How your Retirement Income is affected by WEP

Peter K
February 15, 2018

How your Retirement Income is affected by WEP

CSRS employees and retirees are usually eager to learn about the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) provisions. The only way to understand the provision is by asking all the necessary questions. CSRS retirees are entitled to retirement benefits that are affected by the two provisions of the Social Security law.

Apart from applying to the FERS retirees, the WEP provisions may also be relevant to CSRS Offset retirees

. On the other hand, being under FERS Transferees and CSRS Offset for 5 years denies workers coverage by the GPO. Most prospective and current CSRS retirees are normally left confused by most aspects of retirement regulations and rules like the Government Pension Offset and the Windfall Elimination Provision.

For instance, the WEP provision drastically reduces your Social Security benefit although it does not eliminate the benefit on your earnings. Also, the GPO Offset eliminates the Social Security benefit as the offset is so severe. There have been attempts by public employee and supporters in Congress to revise or repeal the two provisions with no success. The provisions were meant to strengthen the Social Security systems after its introduction the 1980’s, but they have failed to fulfill their purpose.

An employee’s earnings inform the Social Security benefits that are covered under the WEP provision. Therefore, one is entitled to some Social Security benefits when they earn 40 credits or quarters of coverage.

The need-related component of the Social Security System is not favorable for low-wage earners as it replaces a large portion of their income. On the other hand, CSRS employees may appear like low wage earners as the Social Security system does not cover their earned retirement benefit.

Lifetime earnings determine the Social Security benefits that one gets. The number of years of Social Security earnings determines the amount of money that will be reduced. A multiplication factor of below 90% is normally used to compute Social Security Benefits for individuals under WEP.

Individuals with less than 20 years of substantial earning, the 40% multiplication factor is normally used to calculate the benefits. For CSRS with over 20 years of substantial earnings, there is a constant increment of 5% every year. After 30 years, the multiplication factor can be at 90%. The only way to avoid the WEP is by meeting the substantial earnings test of 30 years. This test applies to both FERS Transferees and the CSRS Offset.

There is no automatic entitlement even if you are paying for Social Security and the CSRS Offset. You can easily find out your years of substantial earnings or compare your earnings record from the substantial earnings chart if you are a FERS Transferee or CSRS Offset.

At the end of every year, only few FERS Transferees and CSRS Offset get the Social Security Statements without having to personally request for them. The statements are normally issued by the Social Security Administration agency that serves retirees and other beneficiaries. Other beneficiaries can only get their statements by visiting the Social Security website. In this case, one has to open a Social Security account in order to obtain their current Social Security statements.

The Social Security website contains a lot of important information about the WEP and GPO provisions. The most unfortunate thing is that SSA computers do not recognize CSRS employees that are covered by the WEP provision. The WEP calculator on the Social Security website can be used to compute your benefits. However, you can also compute your benefits by cutting your monthly benefit by half when it is less than $885. Also, one can also compute their benefit by subtracting $443 from their monthly benefit when it is greater than $816.