Your Employment in a Job Not Covered by Social
Security
Teachers' Retirement, Optional Retirement
Plan, and LA State Employees' Retirement System
You are now working for an employer who does
not withhold Social Security Taxes. When you retire or become
disabled, you may receive a pension based on your earnings from
this job. If you do, and you are also entitled to a benefit
from Social Security based on either your own work or the work
of your husband or wife, or former husband or wife, your
government pension may affect the amount of the Social Security
benefit you receive.
Under Social Security law, there are two ways
your Social Security benefit amount may be affected. One is the
"government pension offset" and applies only if you
received a government pension and are eligible for Social
Security benefits as a spouse or widow(er). The other way - the
"windfall elimination provision" - affects how your
retirement or disability benefits are figured if you receive a
pension from work not covered by Social Security. The formula
used to figure your benefit amount is modified, giving you a
lower Social Security benefit.
WINDFALL ELIMINATION PROVISION:
Who is Affected?
The modified formula applies to you if you
reach 62 or become disabled after 1985 and first became eligible
after 1985 for a monthly pension based in whole, or in part, on
work where you did not pay Social Security Taxes. You are
considered eligible for a pension if you meet the pension
requirements, even if you continue to work.
How does it work?
Social Security benefits are based on the
workers' average monthly earnings adjusted for inflation. We
separate your average earnings into three amounts and multiply
the amounts using three factors. For example, for a worker who
turns 62 in 2002, the first $592 of average monthly earnings is
multiplied by 90%; the next $2,975 by 32% and the remainder by
15%.
The 90% factor is reduced in the modified
formula and phased in for workers who reached age 62 or became
disabled between 1986 and 1989. For those who reach 62 or
become disabled in 1990 or later, the 90% factor is reduced
to 40%.
There are exceptions to this rule. The 90%
factor is not reduced if you have 30 or more years of
"substantial" earnings for each year. If you have 21 or 29
years of substantial earnings, the 90% factor is reduced to
between 45% and 85%.
GOVERNMENT PENSION OFFSET PROVISION:
Under the Government Pension Offset
Provision, any Social Security spouse or widow(er) benefit to
which you become entitled will be offset if you also receive a
pension based on work where you did not pay Social Security
tax. The offset reduces the amount of your Social Security
benefit by 2/3 of the amount of your pension. You may receive a
monthly pension high enough to totally offset your spouse or
widow(er) Social Security benefit.
For More Information
Social Security publications and additional
information, including information about exceptions to each
provision, are available at
www.socialsecurity.gov. You may also call toll-free
1-800-772-1213, or contact your local Social Security Office.
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