Social Security Matters: Ask Rusty – Avoiding WEP and GPO reductions
by AMAC Certified Social Security Advisor Russell Gloor, Association of Mature American Citizens
Dear Rusty: I am a retired Texas teacher receiving my state pension. I retired in February 2009, before the end of a “loophole” which affected my future Social Security. I had earned enough credits to receive Social Security benefits in addition to my Teachers Retirement System (TRS) pension. At 62 I began getting my SS benefit (reduced by my TRS pension).
My husband didn’t start his SS until last year, at which time I contacted Social Security so my benefits would “no longer be reduced” as per the TRS loophole. I have spoken with the local SS office three times and sent them the documents requested, but my SS payment remains the same! How do I bypass the local office to get my benefit increased to the amount I was told when I retired under this Texas loophole? Signed: Wanting My Increase
Dear Wanting: Your question requires some explanation of two SS rules known as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules affect anyone, like you, with a pension from an employer which did not participate in Social Security, and who is also eligible for Social Security benefits. WEP applies to your personal SS retirement benefit; GPO applies to any spousal (or survivor) benefit you might become entitled to.
There are 27 States (including Texas) which, to varying degrees, have exempted some state employees from paying into Social Security. But for employees who, nevertheless, also become entitled to SS benefits, either from other SS-covered employment or a spouse, WEP and GPO will affect their SS benefits. Both rules apply to you because you did not contribute to Social Security while you earned most of your TRS pension. Your SS retirement benefit was reduced by WEP and, since your husband is now collecting SS, you might be entitled to an additional amount as his spouse, depending on whether the GPO will apply. The GPO did originally contain a “loophole,” but the loophole didn’t work as you think it did.
When the GPO was first enacted in 1977, it included a rule known as the “last day exemption.” That rule stipulated that if, on your last day of employment prior to retirement, you contributed to both your non-covered pension and to Social Security under the same plan the GPO would not apply. State retirees in many of the 27 affected states took advantage of that loophole. That is, until Congress changed the GPO rule to eliminate the loophole.
A change in 2004 eliminated the “last day exemption” and replaced it with a rule saying that a GPO exemption would occur only if the employee contributed to both the non-covered pension and Social Security under the same plan every day for the last 5 years prior to retirement. A “transition” rule sometimes applied which allowed less than 5 years of contributions to both programs immediately prior to retirement. Each state decided if they would permit employees to take advantage of this option, which Texas did until just after you retired in 2009.
Your own WEP-reduced SS retirement benefit is not affected by, nor will it change because of any “loophole.” Based upon the dates you shared, the “last day exemption” for GPO doesn’t apply to you, but the changed rule may. The current rule permits a GPO exemption if you also contributed to Social Security under your TRS pension plan every day during the last five years of your TRS employment, or if the special “transition rule” applies to you. If that is the case, then you are, indeed, eligible for an exemption from the Government Pension Offset and your SS benefit will increase. But if not, the normal GPO spouse benefit reduction of 2/3rds of your TRS pension will be prorated and based only on the months you didn’t pay into Social Security.
Since you’ve already contacted Social Security several times and sent them the requested documentation, I know of no way to “bypass” your local SS office. But it might help to ask your Congressional representative to intervene by contacting the SSA and request that your case be expedited.