Evelyn Paternostro is 84 years old and works part-time as a cashier at Dollar Tree. For decades, she dedicated her life to education, working as a teacher and principal in Louisiana. However, despite her years of public service, she is now struggling to make ends meet.
“People at the store always ask me, ‘Are you doing this for fun?'” “Why aren’t you retired?” she asked. “Because I need to eat.”
After her husband died, Paternostro discovered she couldn’t collect his Social Security benefits because of two federal policies known as the Windfall Elimination Provision and the Government Pension Offset.
These provisions reduce or eliminate Social Security benefits for millions of Americans who receive a public pension that does not pay Social Security taxes. Retired teachers, firefighters, and other public servants are among those most affected.
“I was completely caught off guard,” she explained. “I knew I would have a teacher’s retirement. I was going to be a member of the Louisiana Teachers Retirement System. And I never considered my husband’s income and what it would mean for me.”
Who is affected?
WEP and GPO affect approximately 2.8 million people in the United States. It affects all employees of state, county, municipal, and special districts in 26 states. Teachers in 13 of those states, including specific districts in Kentucky and Georgia, are also feeling the effects.
In Massachusetts and certain districts in Rhode Island, not all municipal employees, but only teachers are impacted.
2.8M Social Security recipients impacted by reductions
The goal of these two 1980s-era programs was “so that there was no way you could ‘double dip’ into both a federal pension and Social Security,” explains Jill Schlesinger, CBS News business analyst.
The Windfall Elimination Provision affects people who are eligible for Social Security benefits through their job but also receive a pension from another job where they did not contribute to Social Security.
It could reduce their Social Security payments by up to half the amount of their pension.
Michelle Cosgrove, for example, will see her benefits cut nearly in half, from $557 to $601.
Cosgrove spent the first half of her career as a paralegal, contributing to Social Security, before returning home to raise her children.
Later, she became a public school teacher in the San Francisco Bay Area, contributing to CalSTRS, California’s educator pension fund. However, her retirement plans took an unexpected turn when she discovered the complexities of the pension system.
When Cosgrove retired, her reduced payments hampered her ability to pay bills and cover expenses.
The other program, the Government Pension Offset, had an even greater impact on Cosgrove after her husband, Mike, died in 2022. Despite decades of working in the private sector and contributing to Social Security, she was largely unable to access his benefits due to the GPO.
Mike, a welding supervisor, was diagnosed with a rare cancer at 52 but continued to work until his condition worsened. He died at the age of 63.
If a pension recipient is the widow or widower of someone who received Social Security benefits, their survivors benefits may be reduced or they may not receive any at all.
“If I’d have stayed home and done nothing, I’d have gotten all the money,” Cosgrove joked. “If I had known this, I might not have chosen to become a teacher. “I would have chosen something different.”
According to Congressional Research Service data, 83% of those impacted by the GPO are women.
“When you see the GPO numbers rising, it’s because many of those people were probably teachers and married to someone who worked for Social Security,” explained Joslyn DeLancey, vice president of the Connecticut Education Association. “They won’t receive spousal Social Security benefits.” It’s such a complicated and nuanced issue.”
Paternostro estimates she would have received $2,500 per month in Social Security benefits, totaling $300,000 over the past decade.
“That’s a lot of money,” she explained. “That’s more money than I can imagine.”
These policies, however, caused Dede Ruel, a retired school psychologist in Illinois, to experience a different type of heartache.
She stated that she recently received a letter from Social Security informing her that she owed more than $13,000, which reduced her Social Security checks by 21%.
According to a CBS News analysis of federal data, these policies are one of the leading causes of Social Security overpayments, which totaled more than $450 million between fiscal years 2017 and 2021.
More than $457 million in improper payments
In 2022, the Social Security Administration reported more than $457 million in improper payments related to the Windfall Elimination Provision and the Government Pension Offset.
“I have been trying to appeal it through their process and I’ve been denied at every level,” Ruel informed me.
The Social Security Administration’s press office responded to this story, stating that “state and local government employers are required to disclose potential effects of WEP/GPO on newly hired non-covered employees.”
“We work to pay the right people the right amounts at the right times, and Social Security makes correct payments in the majority of cases,” a Social Security spokesperson said. “However, there is room to improve, as people count on the agency to prevent overpayments and underpayments from happening.”
Bipartisan support for the Social Security Fairness Act
The Social Security Fairness Act, one of Congress’ most bipartisan bills this session, seeks to repeal WEP and GPO.
The House voted to pass the legislation on November 12, and the Senate approved it on Friday, December 20.
Social Security is expected to run out of funds by 2035 unless the fund’s cost and revenue system is changed.
Even though supporters of the Social Security Fairness Act claim it will only drain the Social Security fund six months earlier than expected, some critics believe there are better solutions, arguing that states should restructure their retirement systems to address the root causes rather than relying on federal fixes.
“A lot of the critics say this is gonna cost a lot of money, almost $200 billion dollars over the next 10 years,” Schlesinger explains.” “Critics claim there is a reason why we force people to contribute to the Social Security system.
These are separate systems. If we need to fix Social Security, let us do so. Let’s not just pass a repeal, which is essentially a band-aid.”
Rep. Garret Graves, a Republican from Louisiana who spearheaded the bill, stated, “People should receive benefits based on what they contributed to the system.” That is what the formula should be based on. I understand the efforts made in the 1970s and 1980s, but the overcorrection has likely taken $600 to $700 billion in benefits away from these people.”
Devin Carroll, a financial planner, comes across many clients who are “completely taken by surprise.” Carroll frequently instructs his clients to use the Social Security Administration’s WEP calculator, which calculates benefits while accounting for the WEP’s impact.
Carroll explains how difficult it can be to predict future Social Security benefits. The benefits formula includes “bend points,” which are adjusted annually for wage inflation.
These changes are critical because the exact amount of the WEP reduction is determined when a person turns 62.
“You have to make some projections, some assumptions about forward-looking inflation, both price inflation and wage inflation,” Carroll told me. “Once you do, then you can start to work through that and use a calculator like the SSA has that will do a lot of that for you, and it will tell you what your WEP adjusted for retirement age benefit should be.”
Carroll also gets to witness the effects of these provisions firsthand. His daughter-in-law teaches in Texas, and his son works as a firefighter there.
“In essence, this money has been stolen from all of us for all these years,” Paternostro told the crowd. “It’s not fair.”
Read Also :- Thousands of payments hit the pockets of retirees over 62 on January 22nd
