December 4, 2001 2001-R-0907
RETIRED TEACHERS AND SOCIAL SECURITY
By: Judith Lohman, Chief Analyst
You’ve asked…
1.) Whether retired teachers are eligible for
Social Security,
2.)
For an explanation of the Social Security
benefit reductions that may apply to them,
3.)
Whether the reductions are the result of
state law,
4.)
Where, besides Connecticut, teachers are
not covered by Social Security.
SUMMARY
Connecticut public school teachers are not
covered by Social Security for their public
school teaching. Therefore, they are ineligible
to receive Social Security benefits based on
that work. Instead, they are members of the
Teachers' Retirement System (TRS), which is
independent of Social Security. A retired
teacher may still claim Social Security benefits
based on his own or his spouse's covered
employment. But in those cases, their Social
Security benefits are generally reduced or
eliminated. Federal law requires the reductions
and the General Assembly has no authority to
change them. Thirteen other states have teacher
retirement systems that are independent of
Social Security. In some cases, those systems
cover other public employees as well.
TEACHER ELIGIBILITY FOR SOCIAL SECURITY
Connecticut public school teaching service is
not covered by the federal Social Security
system. Teachers and school districts make no
contributions to Social Security for that work
so they cannot collect Social Security benefits
based on it. Instead, the state provides
retirement benefits to public school teachers
through the state Teachers' Retirement System.
Retired teachers may be eligible for Social
Security if they have other work covered by
Social Security or on the basis of a spouse's
work history. But in such cases, their Social
Security benefits are reduced because of their
TRS pensions. The spousal benefit reduction is
called the "offset provision" and the reduction
in benefits for other work is called the
"windfall provision." The reductions are
designed to keep the Social Security system from
paying people benefits that are higher than
their financial circumstances warrant because
most of their earnings are outside the Social
Security system.
Offset Provision
The offset provision reduces a spousal Social
Security benefit by two-thirds of the amount of
any government pension the person receives for
work not covered by Social Security. If the
government pension is high enough, it can offset
the person's entire Social Security benefit.
For example, suppose a person receives a
$1,000-per-month TRS pension and is also
eligible for $600 per month in Social Security
spousal benefits. His offset is $660 per month,
which is more than his total Social Security
benefit, so he receives no Social Security. The
offset applies to anyone who qualifies for a TRS
pension on or after December 1, 1982.
Windfall Provision
The windfall provision changes the formula used
to figure the Social Security benefit. Instead
replacing 90% of the first $561 of the person's
normal wages, 32% of the next $2,820, and 15% of
the remainder, the windfall provision replaces
only 40% of the first $561, thus reducing the
overall benefit. (These amounts apply for a
worker who turned 62 in 2001. They are adjusted
annually.) For example, a worker not receiving
a TRS pension whose average covered earnings
were $3,500 per month would be eligible for a
Social Security benefit of $1,509.30 compared to
$1,228.80 for a TRS member with the same covered
earnings. There are several exceptions to these
rules and the Social Security reduction cannot
be more than 50% of the part of a pension
attributable to uncovered earnings after 1956.
The windfall provision applies to TRS members
who became eligible for a pension on or after
January 1, 1986. Because of a four-year
phase-in, the full effect applies to those who
become eligible for TRS pensions after December
30, 1989. Social Security Administration
Publication 05-10045 explains the windfall
provision in more detail.
STATES THAT EXCLUDE TEACHERS FROM
SOCIAL SECURITY
Fourteen states, including Connecticut, have
pension systems for teachers outside of Social
Security. The other states with "independent"
teacher retirement systems are: Alaska,
California, Colorado, Illinois, Kentucky,
Louisiana, Maine, Massachusetts, Minnesota,
Missouri, Nevada, Ohio, and Texas.
