AUSTIN (Nexstar) — A 1983 Social Security rule aimed to get people fair retirement benefits — but some public workers have repeatedly said it treats them unfairly.
The Windfall Elimination Provision applies to people who receive a pension from an employer who didn’t withhold Social Security taxes, but also qualify for Social Security retirement or disability benefits from other jobs.
Retired educators and school employees are among the groups affected by this rule, the Texas Retired Teachers Association says.
“We are now a state where the majority of educators have second or third jobs and those jobs usually require the Social Security contribution,” Tim Lee, executive director of the Texas Retired Teachers Association said. “Our teachers are paying into Social Security, but because of this federal provision, they’re not going to be paid back out what they pay in.
It can impact those who’ve made career switches, too.
Randall Craig, who resides in Central Texas, experiences this in his Social Security benefit. He spent around 22 years in social work, then became a teacher in the 1990s.
“I loved it,” he said. “It was the best decision I made. I enjoyed going to work every day and loved the classroom.”
He knew he’d see a reduction in his Social Security benefit with the career change, but the actual result was $300 less than what he expected to receive monthly.
“When I knew there was going to be some kind of penalty, I tried to plan for my retirement in other ways through sacrifice,” he said. “Really, my main concern is for public education. Even though it wasn’t the intention, it’s a huge disincentive for people to come into the eudcation profession from other fields.”
Lee says other public sector workers affected include firefighters and police officers.
Experts say without the Windfall Elimination Provision, an employee who is not covered by Social Security is shown as a long-term, low-wage worker.
“As a result, the benefit formula is going to reward you more,” Chantel Boyens with the Urban Institute said.
And the workers who aren’t covered by Social Security are paying into a pension, like the Teacher Retirement System of Texas.
“It was designed to eliminate something called dual entitlement,” Lee said. “Unfortunately, it was not known then the outcomes that could’ve occurred. Today, we have better ways of knowing information of contributions that are made to either the Teacher Retirement System or Social Security and we’re not using those methods to really compute a fair distribution from Social Security.”
Texas Congressman Kevin Brady, R-The Woodlands, has re-introduced legislation to tackle the issue. The Equal Treatment of Public Servants Act of 2019 would replace the current formula with a new one that would recognize the data available for a person’s work history.
“Some workers who are sort of near your median wage will do better under the Brady bill,” Boyens said. “They will get larger benefits because the [Windfall Elimination Provision] is a little too powerful – it reduces their benefits a little too much compared to a perfectly proportional system.”
But Boyens said a small group of higher wage workers will see a slight reduction in their Social Security benefits, too.
Brady’s bill would also restore benefits for public servants subject to the rule. Beginning in 2022, retired workers would get $100 a month and $50 for individuals who receive a spousal benefit.
“We have to treat everybody fairly,” Lee said. “We have to treat everybody as individuals and we need to start doing that now.”