Q: I am 66 years old. Even though I am now a U.S. citizen, I spent the first 30 years of my adult life living and working in Germany. But I have lived and worked in the U.S. for the past 15 years. I get a generous retirement pension from the German Social Security system. And I was shocked to learn that my U.S. Social Security benefit will be reduced by an unfair law called the "windfall elimination provision." I have paid taxes in this country for 15 years. So I earned every penny of my already small Social Security retirement pension. How dare they reduce it even further! Where is the windfall I am supposedly getting? I see that there is a bill in Congress that has bipartisan support to repeal this unjust law. If that doesn't work, I plan to file a class action lawsuit to get what is rightfully mine. In the meantime, at least I should be able to get some of my husband's Social Security.
A: I don't think you are being treated unfairly. And I hope that after I explain the windfall elimination provision law, you will agree. Also, I will comment on your class action lawsuit plans and on the possibility of you collecting spousal benefits on your husband's record.
To understand WEP, I'll first familiarize you with one of the tenets of our Social Security system. One key goal of that program is to give a financial boost to low-income retirees. How that is accomplished is with a retirement benefit formula that is skewed to give poor people a higher rate of return when comparing their income and the taxes they pay with the Social Security check they receive.
The retirement formula is too complicated to explain in a short newspaper column. Here is a simplified version. The average middle-class worker in this country will get a Social Security benefit that represents about 40% of his or her average pre-retirement earnings. A very poor person could get up to a 90% return rate.
That doesn't mean that a poor person gets a higher Social Security benefit. But it does mean he or she will get a better rate of return comparing the taxes they paid with the benefit they will receive.
And here's the deal. You look like one of these poor people to the Social Security Administration computers. Why? Because you have only 15 years of earnings on your Social Security record. As far as the system knows, you spent the rest of your life unemployed or not working. So when your Social Security retirement benefit is initially calculated, you get that 90% return rate intended for a the very lowest income workers in this country. That's the "windfall."
But the fact is, you're not poor. You've worked all your life and you get a nice pension from the German Social Security system. I bet you could be considered a comfortably middle-class person in this country. So you should get the same U.S. Social Security return rate that all other middle-class people get. And that's what the WEP formula does. In a nutshell, it takes you from that 90% poor person's rate to the 40% middle-class rate. I hope you can see that your benefit is not being unjustly cut. The WEP formula merely gives you the same benefit rate as all other middle-class people.
You mentioned that there is a bill in Congress to eliminate the WEP. Actually, bills to eliminate the WEP have been introduced in every Congress since the law was passed in the mid 1980s. And every single time, the bill is defeated. Why? Because when the law is analyzed and explained (as I just did in this column), lawmakers recognize the WEP is fair and decide not to repeal it.
You may wonder why new bills are introduced every year to eliminate WEP. Well, I don't want to get too cynical, but let's just say there are more than a few lawmakers who are looking to gain votes from those affected by the WEP law. That includes some foreign pensioners like you, but primarily involves about 10% of all retired public employees in this country. Like me. As a retired federal employee who gets a nice civil service pension, I also get a small Social Security benefit that has been reduced by the windfall elimination provision.
So, good luck with the civil lawsuit. Because in the extremely remote chance that you win your case, not only will you get a few extra bucks from Social Security, but guys like me, with generous public retirement pensions, will get an increased Social Security check with a return rate intended for the poorest people in this country.
Finally, let me bring up the point you made about possibly being able to collect spousal benefits on your husband's Social Security record. There is a chance that might happen. And if it does, you can count yourself lucky. You will be getting benefits almost no one else in this country can get. So let me explain that.
If you have worked and get your own Social Security retirement check, that monthly benefit offsets (dollar for dollar) any spousal benefits you might be due on a husbands or wife's Social Security account. And if you think about it, that offset makes sense. Spousal benefits are classified as "dependent's" benefits. In other words, you normally need to be financially dependent on your husband or wife to get spousal benefits from him or her. If you've worked and earned your own Social Security retirement pension, you generally won't get spousal benefits.
In the past, people who have worked and paid into a non-Social Security retirement system (for example, old federal employees like me and public employees and teachers in some states), were able to collect our own public retirement benefit and get a "dependent" spousal benefit from our husband's or wife's Social Security account. But a law called the "government pension offset" prevents that from happening — and rightfully so.
But for some reason I can't explain, Congress did not include foreign pensioners in the GPO law. So I can't get a husband's benefit on my wife's Social Security record because of my civil service retirement benefit offsets it. And a retired teacher in Texas can't get a wife's benefit on her husband's Social Security record because her Texas teacher's retirement pension offsets it. But you will be able to get what you yourself called a "generous" retirement benefit from Germany, AND you will be able to get a "dependent" spousal benefit from your husband's Social Security. Frankly, I just don't think that is fair!
If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected] To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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