Greenspan remedy already reality for California teachers
Recent remarks by Federal Reserve Chairman Alan Greenspan about reducing Social Security benefits gave pause to baby boomers contemplating retirement. But what many don’t know is that the sting of reduced benefits already affects nearly 100,000 retired California school teachers and will affect many thousands more who decide to become teachers. These penalties hurt efforts to recruit the best talent for our classrooms.
Two little-known penalties enacted more than 20 years ago the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) already cut in half or completely eliminate any Social Security benefit a retired educator would receive if only they hadn’t been a teacher.
These penalties were imposed to stem perceived abuses of the Social Security system by highly paid and well-pensioned federal workers, the so-called “double dippers.” But the law was drawn so broadly that it also affects millions of modestly paid workers who, like most people, assume that Social Security will provide a supplemental income in retirement. Most teachers only find out they are affected by these penalties when they apply for their benefits at retirement, much too late to revise their financial planning.
The WEP reduces a teacher’s earned social Security income by 50 per cent for jobs outside of teaching. The GPO cuts Social Security by two-thirds the amount of a teacher’s pension, usually eliminating any spousal benefit or survivor’s pension for the widows and widowers of Social Security recipients.
These cuts occur despite years of statements from Social Security, estimating what turns out to be a grossly inflated retirement benefit. In fact, for some readers this article may be the first notice they’ve received that they could be impacted by these penalties.
The financial hardship loss of Social Security imposes is a grim reality for many teachers. They are forced to sell their homes or can’t afford adequate health insurance and other necessities. Many have to return to work.
Social Security is intended as a supplemental income for people of modest means. Teachers who retired during the 1980s and 1990s certainly qualify. The pension they paid for with an 8 percent payroll deduction was inadequate for a secure retirement, according to the California State Teachers’ Retirement System (CalSTRS). Teachers depend on Social Security for additional necessary income.
Private sector workers pay into Social Security, but those that receive a pension typically receive that as a free benefit from their employer. The Social Security Administration doesn’t check on any additional sources of retirement income they might have before determining what their benefits will be. It’s unfair and discriminates against people who choose a public service career, such as teachers, police and firefighters.
It’s not just retirees who are affected. People who decide later in life to become teachers are also unsuspecting victims of these penalties. They may be willing to accept a pay cut in order to teach, but they probably don’t know that the 10, 15 or 20 years they have already spent working jobs covered by Social Security will be substantially devalued or lost.
The California Retired Teachers Association is working throughout the state to alert school districts about the hurdles these penalties place in the way of recruiting capable teachers. We are reaching out to educators who enter the classroom from other professions to make sure they know all of the financial sacrifices they will be making in order to teach.
We are also collecting signature on petitions to Congress. A large and bipartisan majority in the House of Representatives now understands that these penalties are having unexpected consequences in California and 14 other affected states. Support of repeal is also growing in the Senate. Repeal of these penalties is relatively inexpensive Ð about one percent of the $432 billion paid out in Social Security benefits in 2001.
We need to start the process of moving these bill through the Congress and repealing these onerous penalties.
Greenspan is to be commended for drawing attention to the looming crisis that faces the Social Security System. But we must also keep faith with the basic premise of the program to provide a level of income protection for hard working people of modest means. Any reform in Social Security must start with ensuring that the system is fair to all Americans.
Polly Bacich is director of the California Retired Teachers Association District II (Nevada, Yolo, Butte, Shasta, Lassen, Plumas and Siskiyou counties).
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