1. Social Security Administration Windfall Elimination Provision & Government Pension Offset Windfall Elimination Provision & Government Pension Offset

2. Today’s Objectives Fifteen minutes from now you will know: If I will be eligible for retirement benefits How my benefits are figured If I am eligible for Spouse or Survivor benefits If I will be eligible for Medicare If I will be eligible for retirement benefits How my benefits are figured If I am eligible for Spouse or Survivor benefits If I will be eligible for Medicare

3. And Those Pesky Offsets One reduces your own benefit The other reduces any benefits you might be due on your spouse’s Social Security record You will learn why they were enacted. One reduces your own benefit The other reduces any benefits you might be due on your spouse’s Social Security record You will learn why they were enacted.

4. Two Important Points If you have 40 credits you will be eligible for a monthly retirement benefit If you have paid Social Security taxes for fewer than 30 years, your benefit will be reduced If you have 40 credits you will be eligible for a monthly retirement benefit If you have paid Social Security taxes for fewer than 30 years, your benefit will be reduced

5. How We Figure Your Benefit Based on your highest 35 years of wages Not high 3 or last 5 Based on your highest 35 years of wages Not high 3 or last 5

6. Windfall Elimination Provision Social Security is not a pension plan but a Social Insurance plan. As such, it has “social” goals, among which is to: Raise the standard of living for lower income workers

7. How We Do This A weighted benefit formula Lower income workers receive a higher rate of return A weighted benefit formula Lower income workers receive a higher rate of return

8. How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1Your wages are adjusted for changes in wage levels Step 2Find the monthly average of your 35 highest earnings years Step 3Result is “average indexed monthly earnings”

9. If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,919 Average Monthly Earnings $ 5,200 90% of First $ 711= $ 639 32% of Earnings over $ 711 through $ 4,288 $ 3,577= $ 1,144 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 912= $ 136 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,919 If your average monthly earnings are= $ 5,200 Then your monthly benefit would be= $ 1,919 Average Monthly Earnings $ 5,200 90% of First $ 711= $ 639 32% of Earnings over $ 711 through $ 4,288 $ 3,577= $ 1,144 ( $ 4,288- $ 711= $ 3,577) 15% of Earnings over $ 4,288 $ 912= $ 136 ( $ 5,200- $ 4,288= $ 912) $ 5,200 $ 1,919 Retirement Benefit Computation Example

10. Non Covered Earners Look Poor The addition of all those “zero” years give non covered earners an artificially low average wage

11. But you’re not “low wage earners” A non covered employee is not the kind of low- income worker the weighted benefit formula is trying to compensate

12. Modified Formula The Windfall Elimination Provision says we must refigure your benefit giving you the 40% (average) return rate instead of the 90% (low income) return rate

13. Social Security Statement It is inaccurate if you are a non covered employee

14. Exception to the Windfall Elimination Provision (WEP) WEP recognizes the more years a non covered wage earner has paid Social Security taxes, the closer you should be to the standard benefit formula 30 years = standard formula with 90% as return rate 21-30 years = modified formula with return rate between 40-85% 20 years or less = full WEP formula w/40% 30 years = standard formula with 90% as return rate 21-30 years = modified formula with return rate between 40-85% 20 years or less = full WEP formula w/40%

15. The Other Offset It’s called “Government Pension Offset” (GPO) GPO takes two-thirds of your non covered pension and deducts that from any spouse / survivor benefit you might be due

16. Key To Understanding GPO Dependent benefits Consider history of spouse’s benefits under Social Security Dependent benefits Consider history of spouse’s benefits under Social Security

17. Social Security: Yesterday One spouse worked The other spouse did not work outside the home One received a Social Security check The other received a “dependent” spouse benefit One spouse worked The other spouse did not work outside the home One received a Social Security check The other received a “dependent” spouse benefit

18. Social Security: Today Both spouses work and pay into Social Security. Since both work neither is “dependent” Both spouses work and pay into Social Security. Since both work neither is “dependent”

19. Unless One Was a Non Covered Employee … Before “GPO” If one spouse was a non covered employee… They received their own non covered pension … AND a “dependent” Social Security benefit. If one spouse was a non covered employee… They received their own non covered pension … AND a “dependent” Social Security benefit.

20. GPO Insures Fairness GPO treats covered and non covered workers the same way. The rule states you cannot get a dependent benefit unless you are dependent. GPO treats covered and non covered workers the same way. The rule states you cannot get a dependent benefit unless you are dependent.

21. Medicare & Non Covered Pension Even if you are not paying Social Security tax, most of you are paying Medicare tax. Even if Social Security is reduced because of WEP, Medicare is unchanged. For those who do not pay Medicare tax, you may be eligible on a spouse’s Social Security earnings record. Even if you are not paying Social Security tax, most of you are paying Medicare tax. Even if Social Security is reduced because of WEP, Medicare is unchanged. For those who do not pay Medicare tax, you may be eligible on a spouse’s Social Security earnings record.

22. Alternate Retirement Program Hired After 07/13/1990: Covered under Social Security = No WEP Hired Before 07/13/1990: Employee decided to be Covered or Not Covered under Social Security = All or Partial WEP

23. ARP Account Value Value of Account: Effective Day of Termination (regardless of when funds are actually disbursed) Based on Mandatory Contributions Only (do not include voluntary contributions)

24. Account Value Verification TIAA-CREF: 1-800-842-2776 ING: 1-800- 584-6001 ING took over State of Connecticut contract 01/01/06

25. Monthly Pension Amount Life Expectancy Tables Determine a Monthly Pension Amount For Covered and Non-Covered Employees = Pension is Prorated

26. WEP Effective Date First Month Entitled to Both Social Security and Pension Based on Non Covered Employment

27.  Quick  Easy  Secure  Quick  Easy  Secure Social Security Online www.socialsecurity.gov

28. How Apply For Benefits  www.socialsecurity.gov www.socialsecurity.gov  1-800-772-1213  Local Social Security Office  www.socialsecurity.gov www.socialsecurity.gov  1-800-772-1213  Local Social Security Office