Larry Rice spent the bulk of his professional life as a patrolman in Norwich.
He answered calls, broke through doors, chased bad guys and has the scars to prove it.
When he retired in 2003 and applied to collect his Social Security benefits, he discovered he’d be collecting only about half of the benefits because of a little-known and less-understood Social Security clause named the Windfall Elimination Provision.
The premise of the WEP when it was enacted was to adjust benefits to level the playing field between workers with non-covered earnings and those with full careers in covered employment, while keeping Social Security solvent. It also was an attempt to prevent “double-dipping,” or collecting income from two different sources in retirement.
In the years since he’s retired, Rice has spent time trying to understand the provision, which has included multiple letters to our state’s congressional delegation, and he has come up with another name for the WEP: “Legalized theft.”
Beginnings
The Social Security system as we know it was designed in 1935 under President Franklin D. Roosevelt’s administration as a way to ensure some income for retired people and those who could not work, essentially providing a governmental lifeline to people in danger of falling into poverty. It was not set up to be a retirement fund.
The WEP affects those who worked for an employer who doesn’t withhold Social Security taxes, paid into a separate pension and worked another job or jobs in which they did pay into Social Security. According to the Social Security Administration, it impacts about 2 million beneficiaries, including about 22,000 in Connecticut.
It largely affects teachers, police officers and firefighters, although other public employees, including civil servants and others, are also impacted.
One of the many problems with the WEP is, like a lot of things with Social Security and retirement funds in general, it is hard to understand, and even harder to explain.
In practice, it largely penalizes many public employees.
Pension funds
Public school teachers in Connecticut do not pay into Social Security. Instead, they pay into the Connecticut Teachers’ Retirement System, which was established in 1917 and is the largest public retirement system in the state.
So while retired teachers collect their pensions upon retirement, the Social Security they paid into while working other jobs either before, during or after their employment as a teacher, can be affected, based on the WEP formula. The same is true for police officers and firefighters.
As an example, Cathy Klein of Stonington taught for 16 years, including 12 in New London. She knew about the windfall provision, and said she’s receiving about 50 percent of her expected Social Security benefits upon retirement three years ago.
“The system is protecting people who are earning more or at least not protecting people who are not earning as much,” she said.
“It really impacts people.”
Government Pension Offset
In addition to the WEP, Social Security features a Government Pension Offset (GPO), another way to crack down on “double-dipping.” Spouses with their own covered earnings have their spousal benefits offset by their own. The GPO affects just under a million beneficiaries.
Bette Gladue of Montville taught in Killingly after spending years working at Aetna. Her three brothers worked as firefighters, two in New London and one at Poquonnock Bridge in Groton, so all four of them have been affected by the WEP.
When Gladue’s husband, who was a union ironworker, died, she discovered she is not able to collect his full Social Security.
Joanne Burdick of New London spent 20 years teaching in East Hampton, where her husband was a police officer. When he died two years ago, Burdick went to Social Security to inquire about her spousal benefits and was told she wouldn’t be able to collect them because it was considered “double-dipping.”
Hot-button issue
U.S. Rep. Joe Courtney, D-2nd District, said his office receives 300 to 400 letters from recent retirees at the beginning of each new Congress in January.
“Social Security has been an absolute defining issue in terms of two different approaches of how to address solvency problems,” Courtney said in a recent phone interview.
In the 90 years since Social Security’s inception, the U.S. population has more than doubled, from 127 million to about 333 million.
This rise in population and the demographic shifts that have accompanied it, which include the retirement of baby boomers (those born in the years after World War II, when U.S. birth rates rose significantly), a slowdown in legal immigration, and income inequality, have made it necessary to tinker with the system through the years. In addition, about 14,000 people a day are turning 65 and reaching retirement age.
The “fiscal cliff” we hear about from time to time was perhaps never more in danger of being reached than in 1983, when President Ronald Reagan and Speaker of the House Tip O’Neill worked together to pass the bipartisan Social Security Reform Act. One element of that legislation was the Windfall Elimination Provision.
More than 40 years later, that law is still in effect, and for those impacted, there’s not much recourse other than changing the law, and there’s not much appetite for changing a law that would cost an estimated $150 billion over the first 10 years.
Not just a retirement issue
There is a perception that younger people don’t pay much attention to Social Security issues, but Courtney pushed back against that. He said when he goes to senior centers to talk about retirement, “You can hear a pin drop.” But he said increasingly at Chamber of Commerce breakfasts, high schools and other gatherings among younger people, “We have good discussions,“ the congressman added.
“There’s this urban myth that (Social Security) won’t be there for them,” Courtney said. “But it’s been around since 1935. This is not like ‘Mission: Impossible.’”
While that may be true, repealing the WEP might be Mission: Difficult.
HR 82 is a bill introduced in the House of Representatives last year that was referred to the Ways and Means Committee, which has jurisdiction over tax, trade and Social Security policies. The ranking Democrat on the House’s Subcommittee on Social Security, U.S. Rep. John Larson (D-1st District), has introduced HR 5723. That bill has been referred to the Subcommittee on Health. There’s also a Senate bill introduced by Sens. Sherrod Brown, D-Ohio, and Susan Collins, R-Maine, that was referred to the Finance Committee.
All of the bills address the future of the WEP, but a grand bargain between Democrats and Republicans on Social Security is considered by many to be a political Holy Grail.
“There’s a clear unfairness in the system, but to fix it will cost money,” Courtney said. “At some point we’re going to have to deal with this, and the clock is ticking. There is a lot riding on getting this fixed.“