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Social Security Penalizes Teachers, Discourages Needed Recruitment
Penalties in the current Social Security system cut earned benefits to California teachers by 50 percent and typically eliminate spousal and survivor benefits. With looming teacher shortages, these penalties can be a major obstacle to recruiting qualified mid-career workers to the teaching profession.
Supplemental income from Social Security has been a key component to a secure retirement for generations. But a couple of little-known penalties in Social Security actually reduce earned benefits for California’s teachers, and typically eliminate spousal and survivor’s benefits.
For years these penalties—the Windfall Elimination Provision and the Government Pension Offset—have undermined the financial security of an estimated 100,000 retired teachers in California alone. It is becoming clear that they also pose a significant threat to recruiting mid-career switchers to the teaching profession.
“A recent analysis of teacher pensions by the California State Teachers’ Retirement System shows that only those teachers with long careers and employer-provided health care coverage in retirement are assured of financial security,” noted CalRTA President Polly Bacich. “Teachers who enter the profession as a second career and teach 20 years or less cannot afford to sacrifice half of their Social Security income in retirement.”
(For more on the adequacy of teacher pensions, click here.)
Many teachers who are affected by the penalties don’t even know about them until they apply for their Social Security. Then, when it is too late to make alternate financial plans, they find a carefully planned retirement devastated by the loss of thousands of dollars a year in expected income.
An estimated 55,000 current teachers will retire with 20 years or less service credit, and likely will be hard-hit by the Social Security penalties.
Over the past several years, California Retired Teachers Association members have conducted an extensive outreach campaign to educate active teachers and the general public about the impact of the penalties. Members collected more than 100,000 signatures on petitions supporting repeal and convinced more than 100 school districts throughout the state to pass resolutions for repeal.
Over the next 10 years, California faces a massive teacher shortage, according to a recent study by The Center for the Future of Teaching and Learning. By 2014, the state will have to replace 100,000 teachers due to retirement alone. Many of our best teachers enter the profession after another career. But if they stand to lose one-half or more of their earned Social Security income, they may not be able to afford that career switch.
Fortunately, Congress is beginning to recognize the unintended consequences of these penalties. Originally intended to limit perceived abuses of the Social Security system by highly-paid and well-pensioned federal employees, the penalties have proven to have a devastating impact on teachers and other public workers with much more modest incomes.
This isn’t just a California problem. Teachers in 14 other states are also affected. The Retired Educators Coalition for Social Security Fairness has petitioned the Congress to repeal these penalties on behalf of their nearly 300,000 members.
In the previous Congress, 300 Representatives from both parties signed on to a bill to repeal the WEP and GPO while a companion measure in the Senate garnered the support of 30 Senators. Already a repeal bill has been introduced in the current Congress (H.R. 82).
The cost of repeal is modest in comparison to the amount of money paid out annually by Social Security—perhaps just two percent of $432 billion paid in 2001.
If we are to restore fairness to the Social Security system and meet the need for well-qualified future teachers, the time to repeal these penalties has come.
Links To:
Definitions of the penalties
School Districts Supporting Repeal
Real People, Real Pain
Past Congressional testimony
Retired Educators Coalition for Social Security Fairness
Op-eds: Bakersfield Californian; Grass Valley Union
House site for info on HR 147
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