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A Double Jolt on Pension Benefits

Some teachers and other government workers find themselves penalized by two provisions of Social Security.

October 02, 2006|Arin Gencer | Special to The Times

Ruth G. Benjamin remembers the shock she felt when her carefully spun plans for retirement unraveled -- the day she found out she'd get only a fraction of her Social Security benefits.

The 69-year-old former teacher had received notices telling her to expect about $800 a month from Social Security -- a comfortable sum. But because Benjamin had spent the last decade teaching in the San Diego Unified School District, where instructors receive pensions, she subsequently learned that her Social Security would be cut to about $220 -- once Medicare was deducted. Her spousal benefits also had been reduced -- and would continue to be if her husband died -- because of her pension.

"It was like they gave me a double jolt. I was just numb," said Benjamin, who taught developmentally disabled children in private and public schools for 26 years.

She had never heard about the possible reduction of her pension at district retirement meetings, and had been encouraged to take summer jobs to ensure she would qualify for Medicare. "Your whole life is planned ... and then all of a sudden you find, hey, it's not so."

California is among a group of states where two provisions in the Social Security Act can mean reduced benefits for teachers and other employees who, like Benjamin, receive government pensions. About 100,000 of California's retired teachers receive lowered benefits, said Ed Ely, a spokesman for the California Retired Teachers Assn., citing data from 2004.

Ely's organization and other teachers groups have spent years in an uphill battle to eliminate the two amendments, adopted in 1983, which they say unfairly penalize teachers. One, called the "windfall elimination provision," reduces benefits for public employees who receive pensions and have "substantial earnings" from Social Security-covered jobs of less than 30 years. The "government pension offset" adjusts spousal and widow or widower's Social Security benefits when the recipient in question has a government pension.

Legislation has been introduced in Congress to repeal the provisions but hearings have not been held. Teachers and their advocates worry that the bills will remain in limbo as the congressional legislative session winds to a close. The principle behind the amendments was to ensure that teachers and others with government pensions are not receiving higher benefits than they are entitled to, said Lowell Kepke, a spokesman for the Social Security Administration's San Francisco region.

"The purpose of this is ... to give a realistic benefit based on the person's true career, so as not to give them an unearned additional benefit as if they were a low-income worker," he said.

Similarly, the government pension offset aims to give the same spousal benefits to pension-covered workers that those under Social Security could expect, he said.

Under the windfall elimination provision, the average monthly reduction is about $200, he said, with the highest possible cut being about $328. As of July, about 880,000 workers nationwide were affected by that provision, Kepke said, out of a total of 35 million individuals who have retirement benefits.

And as of June, about 443,000 were affected by the government pension offset, said Leslie Walker, communications director for the Social Security Administration's San Francisco region.

Yet time has revealed the "unintended consequences" of the amendments, said Ely, of the retired teachers group.

As of this year, he said, retired teachers lose about $3,900 annually to the windfall elimination provision.

"It isn't a large amount we're talking about, but for a lot of these people, it's a very important amount," he said. "This $300 or $400 a month can really make a difference in the quality of life for these folks in their 70s and 80s."

"The teachers are not asking for money," said Alfred Campos, a federal lobbyist for the National Education Assn. "They're not looking for a windfall. They're looking for the money they paid into the system."

The regular formula for calculating benefits determines workers' average monthly earnings using the highest-paid 35 years of their careers. Social Security pays 90% of the first $656 of that average, then 32% of the next $3,299 and, finally, 15% of anything above that amount. The windfall elimination provision can lower that 90% to 40% if workers have less than 20 years in private industry, Kepke said. The government pension offset takes two-thirds of workers pensions, and then subtracts that amount from spousal or widows' or widowers' benefits, sometimes completely eliminating them.

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