In late April, new legislation was introduced in the U.S. Senate that proposes to change how the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) are applied to those who, like many PERA members, spend a majority of their work life in employment outside of the Social Security system. The Social Security Fairness Act of 2017, introduced by Sen. Sherrod Brown (D-OH), would repeal both the WEP and the GPO. The bill, S.915, has been assigned to the Senate Finance Committee. An identical bill, H.R.1205, has been introduced in the U.S. House of Representatives, and Colorado Reps. Ed Perlmutter (D-CO-07) and Jared Polis (D-CO-02) are cosponsors of the legislation.

Most PERA members contribute to PERA instead of Social Security. But if a PERA member also qualifies for a Social Security benefit, that benefit will most likely be reduced by either the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO). For members who have contributed to both PERA and Social Security, the Social Security benefit will be subject to the WEP. Members who are eligible for a Social Security spousal benefit – a benefit for those married to someone who has earned their own Social Security benefit – the Social Security spousal benefit will be reduced by the GPO.

Below is a list of frequently asked questions from PERA members about the WEP, GPO, Social Security, and PERA:

Question:  Will my PERA benefit be reduced because I’m getting a Social Security benefit?

Answer:  No. PERA does not reduce the PERA benefit for members who have also earned a Social Security benefit. However, the Social Security benefit may be subject to either the WEP or GPO.

Question:  Will I get the projected retirement benefit amount that is currently listed on my Social Security earnings statement?

Answer:  Probably not. Chances are very good that the actual Social Security benefit amount will be less than the amount listed on the Social Security earnings statement.

Question:  By how much will my Social Security benefit be reduced because I’ve worked for an employer who contributes to PERA instead of Social Security?

Answer:  It’s hard to say because every work situation is unique. In terms of earning a Social Security benefit, the reduction could be determined by a number of factors including the number of years worked under Social Security, called substantial earnings. For PERA members who also have 30 years of substantial earnings under Social Security, the reduction may be lower. However, PERA members with fewer than 20 years of substantial earnings under Social Security are subject to the maximum reduction under the WEP. There is a maximum dollar amount that can be subtracted from the Social Security benefit amount. This maximum dollar amount changes each year and is established when a beneficiary reaches age 62. For people turning 62 this year, that amount is $442.50. For people turning 62 in the future, that amount will most likely increase. Use the WEP calculator to determine how this provision in federal law might impact you.

The GPO works differently. Typically, Social Security benefits are reduced by two-thirds of the PERA (or other government pension) benefit, but there are some exceptions. A GPO calculator at Social Security’s website can help estimate a Social Security Spousal Benefit.

Question:  If the PERA member dies and their spouse becomes the benefit recipient, would they be subject to a reduction in Social Security?

Answer:  No. If the PERA member selected Option 2 or 3 at retirement and passes away, the cobeneficiary, whether a spouse or someone else, begins to receive a PERA benefit. The cobeneficiary’s Social Security benefit is not reduced because they are receiving this type of benefit from PERA.

Question:  How do I know if I’ve even earned a Social Security benefit?

Answer:  In order to receive a Social Security benefit, a worker will need to have earned 40 credits (formerly called quarters) under Social Security. Forty credits equals 10 years of work. Those who have fewer than 40 credits are not eligible to receive a Social Security benefit. Create an online Social Security account to learn more about the federal program.

Question:  Why are the minimum ages for qualifying for a PERA retirement and receipt of Social Security different?

Answer:  For PERA members who recently began working for a PERA-affiliated employer, the minimum age to be eligible for service retirement benefits is 60 (58 for those who work for a School Division employer). The minimum age to begin receiving unreduced Social Security benefits for those born in 1960 or later is now 67. Minimum retirement ages in both programs have increased over time, reflecting the longer life expectancies of workers in the United States.

Read the Center for Retirement Research Issue Brief: Social Security’s Financial Outlook: The 2017 Update in Perspective