Social Security’s ‘evil twins’: Maybe not so bad?

One long-time fed said I had made unfair (and unjustified) editorial comments about the impact and the need for the WEP and GPO.

If you’re ever with a group of retired feds, public employees, cops or their spouses and you want a conversation starter, drop the initials GPO and WEP. Then run for your life!

GPO stands for Government Pension Offset. WEP for Windfall Elimination Provision. Each was enacted in the 1980s following the introduction of the Federal Employees Retirement System, which succeeded the old Civil Service Retirement System. FERS produced a lower federal annuity than CSRS, but a much better Thrift Savings Plan option. And Social Security coverage as part of the federal retirement package.

Congress at the time was convinced some high-paid CSRS employees were gaming the system by working short periods under a Social Security-covered job before, during or after federal service. That allowed them to qualify for a CSRS benefit of up to 80% of salary (after 41 years service) and also a Social Security benefit which was relatively higher than low-time, high-income workers got when they retired. Repeal or modification of the two laws have been proposed for decades without congressional action. This year a record number of House members have signed on the proposed changes. That doesn’t mean they will be changed this year. But it is getting closer.

Whether you think WEP and GPO are rip-offs or equalizers, millions of people have had their benefits reduced or eliminated by one or the other. In mid-February my column dealt with the so-called “Evil Twins”: WEP and GPO. Most responses were good. But one long-time fed said I had made unfair (and unjustified) editorial comments about the impact of the two laws. Also the need for them. He’s a smart guy, former Marine, long-time fed and TSP millionaire. Here’s what he wrote:

Not everyone wants WEP and GPO repealed

I started working for the federal government at 18 years old in a Veterans Hospital, cleaning toilets to put myself through college. I have over 40 years of federal service today! My goal was to serve my country as a Marine and lawyer one day. I did both and am now I’m a pretty senior person in a federal agency in Washington, D.C. You previously wrote about me as the “Janitor Millionaire” because I have $1.5 million in my TSP account in 27 years of sticking to the steady investing method.

I started in the Civil Service Retirement System in 1976. I became a Marine and then returned to federal service all excited about a future CSRS pension. On my return to federal civil service, I had to switch to the Federal Employee Retirement System. I thought the CSRS package for an annuity was the gold standard and the best in the world. Every federal employee was offered the opportunity to switch to FERS and everyone turned it down. I fought to stay in CSRS and lost. Every employee had fliers and pamphlets given to them explaining how they could get a better deal in the FERS program. WEP and GPO were clearly explained to employees. In fact, WEP and GPO were created in 1977 to prevent “double dipping” before there was a FERS system, so no one should have been surprised by WEP and GPO. But none of us wanted to believe human resources and their pamphlets and everyone fought to stay in CSRS.

I consider myself a social liberal and a fiscal conservative: Stay out of my bedroom and let people make their own decisions. Treat every person regardless of gender, race, religion, etc. equally. Balance the budget. Remember that for every dollar we spend, we need to collect a tax dollar. For every dollar we cut in the federal budget, someone gets hurt and loses money. So let’s really think about what we really need and want government to do and then do it with a fair plan. I don’t care if that means free medical or college. We just have to acknowledge that we have to pay as we go.

This brings me to the reported “evil twins that have denied hundreds of millions of dollars in Social Security benefits to many if not most government retirees under the old Civil Service Retirement System, or to their surviving spouses.” What a scary headline. Again let’s see the two sides of the argument. People have argued about the best retirement pension for decades. Do you want CSRS or FERS? When the economy is booming everyone wants to be in FERS because the TSP accounts are worth over a million dollars. Then there is a crash and the TSP takes a huge financial hit and everyone wishes for the CSRS.

When the government switched to FERS, everyone was eligible to switch to FERS and you could have avoided WEP and GPO. WEP and GPO were created as a result of CSRS employees trying to game the system. They wanted to maximize their CSRS pension while not paying Social Security taxes. Then they wanted to switch and work in jobs for enough quarters to qualify for Social Security. Then they wanted to receive maximum social security benefits. WEP and GPO stopped these types of filings to avoid people from gaming the system to receive more benefits that they were entitled too. I have no problem with people trying to maximize their benefits. But when the government identifies that a group is getting a much larger payment than they would normally be allowed (or based on their contribution) because of a hiccup or glitch in the system, then we correct the glitch with things like WEP and GPO.

These CSRS people were and are entitled to one of the best annuities in the world. And honestly most employees in the federal government would pay dearly to still be in the CSRS. If you make $100,000 a year you could retire with a pension of $80,000 a year. That is unbelievable. Now you want to add full retirement benefits of up to $36,000 a year on top of that? Greed. You want to know why people are fighting to repeal WEP and GPO? The answer is greed. There may be one or two cases of real hardship, but the real reason is the CSRS folks affected by WEP and GPO want more money. It is expected and normal that CSRS retirees would receive reduced or lowered Social Security payments. Technically they weren’t supposed to be even eligible for Social Security because they never paid into it.

Remember, if we repeal WEP and GPO that means we will give more money to the CSRS retirees with rich pensions and it will mean fewer dollars to be provided to every other Social Security recipient. The money has to come from somewhere if we repeal WEP and GPO. The CSRS people can afford to hire and donate to groups to represent their interests and try to get WEP and GPO repealed. Who represents the poor elderly people barely living over the poverty line on a minimum social security check? There is a real cost to our government of repealing WEP and GPO in both dollars and people. Additionally, the CSRS folks chose this road and are now complaining that they are getting exactly what they bargained for. Once again, I think that if we give these people larger benefits compared to their contributions, that there will be a cost to government. They want something they were never promised. I think we should be careful with our government dollars. I think WEP and GPO — which fixed an abuse, hiccup, glitch, etc. — should not be repealed to provide a windfall to a group that seems to have been fully compensated.

Finally, I have a simple solution for all of these CSRS annuitants that are hurt by the WEP and GPO offset: Pass a law that allows them to switch to the FERS retirement system effective immediately. They will receive a FERS annuity and be eligible for full Social Security. No more worries about WEP and GPO. Not a single person will accept this deal. Why? Because they are getting a gold standard annuity with the CSRS and won’t give it up. They just want more free money.

I have done a deep dive into the numbers of both pension systems and they are really very fair and very equal. The annuity in the CSRS is guaranteed and huge. It makes your eyes get big with envy. But the FERS annuity and Social Security combined are also great. If you put anything into the TSP the two systems almost equal out. For me FERS will be much better than CSRS. Sometimes FERS is better and other times CSRS is better. Every situation is different. But the key point to me is that every CSRS person was offered the chance to convert to FERS and refused. Now CSRS retirees think they are leaving money on the table because they get a smaller Social Security benefit than a FERS retire. Of course they fail to acknowledge the huge annuity they receive while arguing for the Social Security benefits. Just say no to the repeal of WEP and GPO!

Nearly Useless Factoid

By David Thornton

A flock of wild turkeys recently decided to settle at NASA’s Ames Space Center in California, causing a nuisance for employees and posing a threat to aircraft. The California Department of Fish and Wildlife and U.S. Agriculture Department are assisting in relocating the birds to a nearby ecological reserve.


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