Social Security Benefits; Anyone ever run into this?

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gmcrook Asked April 2020

Social Security Benefits; Anyone ever run into this?

My dad passed away in December 2019. My mom (now 82) worked a bit during her life but dad was the "bread winner" so to speak. We were under the impression that when dad passed, my mom would get the higher of their two social security monthly payments. However, my mom was notified recently that the government would be docking her payment by $1000/mo because she is "eligible for a government pension". She has no idea what this means. My dad worked for IBM for 35 years and has an IBM pension. She gets $560 a month now from that. After retirement my dad worked for the school system and got a NY Teachers Association pension but when he passed, my mom received notification that she was not eligible to continue receiving that monthly payment. She also says they paid taxes on that pension every year. She grew up in Scotland and lived there until she was 20 and worked a bit. As a result she gets $75/month from the British government as a pension (so $900/year). My dad's social security check each month was $2200. They are telling my mom she gets $1200 now. She is in shock! We have filed the "Reconsideration" form with SSA. But we have no idea what they are talking about when they say she is eligible for a government pension. Even if it is the check from the UK, how can they justify docking her $12K per year for a lousy $900? Has anyone ever heard of this kind of thing or run into this? If so, what was the result? Do we need to hire a lawyer?
THANKS!

Financial Planning Government Benefits

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score 1 · Answer 1

Please come back and tell us how it worked out. If he started taking it at 62, then he was only entitled to 75% of what he would have received at 66, full SS. He could only make 14.4k a year without being penalized.

Helpful Answer (1)

Yes, I will report back. The person we are working with has been responsive so hopefully we’ll hVe the answer soon. BTW, not for nothing, but the description that the SSA gave us was very unclear to say the least. This appears to have nothing to do with a government pension!

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score 0 · Answer 2

GM, have you gotten any clarification?

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Hi Barb. Yes, you were right. It’s WEP. SSA is saying that dad started taking Social Security at 62 while he was still working. They are confirming but that’s what we think is going on. Thank you so much for your advice.

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score 1 · Answer 3

I sort of understand what Barb is saying. My Sister was a government employee where she didn't pay into SS because she had a government pension. So, how I am looking at this is...

A person has worked for the government and earned the right to a pension. Then goes to work where SS is taken out of their pay, and earns the right to a pension. SS can only calculate earnings on the job that he paid into SS. So whatever earnings he received in that government job doesn't count towards his SS quarters. ?

My question here is, wasn't that all calculated in when Dad received his SS? Why would then Mom be penalized? I think SS is assuming she is receiving the teacher pension and she isn't. She needs to prove that.

In my opinion, Dads SS should have been based on his IBM earnings. As such, that government pension doesn't come into play? SS is not based on how many pensions you receive. Its based on the earnings you made that SS was deducted for. So Mom's SS drops off and she collects Dads. Or you look at it as, Mom is already receiving half of Dads, 1100, and when he passed, she gets the other half = 2200

I am just thinking here. I am not saying this is so.

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score 1 · Answer 4

https://www.bogleheads.org/forum/viewtopic.php?t=271065
There is also GPO (Government Pension Offset) referenced above on the Bogleheads site.

More on the GPO and WEP:

https://en.m.wikipedia.org/wiki/Social_Security_Government_Pension_Offset

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score 1 · Answer 5

A lot of good points. I would add that if your dad had not claimed SS till he was OVER the full retirement age (which for him, would have been 65), he would have received a "deferred credit", which I think only the primary earner gets, not the surviving spouse. A worker can get the deferred credit even if he retires earlier, it is available as long as he defers getting SS. I don't think it could result in a 50% cut, more like 25% though

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score 2 · Answer 6

GM; it wouldn't have to do with the UK pension, because WEP is designed to reduce benefits of folks who worked in the US and didn't pay into SS on that income. I don't see how foreign income would come into it at all.

As I said, you will find genuine SS expertise on bogleheads. Good luck with your SS agent. Please make sure that s/he explains it so that you absolutely understand why mom's benefits are being reduced. Make sure they know that it is you understanding that mom is NOT getting the NYSUT pension. I wonder if she actually IS a beneficiary of that?

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score 2 · Answer 7

Not exactly. Was SS taken out of dad's WAGES (not pension) while he was working for the school system?

It was HIS ss that should have been subject to WEP, I think. I am so NOT an expert on this!

Im hoping your SS person can explain this better and can clarify what they mean when they say"govt pension".

Heres another useful site:

https://maximizemysocialsecurity.com/does-wep-affect-spousal-benefits

Helpful Answer (2)

Yes, I guess we have to wait to hear from our SS person! But thank you for your feedback! I feel like it has something to do with the NYT pension or possibly her UK pension (though its really minimal). Fingers crossed! It's quite stressful to reach this age thinking you're going to have a certain income and then get this kind of surprise.

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score 2 · Answer 8

The key thing with WEP is that the pension benefit would be from a government institution that provided a civil service pension. Wages would have been subject to income tax but NOT to SS taxes.

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OK, so if dad's annual NYT pension was $12K and he took it for 7 years that's about 10K in social security NOT paid (at 12%). So now, they are docking her survivor's benefit due to that unpaid SS. I think that's what you're saying.

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score 0 · Answer 9

Thanks! I live out of state from my mom but she has been working with someone at the local office. I guess with the whole coronavirus (she is in the suburbs of NYC) communication has been impacted. She wrote the woman she was dealing with a letter and we submitted the "Reconsideration" form. I'll ask her if she took her retirement benefits early. I highly doubt it. My dad worked well into his 70's but it's a good question. Thank you for your advice!

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score 2 · Answer 10

It sounds like mom's SS benefit is subject to WEP (windfall elimination provision). https://www.ssa.gov/policy/docs/program-explainers/windfall-elimination-provision.html

You might consider signing up at www.bogleheads.org and posting your question there. Lots of financial expertise.

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Interesting Barb. Thank you!

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score 2 · Answer 11

Have you arranged an appointments to have someone with your local SSA office explain the benefit options and how they are calculated? The local office people are usually very good at explaining benefit options and are usually familiar with how state retirement programs impact SS. If your mother worked enough to qualify for SS benefits in her own person, then she has at least two options - benefit based on her work history or a window's benefit based on her husband's work history. My mother took early retirement and started getting a check at age 62. When my father died, she only received 75% of the amount Dad received because they applied the early retirement penalty to her widow's benefit. If she had retired at age 65, she would have received the full amount of Dad's benefit. It really helps to have an expert explain how the benefit was calculated.

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Sorry, I answered above in the wrong place!

(1)

Social Security Benefits; Anyone ever run into this?

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