SLEDGE: Why will my pension reduce my benefits?

Q: I’m retired from the federal government and receive a civil service pension. I also had enough work credit before I got my federal job for a Social Security benefit, but that benefit is going to be reduced because of my federal pension. Why? I paid my Social Security taxes. This doesn’t seem fair to me.
 
A: You must be getting your federal pension under the Civil Service Retirement System, or CSRS. That’s the older pension program for those who went to work for the federal government prior to 1983. Workers under CSRS don’t pay Social Security taxes, but often — like you — they did enough other work that was covered under Social Security before, during, or after their government employment to qualify for a Social Security benefit. And unless they meet one of the exceptions, then that benefit will be reduced due to something called the Windfall Elimination Provision, generally called the WEP.

I’ve rarely met a CSRS retiree who thought this was fair. But Social Security benefits are intentionally weighted to give those who earned less a benefit that is larger in relation to their lifetime earnings than it does to those who earned more. Now CSRS retirees will usually have spent the majority of their working lives paying into the CSRS system, not into Social Security. Wages earned that are not covered under Social Security – for example, your federal wages – are not credited to your Social Security earnings record. However, our computer system can’t draw any conclusions from what’s not there, though, other than to assume that a weak-looking Social Security earnings record reflects a life of low earnings. Consequently, the resulting benefit calculation would therefore be weighted and considerably higher.

Bear in mind that, without the WEP, you’d get this higher Social Security benefit plus a pension from a federal job where you didn’t pay Social Security taxes. To remove this unintended consequence, Congress passed the Windfall Elimination Provision, which usually reduces the CSRS pensioner’s Social Security benefit. Ever since the WEP went into effect in the mid-1980s, Social Security applicants have been asked if they receive a benefit based on work not covered under Social Security. A positive answer leads in most cases to the adjustment I’ve been describing, to remove the unintended windfall.

For more information about the WEP, go to http://www.socialsecurity.gov/pubs. You’ll find it under “Retirement Benefits.”