Is Congress Getting Special Treatment Under Social Security Law?

Does a quirk of the Social Security law penalize teachers while letting Congress off the hook? Keep reading to find out.

After a recent Money Talks News article on congressional perks, one reader posted on our Facebook page about what he says is the not-so-wonderful windfall elimination provision.

This reader was wondering why Congress was exempt from the provision when some teachers see their Social Security benefits reduced as a result. Are members of Congress getting special treatment?

We’ve done some digging and gotten to the bottom of the issue. The short answer is no, but we’ll get into that a little more in a moment.

First, let’s take a brief look at what seems, for some, to be a perplexing part of the Social Security law.

Who’s getting a windfall?

If you’ve never heard of the windfall elimination provision, known as the WEP, it may be because it affects a relatively small portion of taxpayers.

The provision was included within Social Security amendments enacted in 1983. It reduces the retirement benefits for people who have a pension from a job that wasn’t covered by Social Security.

And who are these people? They are teachers in 15 states as well as about 30 percent of public employees such as some police officers and firefighters. A policy paper from the Congressional Research Service cites Social Security Administration data saying 1.5 million Social Security beneficiaries, representing 4 percent of retired workers, are affected by the WEP.

How does the WEP work?

To see how the WEP is put into practice, let’s look at this example provided on the California Teachers Association website:

Bob — a retired educator, who is currently 71 years old — worked for 17 years in the private sector and paid into the Social Security system. Bob then decided to become a teacher and contributed to the California State Teachers’ Retirement System (CalSTRS). Bob worked for 14 more years as a teacher contributing to CalSTRS. According to the Social Security Administration, he earned monthly benefits of $540 per month for contributions paid into the Social Security system while he worked in the private sector. However, because of the WEP, his actual monthly benefits will be cut by $296 a month. Bob will receive only $244 per month from Social Security instead of the $540 he earned.

The rationale behind the provision is to prevent people from taking what some see as an unfair advantage when it comes to calculating Social Security retirement benefits. A similar provision, the government pension offset, applies to survivor benefits.

Why would having a pension from a non-Social Security job be considered an unfair advantage? It all has to do with the way Social Security benefits are calculated. The program is intended to replace a larger percentage of pre-retirement wages for low-income earners than it does for high-income earners.

The Congressional Research Service report explains:

The benefit formula does not distinguish, however, between workers who have low average earnings because they worked for many years at low wages in Social Security-covered employment and workers who have low average earnings because they worked briefly in Social Security-covered employment.

The generous benefit that would be provided to workers with short careers in Social Security-covered employment — in particular, workers who have split their careers between Social Security-covered and non-covered employment — is sometimes referred to as a “windfall” that would exist in the absence of the windfall elimination provision (WEP).

Is Congress getting special treatment?

So now we come back to our reader’s question: Are members of Congress getting special treatment since the WEP doesn’t apply to them?

Again, the short answer is no. The longer answer is: No, because Congress is covered by Social Security.

Until 30 years ago, Congress and most federal employees paid into their own pension system and were exempt from Social Security. However, in 1983, the same amendments that created the WEP also moved Congress and most federal workers into the Social Security system.

That change means they aren’t affected by the WEP unless they have had a different job at some point that wasn’t covered by Social Security; for example, a California teacher elected to Congress might be impacted by the WEP.

Should the WEP be repealed?

Now that we know what the WEP is and why some teachers are affected but Congress isn’t, we have one final question to consider: Should the WEP be repealed?

Proponents of the law say it’s necessary to level the playing field among all workers, but opponents say it’s an arbitrary and unfair part of the law. It doesn’t take into account the actual amount of the pension earned in the non-Social Security job and, instead, with few exceptions, applies the same cut to all affected workers regardless of how much they earned or how many years they worked in non-covered employment.

You can read more about the exceptions to the provision in this article by Money Talks News money expert Stacy Johnson.

Meanwhile, two bipartisan pieces of legislation – S. 896 and H.R. 1795 – were introduced last May to eliminate the WEP as well as the government pension offset. However, they appear to be going nowhere fast.

What do you think? Should the WEP stay, or is it time to say goodbye to this part of the Social Security law? Tell us in the comments or on our Facebook page.

Stacy Johnson

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  • Kent

    Remove the salary cap on Social Security contributions. It makes no sense. If you’re overpaid, you should overpay.

    • Steven D. Pearson

      Why not. At least it would help fund the shortfall that exists.

  • maynardGkeynes

    So actually, just to clarify, Congress IS covered by the WEP, same as everyone else. It would apply to the veterans who were there under the old system, unless they have 30 years of substantial earnings under SSA.

  • Steven D. Pearson

    Why is it when people work two or more jobs to try to get ahead they are penalized? If you paid into a plan you should be be paid the same appropriate amount as someone else. This is like saying you are going to be taxed extra if you saved more money than someone else. Like almost every government run program social security has been mismanaged since the start. If you were collecting benefits from it in the 50’s, 60’s or 70’s you did very well. Ever since then they have been doing nothing but reducing benefits for those that earned them. Why? Because this is by far the biggest ponzi/pyramid scheme ever devised, not Bernie Madoff. If you don’t believe me, start researching the history and see for yourself. So in answer to your question, do I think the Government pension offset or Windfall elimination provision should be eliminated, absolutely.

  • Tom

    But, am I right that a teacher or state employee in a state where there is a pension BUT THE EMPLOYEE/EMPLOYER ALSO paid FICA taxes are NOT affected by WEP?

    • Steven D. Pearson

      I do not know how teachers pay is structured but a person with a government pension would be affected by WEP if they worked a second job that did pay into social security. Because a person with a government pension who did not pay into social security is not eligible for social security benefits unless they worked a second job that did collect and pay FICA taxes. They are however still eligible for medicare because they have been paying into that since 1983 pension or no pension. Pensioners who had second incomes lose substantial percentages of SS benefits and sometimes all of it depending on how many years were worked and the amount of the pension payment due to WEP and the GPO (Government Pension Offset). There is a myriad of ways this is calculated but they all amount to you loosing money. This is similar to a married couple who had similar incomes but one of them is going to get a reduced benefit which I’ve never understood but it is what it is and those of us that paid in for all those years end up getting short changed in my opinion.

  • Steven D. Pearson

    That is why they lose much or sometimes all of their SS benefits because of WEP or the GPO. Either way they never end up getting an appropriate percentage of the SS benefits that they paid because of these two provisions

  • Steven D. Pearson

    I don’t know of any government employee that gets a 90% pension. If they exist there is a real good probability that the pension amount was tweaked by some higher up administrators as a way to reward one of their own. But this is the exception and not the rule and when it does occur it is almost always an abuse of powers and at the expense of the pension fund also known as us taxpayers. I also think this should be illegal and recoverable. There are many different pension funds and some were never realistic from the get go but there are many that are realistic. I just don’t understand the governments reasoning to level the playing or paying field by penalizing those who worked extra jobs to provide for a better retirement for ones self.

  • john brothers

    Ron. Correction to your statement. I retired as a govt. retiree with 30yrs. my pension is only 65%. the max is 80% @ 40 yrs. yes I feel pray to WEP. on my SS pmts.

  • Mike D

    I do believe that the statement “in 1983, the same amendments that created the WEP also moved Congress and most federal workers into the Social Security system” is incorrect. The employees that were in the CSRS were given the option to convert. If they declined, they still paid into CSRS and not Social Security. I am assuming that Congress was given the same option. It is my understanding that they are exempt from WEP even if they remained in CSRS.

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