Lesson Plans and Retirement Plans

(September, 2009)

If you're a teacher, chances are you know the lessons you're going to teach like the back of your hand, inside and out. That's because you took some time and prepared ahead with lesson plans.

But how much time have you devoted to your retirement plan?

Whether you're 30 years in, or in your freshman year as a teacher, it's important to spend time learning your retirement plan.

You may be a teacher or other government employee covered by state or local government retirement plans instead of Social Security. And, even if you do work at a second job and pay into Social Security, your benefits would most likely be affected by your other retirement plan. So take a lesson from us and learn about two important provisions that may affect you: the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).

Who is affected by GPO and WEP?

Government employees who didn't pay Social Security taxes on their government earnings are affected. The Government Pension Offset (GPO) reduces the potential Social Security spouse's/widow's/widower's benefit amount someone could receive if he or she also receives a pension from a federal, state or local government for work on which no Social Security taxes were paid. The Windfall Elimination Provision (WEP) can reduce a worker's monthly Social Security benefit amount, if he or she also receives a pension from work not covered by Social Security.

What is the purpose of these provisions?

GPO and WEP are designed to ensure that all American workers are treated equally under the Social Security program. GPO generally requires that Social Security spouses' or surviving spouses' benefits be reduced by two-thirds of the entitled person's government pension. Why? Because GPO removes an advantage that some government workers once had. Before GPO, a person who worked in a government job that was not covered under Social Security could receive, in addition to a government pension (based on his or her own earnings), a full Social Security spouse's or surviving spouse's benefit. No other workers had this option because Social Security benefits payable to a person as a spouse or surviving spouse must be offset, dollar for dollar, by the amount of that person's own Social Security benefit.

Similarly, WEP takes away an advantage that the regular Social Security benefit 'formula' would give people who have substantial pensions from non-Social Security covered jobs. Without WEP, a worker who spent most of his or her career in employment not covered by Social Security and who worked for a short time to get Social Security coverage would end up with much higher benefits than if all of his or her work were done under Social Security. This is because we calculate Social Security benefits using a formula that gives proportionately higher benefits to workers with low lifetime earnings.

Want to learn more? You can dig deeper, and see some examples of just how the two provisions work in real-life situations, at www.socialsecurity.gov/gpo-wep. Or you can call toll-free, 1.800.772.1213 (for the deaf or hard of hearing, call our TTY number, 1.800.325.0778) and ask for Social Security publications on the Government Pension Offset or the Windfall Elimination Provision.

There's no pop quiz now, but the real test will come when you're ready to retire. A little time preparing for your retirement now can help you ace your final exam: retirement. To learn more about Social Security, visit www.socialsecurity.gov.

Ginny Jordan is a Public Affairs Specialist for the Social Security Administration. Her weekly column on all things Social Security appears in the Sunday Edition of the Sun-Sentinel.

Ginny has agreed to let us reprint her articles here for your convenience.

Thank you Ginny!