Many federal & state employees don’t participate in Social Security due to historical exemptions, but may qualify for spousal benefits based on the work records of their spouses. If some of your previous job(s) weren't covered by Social Security (i.e. you didn't have to pay the FICA payroll tax), then your benefit payments may be reduced due to the WEP (Windfall Elimination Provision). Another, GPO (Government Pension Offset), may reduce your spousal benefit payments. Spousal benefit for Medicare (if not eligible on own) is not affected by these offsets. These WEP & GPO offsets are harsh & there are proposals to reduce or eliminate them in some cases.
Proposals to eliminate WEP & GPO are moving through the Congress.
https://www.cnbc.com/2024/09/19/bill-to-eliminate-social-security-gpo-wep-rules-gets-closer-to-a-vote.html
Comments
I recall applying for SS and being told I'd be receiving reduced benefits. Because I had "non-covered" jobs for a lotta years. But I'd ALWAYS paid in. I had to go to the local office in person. Then they fixed their mistake. Stupid system, when they can say that to a guy like me.
Reforming the GPO and WEP
In Social Security
This proposal focuses, not on the years and money paid in, but, while giving credit for this, it also focuses on the years and money not paid in that could used for an alternate pension system or could be saved. The main goal is simple - put the state or non-profit worker into the proper bend point in the regular calculation.
This more recent discussion is pretty good:
Article by Kathleen Romig:
Repealing Social Security’s WEP and GPO Rules Would Be Misguided
I studied this myself years ago when, in my ignorance, I thought people were being treated unfairly. I discovered that, whereas the Greenspan crew did their best to bring fairness to an unfair reward for non-pay-in, the lack of computers of the era with the double problem of inadequate records of salaries made their solution rather broad but, perhaps, necessary. In today's world, it is simply not necessary to keep the current method of determining the GPO/WEB. We have computers and the data to do a fairer calculation.
That said, when Bush was pushing privatization schemes, I downloaded the AnyPIA program from SSA. It calculates entitled benefits. I only calculated benefits for a rather rudimentary design of varying pay-in patterns. Looking at dates on my emails to an actuary friend the time frame of these calculations was between 2003 and 2008. Most my GPO/WEP calculations were done, not from a point of view of the after-reduction amounts but were a what-if there was no reduction point of view. So it was, bottom-line, sufficient for my purposes but not exhaustive. That is why I recommend reading experts on the subject. I thought the two publications I selected were a good broad brush of the "why" story.
What I found was the salaries and salary patterns played a huge impact. For example, imagine the difference in pay-in of A and B, both working early in life at minimum wage paying SS taxes for the same 10 years, then, engineering degree in hand, B working for a utility company for 35 years and A working for a non-SS state government for 35 at the same identical salary each year as B. In the SS calculation A becomes a low wage worker with a return on investment based on minimum wage for 10 years. B becomes a high wage worker with a return on investment based on a high wage for 35 years. A is in the highest return on investment bend point for the SS calculation and B's position on the bend points would put him at a lower return on investment. This appeared to be the major source of the windfall that is spoken of. So, you end up with a Greenspan Commitee recommendation to bring "fairness" to the paid-in worker, which, when handed to the math geeks, ended up with WEP which, I think, has more built-in protection for the low wage worker.
Whereas I am clueless about fixing GPO inequity, it seems to me that, in today's information age that, if an equitable result was sought for WEP, it would be easy to generate an algorithm that took actual wage and wage pattern and combined it with a record of years paid in and years not paid in and come up with equal return on investment numbers for A and B.
Edit: I had to edit this because, after defining A and B, I proceeded to profile them backwards, so I just edited to make B the pay-in and A the non-pay-in.
For SS purposes, clergy are self-employed. For federal tax purposes, clergy are employees. Ridiculous, silly, crazy, stupid and nuts.
Your 'grace' is underwhelming.
https://www.newsweek.com/republicans-break-protocol-kill-social-security-benefits-expansion-bill-1982423
When I discovered my mother does not receive the higher spousal benefit, I took my parents to my local SS office (when they retired, they moved States to live with me) and apply for the higher benefit. My parents said they had originally applied for the spousal benefit and they presumed to be getting that. They came out of the office and said the SS office employee said the benefits can not be changed after they started and sent them away. That was 15 years ago. So, for past 20 years, my mother has been cheated out of some of her benefit, I am not sure for whose benefit.
I know people who did not receive unemployment benefits when they lost jobs while they paid unemployment insurance when employed.
If you are a Govt employee, there are no consequences for screwing citizens.
@Crash’s subsequent posts makes me nervous about my benefits when I apply because I was self employed 1/3rd of my working life.
Laws are man made stuff. I do not quibble about their fairness or unfairness but I quibble about their implementation. If we do not have a rules based society, what do we have? Politicians make laws and if you do not like their behavior, you can fire them (vote them out) but you can not vote out a Govt employee.
Budget CR to avoid Government shutdown
WEP & GPO Relief Bill (if not today, the process will have to restart from scratch in the next Congress)
Both normally take days, but today is the drop dead date on both.
The solution, as seen in proposals across the political spectrum, is to fix the formula.
(1) Add up all the earnings (not just covered earnings),
(2) calculate the percentage to be paid in SS benefits, and
(3) apply that percentage to the amount of covered earnings.
This is the same way states with progressive income taxes calculate how much a part time resident owes in taxes. H.R. 6489, the Social Security Reform Act of 2016 included this. Here's what the Chief Actuary of Social Security wrote to the House about this calculation: https://www.ssa.gov/oact/solvency/SJohnson_20161208.pdf
Two workers with the same lifetime incomes should receive the same percentage of the amount they paid into SS. Get rid of WEP, and one worker gets a higher percentage than the other. That's not fair. Here's a three line table illustrating this.
Yes, the source is the Heritage Foundation, the same people who brought you Project 2025. Sometimes they get the numbers right, even if their policies are, um, questionable.
Social Security WEP (Windfall Elimination Provision) & GPO (Government Pension Offset) offsets have been repealed. This isn’t an adjustment or modification, but a repeal. The extra costs by elimination of WEP & GPO may move up the date when the SSA reserves vanish by about 6 months.
https://www.cnbc.com/2024/12/20/social-security-fairness-act-government-shutdown.html
My guess is that they may comeback in a better and more rational form when there are comprehensive fixes to Social Security - the clock is ticking with alarm set for about 10 years.
There are arguments for and against and I have summarized them in the link below - separately from the news,
https://ybbpersonalfinance.proboards.com/post/1787/thread