Social Security
Offset
Pension offset unfairly reduces survivor
benefits of retired public employees.
It’s an all-to-familiar story. An NEA-Retired member loses her entire
spousal benefit even though her deceased spouse paid Social Security taxes for
many years. And NEA-Alaska Retired
members are among those impacted by this discriminatory federal
law.
Some retired public employees who survive
their spouses are unfairly penalized with a pension offset that deducts an
amount equal to two-thirds of their public pension benefits from their Social
Security survivor benefits.
Currently, some 300,000 individuals are
losing an average of $3,600 a year because of the pension offset provision -- an
amount that can mean the difference between self-sufficiency and poverty. The
offset has the harshest effect on those who can least afford it: widowed
lower-income women who have worked hard for years.
Two provisions of federal law reduce a
person's Social Security:
1)
The Government Pension Offset (GPO) reduces an individual’s Social
Security survivor benefits (available to a person whose deceased spouse had
earned Social Security benefits) by an amount equal to two-thirds of his/her
public pension.
Example:
A widowed retired educator has earned $600
per month from her state retirement plan after 25 years of service. Her deceased
husband worked in the private sector and paid into Social Security his entire
working life. She normally would be entitled to monthly Social Security survivor
benefits of $850.
Because she works in a state where public
employees do not participate in the Social Security system, the Government
Pension Offset cuts her survivor benefits by two-thirds of her $600 monthly
retirement payment or $400. Her survivor benefits instead equal $450 - nearly
half of the $850 she would normally receive.
2)
The Windfall Elimination Provision (WEP) changes the formula used to
figure benefit amounts – reducing an individual’s own Social Security benefits
(earned while working in a job covered by Social
Security).
Example:
A teacher taught 17 years in one state,
then moved to a different state and taught another 14 years. According to the
Social Security Administration, she earned monthly benefits of $540 per month
for her contributions paid into the Social Security system while she worked in
the first state.
Because public employees in the second
state do not participate in the Social Security system, her actual monthly
benefits will be cut $196 due to the Windfall Elimination Provision. She will
receive $
The offset is discriminatory, unfair and
needs to be fixed.
NEA-Alaska supports reform that protects
families' economic security, eliminates the government pension offset, and
expands survivor benefits to a basic minimum level. NEA-Alaska opposes mandatory
coverage for public employees.
What can be done to remedy this unfair
situation?
Congress is considering legislation to
address the GPO. Representative Jefferson (D-LA) and Senator Mikulski (D-MD)
have introduced bills (H.R.664/S. 611) that would protect low- and middle-income
public retirees by eliminating the offset for the first $1,200 of combined
monthly benefits. This legislation is an important immediate step toward the
ultimate solution – total repeal of the offset.
Representative Frank (D-MA) has introduced
legislation (H.R. 1073) to address the WEP by restricting its application to
individuals whose combined monthly benefits exceed $2,000. Representative
Sandlin (D-TX) has introduced legislation (H.R. 848) to eliminate the WEP.
Congress needs to act on this critical issue.
What can YOU do to help repeal the Social
Security offset?
To help you make your case to Congress, we
have two sample
letters. Contact
Alaska’s members of Congress at:
Hon. Frank
Murkowski
United States
Senate
322 Hart
Building
Washington, D.C. 20510-0202
Hon. Ted
Stevens
522 Hart
Building
Washington, D.C.
20510-0201
Hon. Don
Young
House of
Representatives
2111 Rayburn House Office
Building
Washington, D.C. 20515-0201