Roughly one-fourth of state and local government employees participate in a public retirement system in lieu of Social Security (SS) [this includes almost 40 percent of public-school teachers and over
Roughly one-fourth of state and local government employees participate in a public retirement system in lieu of Social Security (SS) [this includes almost 40 percent of public-school teachers and over two-thirds of firefighters, police officers, and other first responders].
The Windfall Elimination Provision (WEP), a federal law adopted in 1983, can cut any SS benefits these public employees may have earned if they also were employed in a job covered by SS. For workers who become eligible to retire in 2021, this reduction ranged from $50 per month (with 29 years of substantial SS coverage) to $498 per month (with 20 or fewer years SS coverage). Furthermore, about 21 percent of public employees whose SS benefit were cut by the WEP received a noncovered pension amount of less than $12,000 annually.
Thus, the WEP can substantially reduce public employees’ SS benefits. The impact of the WEP formula is arbitrary and offers an imprecise way to determine the actual “windfall” when applied to individual cases. Finally, WEP can reduce benefits disproportionately for lower-earning households.
For several years now, key Members of Congress have tried to repeal the current formula and replace it with one that attempts to address some of the more onerous aspects of the existing approach. Currently, two major bills to do so are pending in the House of Representatives.
Will 2022 be the year of WEP reform?—and if so, what might reform look like? What are our member systems with affected employees and retirees considering as they work toward some form of relief? And finally, could repeal of the WEP be a possibility instead?
For answers to these questions and more concerning WEP reform, join NCTR on Wednesday, February 16 at 3 PM/ET, as our Federal Relations Director Leigh Snell discusses this important subject. Guest speakers include:
- Tom Lussier, Administrator of the Coalition to Preserve Retirement Security (CPRS), president of The Lussier Group, and NCTR Past President
- Anthony Tedesco, Government Relations Officer, Ohio Public Employees Retirement System (OPERS)
- Michael Hairston, Senior Pension Specialist, National Education Association (NEA), former public pension trustee and NCTR Executive Committee member
WEP reform continues to be a topic of interest to public pension plan participants and retirees. Register today and join NCTR to learn the latest on this controversial subject.
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