About one-fourth of public employees do not pay Social Security taxes on the earnings from their government jobs. Historically, Social Security did not require coverage of government employment because some government employers had their own retirement systems. In addition, there was concern over the question of the federal government’s right to impose a tax on state governments. Nevertheless, these workers may still be eligible for Social Security benefits through their spouses’ or their own earnings from other covered employment.
There are many CMERS employees who are not covered by Social Security and thus affected by certain provisions of Social Security. Additionally, for members who are covered by Social Security, there is the “Age 62” offset. The section helps to explain some of these provisions.
1. Contributions
With regard to contributions, the amount you contribute depends on whether or not your employment is covered by Social Security.
If your employment is not covered by Social Security:
- You contribute 7% of your pay.
If your employment is covered by Social Security:
- You contribute 4.25% of the portion of your pay on which Social Security taxes are withheld; and
- You contribute 7% of the portion of your pay on which Social Security taxes are not withheld.
2. Social Security – Age 62 Offset
CMERS members who are covered by Social Security are subject to what has been erroneously called the “social security” reduction when they reach age 62: however, it is not a reduction. While it may be difficult to understand, CGS Sec. 7-437 actually provides for an additional, temporary benefit if the member is covered by social security and the member retires before age 62. Since a social security benefit is not payable until age 62, the member receives a total benefit (regular benefit plus a temporary benefit) from his or her retirement date to age 62 which is equal to the benefit the member would have received under CMERS if they were not covered by Social Security.
There are two points at which this additional, temporary benefit terminates and is removed from the retirement benefit. The first is when the member is eligible for social security which is at age 62 – not at the age of the “full” social security benefit. Second, the additional benefit ends when the member receives a social security disability benefit if the award is received earlier than the age of 62.
Members are required to inform CMERS if they receive a social security disability award prior to age of 62. Failure to infoCMERS will result in an overpayment of your CMERS retirement benefit. CMERS is required to recover any overpayment it has made to either a retiree or annuitant regardless of cause of the overpayment.
In sum, if the member is retired and is covered by Social Security he or she will receive an additional, temporary benefit until they reach the age of 62 or receive a social security disability award whichever comes first. At that time, the temporary benefit will be removed from the total benefit and the retiree will be returned to the “regular” benefit. If the member retires after the age of 62, they will receive their “regular” benefit and no further reduction will occur. This reduction will not occur for members who have contributed 7% of their pay into CMERS and therefore are not covered by Social Security.
3. Other Social Security Provisions Potentially Affecting CMERS Retirement
Government Pension Offset
If a CMERS member receives a pension from a government job in which s/he did not pay Social Security taxes, some or all of the member’s Social Security spouse’s, widow’s or widower’s benefit may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO.
The GPO will reduce the amount of the member’s Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. For example, if the member receives a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset the Social Security spouse’s, widow’s or widower’s benefits. If the person is eligible for a $500 spouse’s benefit, the person will receive $100 per month from Social Security ($500 – $400 = $100).
This law applies if the individual receives a government pension and is eligible for Social Security benefits as a spouse or widow(er). For more information about this provision, see Social Security for the Government Pension Offset (Publication No. 05-10007) fact sheet.
Windfall Elimination Provision
This law affects the way retirement or disability benefits are figured if the individual receives a pension from work not covered by Social Security. The Social Security Amendments of 1983 include a provision that greatly reduces the Social Security benefit of a retired or disabled worker who also receives a government annuity based on his or her own earnings. This Windfall Elimination Provision (WEP) primarily affects a CMERS member if he or she earned a pension in any job where she did not pay Social Security taxes and also worked in other jobs long enough to qualify for a retirement or disability benefit. The Windfall Elimination Provision applies when:
- The member reached 62 after 1985; or
- The member became disabled after 1985; and
- The member first became eligible for a monthly pension based on work where s/he did not pay Social Security taxes after 1985. ” Eligible” means the member satisfied all prerequisites (age/service) for a benefit.
- The Windfall Elimination Provision does not apply to survivors benefits and has other exclusions.
CMERS cannot answer questions on how Social Security may ultimately affect a pension questions on these issues must be referred to Social Security. For more information, please see Windfall Elimination Provision (Publication No. 05-10045) at www.socialsecurity.gov/WEP. Or, for more information on GPO or WEP, you can contact the Social Security Administration at:
Web Site: http://www.ssa.gov
Toll-Free Number: 1-800-772-1213
4. Important Retiree Information on the Windfall Elimination Provision
There are many CMERS employees and retirees who are not – or were not – covered by Social Security during their CMERS employment. These non-covered individuals, referred to as CMERS “Part A” employees, may be affected by certain provisions of the Social Security Act. This article provides an overview of one of these provisions – the Windfall Elimination Provision (WEP). These provisions do not apply, and this section does not pertain, to CMERS employees who have social security deductions taken from their paychecks (“Part B” employees).
WEP was enacted as a result of the Social Security Amendments of 1983 and primarily affects a CMERS member if: (1) s/he earned a pension in any job where s/he did not pay Social Security taxes (i.e. “Part A” employment) and (2) also worked in other jobs long enough to qualify for a Social Security benefit.
WEP adversely affects the social security benefit – sometimes reducing it as much as 50%. WEP most likely applies to all “Part A” CMERS members who were not entitled to a CMERS pension prior to January 1, 1986. However, WEP most likely does not apply if a “Part A” employee was entitled to a CMERS pension prior to January 1, 1986.
In 1986, a member of CMERS was entitled to retire with reduced benefits after 10 years of service. This means that a Part A employee who started work on or before January 1, 1976 and had at least ten (10) years of CMERS service prior to 1986 may be exempt from WEP. That is, they may be entitled to collect their full Social Security benefit.
CMERS understands that in the past there was confusion with regard to the length of time it took in order to be entitled to a CMERS pension. When questioned by Social Security as to how many years the member had to work in order to retire, some members wrongly stated 25 years and applied WEP to the members’ social security benefit.
CMERS advises that any Part A member hired prior to January 1, 1976, having at least ten (10) years of active service prior to 1986 and presently collecting Social Security should call Social Security (not CMERS) to verify that they are receiving their full social security benefit and that their benefit has not been affected by WEP. If their benefit was affected by WEP, then they should call customer service at 860-702-3480 and ask for a Letter of Eligibility to Retire. They should then take this letter and submit it to Social Security. The Social Security Administration – not CMERS – will make the final decision with regard to exemption and whether the member’s social security benefits should be restored.
Additionally, any Part A member hired prior to January 1, 1976, having at least ten (10) years of active service prior to 1986 and has not yet applied for Social Security should call customer service at 860-702-3480 and ask for a Letter of Eligibility to Retire. The member should submit this letter with any other documents required by Social Security. Once again the Social Security Administration – not CMERS – makes the final decision with regard to exemption.
Remember – WEP does not apply to Part B employee (those employees who have social security contributions taken from their paychecks) and these employees do not need a Letter of Eligibility to Retire from CMERS.
CMERS cannot answer questions on how Social Security may rule on a WEP exemption and all specific questions on WEP must be referred to Social Security. All CMERS can, and will do for “Part A” non-covered members is to provide a Letter of Eligibility to Retire.