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IME many of the jobs/employers that don’t pay into Social Security are state and local government entities (many are LEO and fire departments) and the idea is that the money will be directed toward a defined benefit pension instead. But that has been evolving and will continue to evolve as those entities switche to defined contribution and TSP-type plans instead of pensions, with Sovial security becoming part of the retirement equation for those employees affected. (i.e., the feds’ shift from CSRS to FERS).
And it can be a very small group within a larger entity. I worked for a state corrections agency. The bargaining unit security staff were in a non-SS plan but the rest of the agency paid into SS.
The folks who are going to have a real problem are the individuals who seek the clergy exception to SS and fail to save anything in lieu.
From what I understand, is that people who do not contribute to SS because they contribute to defined pensions that they cover that through the Windfall Elimination Program or provision (WEP), so there is no double-dipping into an employer sponsored pension plus federal benefit of SS. Doesn't seem right these folks get penalized for having the benefit of both (I'm not one of them), but as you said afterwards, these entities are switching to defined contribution plans instead to allow them to contribute to SS and a defined savings plan.
From what I understand, is that people who do not contribute to SS because they contribute to defined pensions that they cover that through the Windfall Elimination Program or provision (WEP), so there is no double-dipping into an employer sponsored pension plus federal benefit of SS. Doesn't seem right these folks get penalized for having the benefit of both (I'm not one of them), but as you said afterwards, these entities are switching to defined contribution plans instead to allow them to contribute to SS and a defined savings plan.
It might help to understand why WEP exists. It is not so much a "penalty" as it is the equalization of a previous advantage.
"Before 1983, people whose primary job wasn’t
covered by Social Security had their Social Security
benefits calculated as if they were long-term, low-wage
workers. They had the advantage of receiving a Social
Security benefit representing a higher percentage of
their earnings, plus a pension from a job for which
they didn’t pay Social Security taxes. Congress
passed the Windfall Elimination Provision to remove
that advantage."
As I understand it, it's not the state, but your pension plan.
DH did not pay into SS during his government job because he had a pension, he may get some SS from the other jobs he worked.
In my jobs I did pay into SS because I was not covered by a similar pension.
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As I understand it, it's not the state, but your pension plan.
DH did not pay into SS during his government job because he had a pension, he may get some SS from the other jobs he worked.
In my jobs I did pay into SS because I was not covered by a similar pension.
But many jobs with a pension, government as well as others, do pay into SS and receive it when they retire. It's a mystery to me, why some states and agencies don't pay into it. I worked for a municipal utility (pseudo civil service) and we had some bizarre formula in which the first $135 per paycheck was exempt from SS, but the rest was subject to it. So I will receive SS, but at a very slightly reduced amount than if my whole check was taxed. I never understood that one!
But many jobs with a pension, government as well as others, do pay into SS and receive it when they retire. It's a mystery to me, why some states and agencies don't pay into it. I worked for a municipal utility (pseudo civil service) and we had some bizarre formula in which the first $135 per paycheck was exempt from SS, but the rest was subject to it. So I will receive SS, but at a very slightly reduced amount than if my whole check was taxed. I never understood that one!
As long as they know what benefits they have - should not be a problem, but I've run into people who after 35 or 40 years of service with our school district that had no clue!
One lady said, I guess they told us at briefings, but I don't remember.
I’m a state government employee now. I came into public work late in life, so am under the latest “tier” of pension an which means my contributions are higher, I must work longer, and my pension factor is lower than those who came to work a couple of years before I did. Under my plan, employees have Lways paid into social security as well as the defined benefit pension. I pay almost 11% of my gross toward my pension.
My husband is affected by WEP. We understand it as explained above. It’s really not a penalty. Rather, it’s a truing up. But he also had a lot of years of sufficient SS earnings so the WEP was really minimal.
I worked for a municipal police department and paid into the state pension system, not social security. So, when I go to collect social security, I have the 'windfall elimination', a calculated deduction in my benefit based on the fact that I receive a pension from the PD.
We've had posters who were aware of WEP who have done this. I remember one who stated she intentionally left a non-SS job and then worked under SS for 30 years for this reason.
Last edited by Ariadne22; 05-12-2018 at 01:20 PM..
As I understand it, it's not the state, but your pension plan.
DH did not pay into SS during his government job because he had a pension, he may get some SS from the other jobs he worked.
In my jobs I did pay into SS because I was not covered by a similar pension.
Quote:
Originally Posted by pamjedlicka
I worked for a municipal police department and paid into the state pension system, not social security. So, when I go to collect social security, I have the 'windfall elimination', a calculated deduction in my benefit based on the fact that I receive a pension from the PD.
I worked for two gov’t agencies and I am collecting pensions from both. Since they both also deducted money from my paycheck towards SS I suffered no WEP to my SS benefit. So it’s not about having a pension. It’s about whether you payed SS taxes while working for the employer who provides the pension.
I worked for two gov’t agencies and I am collecting pensions from both. Since they both also deducted money from my paycheck towards SS I suffered no WEP to my SS benefit. So it’s not about having a pension. It’s about whether you payed SS taxes while working for the employer who provides the pension.
It's the type of pension agreement. I have a small gov't pension, same state/city/county as DH. Our pensions were different (as negotiated by the unions). I paid SS, DH did not. His is worth wayyyyyyy more than mine.
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Why WEP exists
