At age 84, Evelyn Paternostro spends her days part-time as a cashier at Dollar Tree. For decades, she devoted her life to education, serving as a teacher and principal in Louisiana. But despite her years of public service, she now struggles to make ends meet.
“People in the store ask me all the time, ‘Are you doing this for fun? Why aren’t you retired?'” she said. “Because I have to eat.”
After her husband died, Paternostro discovered she couldn’t collect his Social Security benefits because of a pair of federal policies called the Windfall Elimination Provision and the Government Pension Offset.
Reduce or eliminate these provisions Social security advantages for millions of Americans if they receive a public pension with no Social Security taxes withheld. Retired teachers, firefighters and other public servants are most affected.
“I was really blindsided,” she said. “I knew I was going to retire as a teacher. I was going to be part of the Louisiana Teachers Retirement System. And I never really thought about my husband’s income and what that would mean for me.”
Kati Weis / CBS News
Who is affected?
Nearly 2.8 million people in the United States are affected by WEP and GPO. Its impact extends to all state, county, municipal and special district employees in 26 states. Teachers in 13 of those states, including specific districts in Kentucky and Georgia, are also feeling the impact.
In Massachusetts and certain districts in Rhode Island, not all municipal employees are affected, but only teachers.
The purpose of these two 1980s programs was “so that there was no way you could ‘double up’ on both a federal pension and Social Security,” explains CBS News business analyst Jill Schlesinger.
The windfall elimination provision affects people who qualify for Social Security benefits through their job, but also receive a pension from another job where they have not paid into Social Security.
It can reduce their Social Security benefits by up to half the value of their pension.
For example, Michelle Cosgrove’s benefits were cut in half, from $866 per month.
Cosgrove spent the first half of her career as a paralegal and contributing to Social Security before staying home to raise her children.
She later became a public school teacher in the San Francisco Bay Area and paid money into CalSTRS, California’s educational pension fund. However, her retirement plans took an unexpected turn when she discovered the intricacies of the pension system.
When she retired, Cosgrove’s lower payments affected her ability to pay bills and cover expenses.
The other program, the Government Pension Offset, further impacted Cosgrove after her husband, Mike, passed away in 2022. Despite working in the private sector for decades and contributing to Social Security, his benefits were largely inaccessible to her because of the GPO. Mike, a welding supervisor, was diagnosed with a rare form of cancer at the age of 52, but continued to work until his health deteriorated. He died at the age of 63.
If pension recipients are a widow or widower of someone who received Social Security benefits, that pension recipient may have lower survivor benefits or may not receive benefits at all.
“If I had stayed home and done nothing, I would have gotten all the money,” Cosgrove said. “If I had known this, I might not have gone into teaching. I would have chosen something else.”
The GPO primarily affects women, with 83% of those affected by the GPO being women, according to data from the Congressional Research Service.
“If you see the GPO numbers going up, it’s because a lot of those people were probably teachers and married to someone who worked in a Social Security job,” said Joslyn DeLancey, vice president of the Connecticut Education Association . “They’re not going to get that spousal welfare benefit. … It’s so messy and nuanced.”
Paternostro estimates she would have received $2,500 a month in Social Security benefits — about $300,000 over the past decade.
“That’s a lot of money,” she said. “That’s more money than I can imagine.”
But the policy brought a different kind of heartache for Dede Ruel, a retired school psychologist in Illinois.
She said she recently received a letter from Social Security informing her that she owed more than $13,000, which reduced her Social Security checks by 21%.
According to a CBS News analysis of federal data, these policies are one of the most common reasons for Social Security overpayments, which totaled more than $450 million in fiscal years 2017-2021.
“I tried to appeal through their process, but I was rejected at every level,” Ruel said.
Bipartisan support for the Social Security Fairness Act
The Social Security Fairness Actone of the most bipartisan bills in Congress this session, aims to repeal WEP and GPO.
The House voted in favor approve the legislation November 12. The Senate is expected to do so vote on the Social Security Fairness Act this week.
Social Security is expected to run out of money by 2035 unless a change is made to Social Security the costs and income of the fund system.
Although proponents of the Social Security Fairness Act argue that the Social Security fund will deplete just six months sooner than otherwise expected, some critics believe there are better solutions. They suggest that states should restructure their pension systems to address the root causes rather than relying on federal action. solutions.
“Many critics say this will cost a lot of money, almost $200 billion over the next decade,” Schlesinger explains. “Critics say there is a reason why we force people to pay into the welfare system. These are two separate systems. If we need to fix Social Security, let’s do it. Let’s not just do a repeal that is essentially a band-aid. .”
Rep. Garret Graves, a Louisiana Republican who spearheaded the bill, said: “People should receive benefits based on what they put into the system. That’s what the formula should be largely based on. I understand the efforts in the 1970s and 1980s, but the overcorrection probably cost these people $600 to $700 billion in benefits.”
Devin Carroll, a financial planner, encounters many clients who are “completely surprised.” Carroll often instructs his clients to use the Social Security Administration’s WEP calculator, a tool that calculates benefits taking into account the impact of the WEP.
Carroll explains that calculating future Social Security benefits can be challenging. The benefits formula includes “inflection points,” which are adjusted annually based on wage inflation.
These adjustments are crucial because the actual amount of the WEP discount is determined in the year that someone turns 62.
“You have to make some projections, some assumptions about forward-looking inflation, both price inflation and wage inflation,” Carroll explains. “Once you’ve done that, you can go through that and use a calculator like the SSA, which will do a lot of that for you, and will tell you what your WEP adjusted for retirement benefit should be.”
Carroll also gets to see firsthand the impact of these facilities. His daughter-in-law is a teacher in Texas and his son is a firefighter in Texas.
“Essentially, this money has been stolen from all of us all these years,” Paternostro said. “It’s not fair.”
Jill Schlesinger contributed to this report.
