to the WEP, above which the Soc Sec benefit is reduced if the pensioner has paid in for 40 quarters. Go to the SocSec site and search for Windfall Elimination Provision to see the chart.
                   
                  My DH is a CA state employee but also has his 40 quarters in as the agency he worked for did not withdraw from SocSec until 1982. His SocSec will also be reduced by the full 60% reduction due to the amount of his pension.
                   
                  If you want to protest the WEP, you can sign up on the Repeal HR 235 site: http://www.petition2congress.com/2071/h-r-235-repeal-government-pension-offset-gpo-provision/. Sen. Dianne Feinstein (Dem-CA) has been backing this bill for years, but support from as many voters as possible will help show Congress there is popular sentiment to amend the WEP.
                    • Re: State Pension & Reduction of SS Benefits
                      JoeYoung
                      I have been following the numbers for WEP reduction of my SSN benefits for several years.  I really can't complain as not paying into SSN for 20 years allowed me to retire the first time at 55 and take a job for a salary that I never could have excepted without my state pension as I get more there than as a full time faculty member at the small college I now work for and enjoy the job also.
                      When I hit 66 in 4 years I am hoping that the SSN check will pay the federal tax on my other retirement.  So I fine with leaving the money I have payed in to the system, and continue to pay in, for others who are not as blessed as I am.
                      • Re: State Pension & Reduction of SS Benefits
                        PJacho
                        Thanks for the resource.  I will follow up.
                          • Re: State Pension & Reduction of SS Benefits
                            RJones
                            It appears that two different but related provisions of the Social Security program are being referenced in this thread.
                             
                            There is the Windfall Elimination Provision (WEP) which affects workers who have an earnings-based pension from an employer who does not withhold Social Security taxes.  In general, a modified formula is used to calculate your (smaller) SS benefit.  See Social Security Administration Publication 05-10045 for more information and the general formula used. 
                             
                            There also is a Government Pension Offset (GPO) provision that typically affects the Social Security benefits payable to the Social Security spouses/widowers/widows of government pension recipients.  In general, SS benefits will be reduced by 2/3 of the government pension.  See Social Security Administration Publication 05-10007 for more information and the general formula used.
                             
                            There are exceptions and additional provisions for both provisions described in the documents above.  Hope that helps.
                              • Re: State Pension & Reduction of SS Benefits
                                jpb001
                                I'll qualify for a teacher's pension in IL soon.  I also have credit for 39 quarters under Social Security from earlier work in New Jersey (where teachers do contribute to SS).  Because the amounts contributed long ago to SS were so small, is it worth working one more quarter in a non-teaching job to qualify for SS?  Or is it likely because of the windfall provision and my low contributions, that I wouldn't get much (or anything) in SS anyway?

                                New to all this - so thanks!   
                                  • Re: State Pension & Reduction of SS Benefits
                                    Nuge

                                    I was in a similar position with some SS quarters from the 1970s in  a good wage job (10K) and the rest from low wage jobs (12K) in the  1990s. I ended up with 40 quarters but the Windfall Elimination  Provision (WEP) reduced my SS pension from about $700 a month at age 67  down to $360 a month. About $100 of that goes for Medicare.


                                    I think the WEP is a reasonable provision. The SS system is  weighted to provide more dollars of benefits to low wage workers. The  person who worked six days a week as a minimum wage cook or waitress for  40 years with no paid vacation and no benefits gets a higher percentage  of their final salary than a CEO does. 


                                    You and I were exempted from paying SS taxes while we socked money  away in a state or local pension system so there's no reason we should  get that same low-wage boost that a lifetime low-wage worker gets under  Social Security. The WEP corrects for that.
                                    • Re: State Pension & Reduction of SS Benefits
                                      jkom51
                                      jpb001 said...
                                      I\'ll qualify for a teacher\'s pension in IL soon. I also have credit for 39 quarters under Social Security from earlier work in New Jersey (where teachers do contribute to SS). Because the amounts contributed long ago to SS were so small, is it worth working one more quarter in a non-teaching job to qualify for SS? Or is it likely because of the windfall provision and my low contributions, that I wouldn\'t get much (or anything) in SS anyway?
                                      Even with the maximum 60% reduction under WEP, you would still probably get enough to offset the cost of Medicare B with a couple of hundred $$ leftover. NEVER turn down guaranteed income, especially when you contributed your own $$!
                                       
                                      If your pension is small - many are, few workers actually manage to retire with 42 yrs the way my DH did - your offset could be much less than the max.
                                       
                                      Work one more quarter, and get yourself qualified for a SocSec benefit. I believe it will also qualify you for Medicare Part A for free; otherwise you'd have to pay for it (can someone confirm this for us? I'm going on memory here, a sometimes unreliable thing at my age, LOL!).
                                  • Re: State Pension & Reduction of SS Benefits
                                    rrefudge
                                    How can I find out how much my SS will be penalized by a Public Safety retirement?
                                     
                                      • Re: State Pension & Reduction of SS Benefits
                                        jkom51
                                        rrefudge said...
                                        How can I find out how much my SS will be penalized by a Public Safety retirement?
                                         
                                        First, confirm with your HR or pension fund mgr that your pension WILL be counted against your SocSec. Not all government pensions fall under the WEP rule.
                                         
                                        Then check the SocSec website which gives you the reduction percentages. You should know roughly what your pension will be; check that against the various percentages.