The Classroom Teacher, summer 2015

Whether close to retirement, mid-career or just starting out, all school employees should be familiar with and aware of how federal laws may affect retirement benefits.

Q: I’ve heard that I won’t get any of my husband’s Social Security benefits or any of the benefits I earned myself when I worked other jobs – is that true?

A: Partially. Federal law requires reductions in Social Security benefits in most circumstances for Texas school employees who are not paying into Social Security through their school district. These provisions do not apply to employees who have worked their entire career in a district in which they pay into Social Security. In some cases, and only with regard to spousal benefits, the reduction is enough to completely eliminate the Social Security benefit; note that the TRS benefit is not reduced.

Government Pension Offset (GPO)

The GPO reduces benefits that you would otherwise be entitled to through your spouse’s participation in Social Security. If you receive a pension through TRS that is based on government work in which you did not pay into Social Security (i.e., your non-Social Security school district), your spousal Social Security benefits will be reduced by two-thirds of your TRS benefit. http://ssa.gov/planners/retire/gpo.html

Avoiding the GPO – the only ways to avoid the GPO are to not receive a TRS pension (which has many other implications, such as access to TRS-Care retiree health insurance, that must be considered) or to work for your final 60 months for an entity in which you pay into both TRS and Social Security.

Windfall Elimination Provision (WEP)

The WEP addresses benefits you earned yourself through other employment in which you participated in Social Security. If you are entitled to Social Security benefits because you paid into Social Security for at least 40 quarters, but you work for more than five years in a district not paying into Social Security, your Social Security benefit will be reduced. The calculation is somewhat complicated, but online calculators on the Social Security Administration’s website can be helpful. http://ssa.gov/planners/retire/wep.html

Avoiding the WEP – you may be able to avoid the WEP if you work less than five years in a TRS district, as you will not have vested and thus would not be entitled to a pension. (Even if you do not receive a TRS pension, being vested makes you subject to the WEP.) Also, if you have paid into Social Security for 30 or more years, you are exempt from the WEP. If you have 21 to 29 years of Social Security participation, a sliding scale applies so that the benefit reduction is lessened as you approach the 30-year mark.

These federal laws were adopted to address inequities in the calculation of Social Security benefits for employees who work in government jobs not paying into Social Security. For more information, see the excellent presentation by Tom Clark at our 2014 convention – available to TCTA members only at https://tcta.org/socialsecurityretirement.

Bills in Washington

The following bills have been filed during the current congressional session. None of these bills has moved since its initial filing and referral to committee.

Two bills, known as the Social Security Fairness Act of 2015, would completely repeal both the GPO and WEP:

•    S 1651 by Sen. Sherrod Brown (D-OH). Referred to the Senate Finance Committee. The bill has 16 co-sponsors, none of whom are from Texas.

•    HR 973 by Rep. Rodney Davis (R-IL). Referred to the House Ways and Means Committee. The bill has 115 co-sponsors, including five from Texas: Michael Burgess, Randy Neugebauer, Marc Veasey, Beto O’Rourke, Lloyd Doggett.

HR 711 by Rep. Kevin Brady (R-TX) is called the “Equal Treatment of Public Servants Act of 2015.” It revises the formula for the WEP so that it is based on the employee’s actual compensation rather than the current one-size-fits-all formula, and recovers previous overpayments to fund higher benefits that may result. The bill has 38 co-sponsors, including 15 from Texas: Ted Poe, Pete Olson, Beto O’Rourke, Blake Farenthold, Michael McCaul, Kenny Marchant, Kay Granger, Gene Green, Louie Gohmert, John Culberson, Will Hurd, Michael Burgess, Randy Neugebauer, Sam Johnson and Lamar Smith. It was referred to the House Ways and Means Committee.