If you’re ever with a group of retired federal officials, public sector employees, cops, or their spouses and want to strike up a conversation, drop the initials GPO and WEP. So run for your life!
GPO stands for Government Pension Offset. WEP for Windfall Elimination Provision. Each was enacted in the 1980s following the introduction of the Federal Employees Retirement System, which succeeded the old Civil Service Retirement System. FERS produced a lower federal annuity than CSRS, but a much better Thrift Savings Plan option. And social security coverage under the federal retirement program.
At the time, Congress was convinced that some well-paid CSRS employees were playing games with the system by working for short periods of time in Social Security-covered employment before, during, or after federal service. This allowed them to receive a CSRS benefit of up to 80% of salary (after 41 years of service) and also a relatively higher social security benefit than low-income and high-income workers received when they were retiring. Repeal or amendment of both laws have been proposed for decades without congressional action. This year, a record number of House members signed the proposed amendments. This does not mean that they will be changed this year. But it’s getting closer.
Whether you think WEP and GPO are scams or equalizers, millions of people have had their benefits reduced or eliminated by one or the other. In mid-February, my column dealt with the so-called “Evil Twins”: WEP and GPO. Most of the answers were good. But a longtime official said I made unfair (and unwarranted) editorial comments about the impact of the two laws. Also the need for them. He’s a smart guy, ex-Marine, longtime Fed and TSP millionaire. Here is what he wrote:
Not everyone wants WEP and GPO repealed
I started working for the federal government when I was 18 at a veterans hospital, cleaning toilets so I could go to college. I have over 40 years of federal service today! My goal was to one day serve my country as a Marine and a lawyer. I did both and am now a fairly senior citizen in a federal agency in Washington, D.C. You already wrote about me as a “Janitor Millionaire” because I have $1.5 million in my TSP account in 27 years of adhering to the regular investment method.
I started in the civil service pension system in 1976. I became a sailor, then I returned to federal service, all excited about a future pension from the CSRS. When I returned to the Federal Public Service, I had to transition to the Federal Employee Retirement System. I thought the CSRS package for an annuity was the gold standard and the best in the world. Every federal employee was offered the opportunity to switch to FERS and everyone turned it down. I fought to stay at CSRS and I lost. Each employee was given flyers and brochures explaining how to get a better deal under the FERS program. WEP and GPO have been clearly explained to employees. In fact, WEP and GPO were created in 1977 to prevent “double dipping” before there was an FERS system, so no one should have been surprised by WEP and GPO. But none of us wanted to believe the human resources and their brochures and everyone fought to stay at the CSRS.
I consider myself a social liberal and a fiscal conservative: stay out of my room and let people make their own decisions. Treat each person regardless of gender, race, religion, etc. equally. Balance the budget. Remember that for every dollar we spend, we must collect a dollar in tax. For every dollar we cut from the federal budget, someone gets hurt and loses money. So let’s really think about what we really need and want the government to do, and then do it with a fair plan. I don’t care if that means free medical care or a college education. We just have to recognize that we have to pay as we go.
This brings me to the “evil twins” who denied hundreds of millions of dollars in Social Security benefits to many, if not most, government retirees under the old public service pension system, or their surviving spouses. What a scary title. Let’s look at both sides of the argument again. People have been arguing for decades about the best retirement pension. Do you want CSRS or FERS? When the economy is booming, everyone wants to be in FERS because TSP accounts are worth over a million dollars. Then there is a crash and the TSP takes a huge financial hit and everyone wants the CSRS.
When the government switched to FERS, everyone was eligible to switch to FERS and you could have avoided WEP and GPO. WEP and GPO were created as a result of CSRS employees trying to trick the system. They wanted to maximize their CSRS pension while not paying social security contributions. Then they wanted to change jobs and work for enough quarters to qualify for Social Security. Then they wanted to get the maximum social security benefits. WEP and GPO stopped these types of deposits to prevent people from playing around with the system to receive more benefits which they were also entitled to. I have no problem with people trying to maximize their benefits. But when the government identifies that a group is receiving a much larger payment than they would normally be allowed (or based on their contribution) due to a glitch or glitch in the system, we fix the issue with things like WEP and GPO.
These CSRS people had and are entitled to one of the best pensions in the world. And honestly, most federal government employees would pay dearly to still be at CSRS. If you earn $100,000 a year, you could retire with a pension of $80,000 a year. It’s incredible. Now you want to add full retirement benefits of up to $36,000 per year? Greed. Want to know why people are fighting to repeal WEP and GPO? The answer is greed. There may be one or two cases of real hardship, but the real reason is that the CSRS people affected by WEP and GPO want more money. It is expected and normal that CSRS retirees receive reduced or reduced social security payments. Technically, they weren’t even supposed to be eligible for Social Security because they never paid into it.
Remember that if we repeal the WEP and the GPO, it means we will give more money to CSRS retirees with rich pensions and it will mean less dollars to provide to all other Social Security recipients. The money has to come from somewhere if we repeal WEP and GPO. CSRS folks can afford to hire and donate groups to represent their interests and try to get WEP and GPO repealed. Who represents poor elderly people living barely above the poverty line on a social minimum? There is a real cost to our government to repeal WEP and GPO in dollars and people. Moreover, the CSRS people chose this path and are now complaining that they are getting exactly what they bargained for. Once again, I think that if these people are given more benefits in relation to their contributions, that will have a cost for the government. They want something they were never promised. I think we should be careful with our government money. I think WEP and GPO – which fixed an abuse, hiccup, glitch, etc. – should not be repealed to provide a windfall to a group that appears to have been fully compensated.
Finally, I have a simple solution for all those CSRS pensioners who are affected by WEP and GPO compensation: Pass a law that allows them to switch to the FERS pension system with immediate effect. They will receive an FERS pension and will be eligible for full-rate Social Security. No more worries with WEP and GPO. Not a single person will agree to this deal. Why? Because they obtain a reference pension from the CSRS and they will not abandon it. They just want more free money.
I dove deep into the numbers for both pension systems and they are really very fair and very equal. The pension at the CSRS is guaranteed and enormous. It makes the eyes grow with jealousy. But the FERS annuity and social security combined are also excellent. If you put anything in the TSP, the two systems are almost equal. For me, FERS will be much better than CSRS. Sometimes FERS is better and other times CSRS is better. Every situation is different. But the key point for me is that every CSRS person was offered the opportunity to convert to FERS and refused. Now CSRS retirees think they are leaving money on the table because they receive a lower social security benefit than an FERS retiree. Of course, they don’t recognize the huge annuity they receive while pleading for Social Security benefits. Just say no to the repeal of WEP and GPO!
Almost useless factoid
By David Thorton
A flock of wild turkeys recently moved into NASA’s Ames Space Center in California, causing a nuisance to employees and posing a threat to planes. The California Department of Fish and Wildlife and the United States Department of Agriculture are helping move the birds to a nearby ecological reserve.
Source: Space.com
