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Social Security & Medicare Q&A: Private Sector and Social Security Benefits
Q: I have a complaint about the Social Security �Windfall Elimination Provision.� I worked for the private sector for over 20 years (1960 - 1981) becoming fully eligible for Social Security (SS) benefits. But since I worked for the Federal Government another 23 years after that (1981 - 2004) the government is going to reduce my SS benefits when I retire. My government pension will only be 40% of my base pay. I can�t afford to retire. I really need the entire SS benefit and it should be mine since I earned it long before I went to work for the government. How can it be a �windfall�? C.S. A: The Social Security Windfall Elimination Provision (WEP) affects how your retirement or disability benefits are calculated if you also receive a pension from a job in which you did not pay into Social Security � like the Civil Service Retirement System, or a public pension from a state retirement system that did not pay into Social Security. To determine the initial benefit under the standard Social Security formula, for a worker who turns 62 in 2004, for example, the first $612 of average monthly earnings is multiplied by 90%; the next $3,077 by 32%; and the remainder by 15%. Under the WEP the 90% factor is reduced. If you became 62 in 1990 or thereafter, the 90% factor is reduced to 40% if you worked in a job covered by Social Security for 20 years or less. The WEP is particularly unfair because it applies only to persons receiving a public pension and not to persons receiving private pensions. Many school teachers, firefighters, police offers and other retired public employees have their Social Security benefits reduced while private sector retirees get to keep their entire pension and receive their full Social Security. Recently, a bipartisan group in the House introduced legislation that would provide a more fair Social Security benefit for those affected by the WEP. Introduced by Representative Kevin Brady of Texas, the bill would alter the WEP benefit formula. In an example provided by the House Ways and Means Subcommittee on Social Security, a retiree turning 62 in 2004, with average earnings of $3,300 per month, would receive a monthly benefit of $705 instead of $576. TSCL lobbies in support of measures that would repeal or modify the Windfall Elimination Provision and has recently endorsed this measure, as well as other bills, such as H.R.594 and S.349. For more information, visit the Social Security web site at www.ssa.gov or call toll free 1-800-772-1213. July 2004 | ||||||||
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