The WEP is Unfair – and Here’s Why

September 1, 2016 — Blog   

Americans across the country pay into Social Security and expect to receive the benefits they have earned when they retire. Unfortunately, because of a well-intended but flawed policy known as the Windfall Elimination Provision, or the WEP, some workers — specifically teachers, firefighters, police officers and others who have paid into Social Security for part of their careers but not all of it — are not treated fairly.

As the Bipartisan Policy Center explained:

“Many state and local government workers are not covered by Social Security, meaning that employees and their employers do not contribute payroll taxes on their earnings from those positions. Yet many of these workers also work part of their careers (or work part-time) in covered employment and will still be eligible for Social Security benefits. The WEP was originally designed to prevent these individuals from receiving unintentionally large Social Security benefits, but its methodology is overly complex and does not allocate benefits equitably.”

That’s not fair. Here’s why:

1. The benefits for workers who choose to serve their communities are calculated differently than other workers. The WEP only applies to certain workers who didn’t pay into Social Security for part of their careers. That means many teachers, fire fighters, and police officers could have their benefits reduced by up to 56 percent just for choosing to serve their communities. Here’s an example: A kindergarten teacher who works at a local supply store during the summer will have his Social Security benefits calculated using a different formula than his neighbor who has worked only at the supply store. 

2. For some, the WEP is not based on their entire earnings history. The benefits some workers receive upon retirement do not reflect the actual earnings over the course of their career. The WEP tries to fix this but uses an arbitrary formula that is based on a Washington compromise. This arbitrary formula would affect someone who served as a police officer before becoming a private security guard. On the other hand, if he had spent his full career as a private security guard, his benefits would reflect his earnings history.

3. For those who choose to serve their communities, the WEP makes it harder to plan for retirement. The WEP does not show up on a worker’s Social Security statement. Here’s an example: A worker could think she is getting $1,227 a month when she retires, only to find out years later that she will receive nearly $800. For those who planned their retirement based on their Social Security statements, that unexpected reduction could have serious consequences. The whole point of Social Security statements is for workers to be able to plan, but for those subject to the WEP, these statements give wrong information. 

Ways and Means Chairman Kevin Brady (R-TX) and Rep. Richard Neal (D-MA) want to hear how the WEP has impacted you as they work on a solution to treat all workers fairly. Share your story with us at WEP.feedback@mail.house.gov.

CLICK HERE to learn how Social Security benefits are calculated and how the WEP applies.

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SUBCOMMITTEE: Social Security