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Does Congress get special treatment from Social Security?

Does a quirk of the Social Security law penalize teachers while letting Congress off the hook?

By MSN Money Partner Jan 30, 2014 3:08PM

This post comes from Maryalene LaPonsie at partner site Money Talks News


Money Talks News on MSN MoneyAfter 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.

Social Security cards on clothes line © Mike Kemp/Tetra images/Getty ImagesThis 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 (.pdf file) 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?

More on Money Talks News:

Jan 30, 2014 5:05PM
WEP should be eliminated. It is patently unfair to people who take on relatively low-paying public service jobs. Since the formulas don't have actual earnings as a factor, teachers and police officers from low paying states are significantly penalized even more over their colleagues in states that have better pay.
Jan 30, 2014 7:01PM
Does Papa Bush receive Social Security??  The WEP was passed during his watch.  I think WEP affects more women than men.  The amount of money we would receive from Social Security if the WEP is repealed is very small but could keep us from eating dog food as we have a continuing decreasing retirement. 
Jan 31, 2014 8:53AM

SS payments are based on an average of your highest 35 years of inflation adjusted covered wages.  It replaces 90% of about your first $10,000 of average annual earnings, then only 32% of your next about $50,000, then only 15% for anything over around $60,000 up to the max taxed earnings.  That's what makes the program so redistrubitive, we all pay the exact same percentage yet low income earners get a much higher percentage of their income replaced. 


Eliminating the WEP could allow some school superintendent with a six figure pension to still claim SS off of past part time work, and basically get paid back at that 90% replacement rate.  If there are issues with the WEP for those who've earned minimal pensions, fix those, but don't eliminate it entirely.

Jan 30, 2014 6:31PM
WEP should stay, no doubt about it.

1) Lower income earners get a disproportionate amount of SS benefits, compared to their income. So they are getting back a lot more than they pay in.
2) Some people qualify as "lower income" because they worked BRIEFLY in the SS system, but not because they were necessarily lower income.

Thus, some middle income earners get lower income (better) SS benefits, simply because they split time between two retirement systems.

Meanwhile, middle income earners who did not split time between retirement systems get the shaft.

WEP levels the playing field.
Jan 30, 2014 5:08PM
Jan 30, 2014 6:32PM
Isn't actually PAYING Congress the first problem? 

Party of NO traitors-- get off our dime and have your treasonous puppet masters pay your keep. Oh, they already do. 
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