Posted on 02/18/2004 7:41:34 PM PST by Jeff Gannon
WASHINGTON (Talon News) -- Last April, the House of Representatives passed the Social Security Protection Act of 2003. A Senate amended version of that bill that will close a loophole in the Government Pension Offset (GPO) will soon come up for a vote. The legislation will prevent some retiring teachers from "double dipping," where they would collect a government pension as well as social security.
The GPO reduces Social Security benefits that a person receives as a spouse if he or she also has a government pension and did not pay into Social Security. The intent of GPO is to equalize the treatment of workers covered only by Social Security. A "last-day exemption" allowed individuals to claim Social Security benefits by working as little as one day in a job where they paid into the Social Security system.
The last-day exemption has been used in Texas where teachers typically worked a single day in a non-teaching position covered by Social Security, such as a clerical or janitorial position. Based on an hourly wage of about $6, these individuals in typically paid a total of $3 in Social Security taxes for that single day. But that $3 entitled the person to draw $5,200 a year in Social Security benefits.
In 2002, one fourth (3,521) of all Texas public education retirees took advantage of this exemption, the use of which has been highly publicized. For example, the General Accounting Office found the following information on a financial planning website:
"You may be eligible to receive both teacher retirement and Social Security benefits even if you have never worked a day under Social Security. As little as one day of work in a dual system (Teacher Retirement System and Social Security System) will give you half of your spouse's Social Security benefits when you reach retirement age. When you reach retirement, you will receive 1/2 of your spouse's benefit and/or the widow(er) benefit for the rest of your life. This could mean $150,000 or more in benefits throughout your lifetime. Not too bad for as little as one day of work under a dual system!"
The GAO estimates that the individuals who have already used the GPO exception will get $450 million in Social Security benefits. The cost will be much higher as word of the loophole spreads. In addition to Texas and Georgia, 26 other states have the potential to use the loophole.
Proponents of the new legislation say that the GPO loophole is unfair to the millions of retirees who pay into the Social Security system during their careers only to have a government worker receive both a government pension and full Social Security benefits for only one day's work.
Rep. Kevin Brady (R-TX), a member of the House Social Security Sub-committee, said, "We can't have two classes of families in America: those who have Social Security loopholes and those who don't. The teacher loophole is unfair to other working families, drains hundreds of millions of dollars from the Social Security Trust Fund and deserves to be closed."
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