Why Am I Again Being Penalized?

Jun 20 2019 - 8:00pm

I worked as a teacher in KY and therefore the SS I had earned prior to my teaching job was cut by about 2/3. My husband who never worked for a government agency and paid into SS for 30 years died this year. They cut the amount of his SS I received as surviving spouse by 2/3. This seems extremely unfair as he paid into the system for 30, or more years, never worked for government. Why am I again being penalized through my husbands benefits? The 2/3 is a close estimate, definitely more than 1/2.

Hi,

I'm sorry for your loss.

It sounds like 2 separate provisions are involved in your case. One is the Windfall Elimination Provision (WEP) which would only affect the retirement benefit rate payable on your own record. The other provision affecting your benefits is the Government Pension Offset (GPO) provision, which only affects your widow's benefit.

Here's an example to illustrate how these provisions would be applied in a case similar to yours. Say Jane is eligible for a monthly teacher's pension of $1200 based on earnings that were exempt from Social Security taxes. Jane is also eligible for Social Security retirement benefits based on her other earnings which were subject to Social Security taxes and her primary insurance amount (PIA), which is equal to her full retirement age (FRA) rate, is $800, However, if Jane is drawing both her Social Security retirement benefits and her teacher's pension, the WEP provision would cause her benefit rate to be calculated using a less generous formula (https://www.ssa.gov/planners/retire/wep.html). In Jane's case, WEP would likely reduce her PIA from $800 to roughly $400. So, if Jane is drawing her teacher's pension and files for her Social Security retirement benefits at FRA she'd receive a monthly rate of $400.

Continuing our example, say that Jane's husband started drawing his benefits at his FRA and dies after Jane reaches her FRA. Jane's husband's PIA was $2000, so Jane's widow's benefit rate would be calculated by subtracting her PIA from her husband's PIA, which in this example would be $1600 (i.e. $2000 - $400). However, due to the GPO provision, 2/3rds of the amount of Jane's teacher's pension (i.e. $800 or 2/3rds of $1200) would be subtracted from her widow's rate, reducing her net widow's benefit rate to $800. That benefit would then be added to Jane's retirement benefit to give her a combined monthly benefit rate of $1200.

Note however that if Jane's PIA wasn't affected by WEP and she was receiving $800 on her own record, she would still receive a combined rate of $1200. Her widow's rate would then be $400 (I.e. $2000 - her PIA of $800 - 2/3rds of her $1200 teacher's pension), which would then be added to her own $800 benefit rate. Thus, once Jane becomes entitled to higher widow's benefits the WEP reduction no longer has any net bearing on her total benefit rate.

So, assuming that your husband's benefit rate was higher than your own and you're FRA or older, you should be receiving roughly his full rate minus 2/3rds of your teacher's pension. Congress's reasoning for passing the GPO provision is explained in the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10007.pdf.

Best, Jerry