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Pension apprehension

Professionals should not have to put their Social Security benefits at risk when they become teachers.

August 22, 2008

Strange to say, one problem plaguing teachers is the size of their pensions. Not the usual, hefty pensions that threaten to sink school districts such as Los Angeles Unified, but the ones that shortchange teachers who enter the field later in life.

Under little-known provisions of the Social Security Act, people who make mid-career switches to teaching or certain other public-sector work can lose a significant portion of their federal retirement benefits. The rules don't affect people who paid into Social Security for a full 30 years, but they do cut into the benefits of those who make the switch earlier. Even if a teacher's spouse has paid into Social Security for three decades, survivor benefits for the teacher would be reduced.

One of these measures, the so-called windfall elimination provision, was adopted in 1983 to prevent people from piling up public pensions from, say, careers in the military and law enforcement, from which employees can retire at relatively young ages with sizable pensions, and then adding a full Social Security retirement package by working jobs covered by the federal program. But for teachers and some other public servants, the biggest share of pension money kicks in during the last few years of work. With partial pensions and shrunken Social Security benefits, those who work in these sectors for a limited number of years could end up worse off than if they had never switched careers.

The windfall provision reduces benefits for workers who have "substantial earnings" from jobs that were covered by Social Security if they later receive public pensions from jobs in which they did not pay into the federal system. The formula is complicated, but the average loss to affected teachers in California has been estimated at $3,900 a year. A separate provision reduces spousal and survivor benefits when one spouse has a government pension.

The issue has gained urgency in recent years because schools are trying to recruit more math and science teachers, and hope to woo them from the ranks of people who already work in related fields. Most of these people make higher salaries in the private sector; the pension hit is another disincentive for them to consider teaching.

As a matter of fairness, Social Security shouldn't punish people for switching jobs. As a matter of smart public policy, the federal government should encourage qualified professionals to enter teaching. Sen. Dianne Feinstein (D-Calif.) is leading the congressional effort to fix this, but her Social Security Fairness Act would go too far, repealing the provisions altogether and costing $60 billion over 10 years.

Overly generous public pensions are crippling government budgets, and the future funding of Social Security is in doubt. The provisions should be tweaked toward fairness, not thrown out completely.

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