In July, USA TODAY published an article about a stealthy, nasty financial predator lurking in the weeds. This predator is not seeking a living breathing prey. No, the focus of the appetite of this beast is your retirement income…specifically the benefits promised under the Social Security Administration!
This money hungry animal of prey is known as the Windfall Elimination Provision (WEP). The WEP is adept at hiding its presence. Almost no one knows of its existence. For years, people have worked in various roles of local education, ministry, nonprofit service, and even government employment not knowing they are being stalked. Several times each year, they unsuspectingly read statements from the Social Security Administration about the benefits they may expect at full retirement age and earlier than full retirement age. They learned how waiting until age 70 might increase their monthly payment. Decisions were made on when to retire, and plans were made about the family future based upon the numbers presented in the report.
Individuals filed online through ssa.gov, and plans were set into motion. The WEP never made a sound. Suddenly, during the confirmation call from the Social Security Administration, there was a frightening roar over the telephone that the planned benefits were being reduced by hundreds of dollars each month. The WEP could return to its lair, well fed on the cash counted upon for retirement income, and it could wait for its next prey.
The Christian Churches Pension Plan office hears from plan participants annually about the hunger of the WEP. The stories include a familiar question, “How can they take that much from my Social Security?” The reason we hear from people so often is 1) many people in ministry are bi-vocational, and 2) many in ministry have had a different career involving another line of work.
To better understand the WEP, it is beneficial if we remember Social Security benefits are intended to replace only a portion of anyone’s pre-retirement earnings. The WEP was introduced as part of an effort to keep individuals from “double dipping.” This was defined as receiving both a pension from a job where they did not pay Social Security taxes and a Social Security benefit. So, the WEP particularly applies to teachers who work in states where their pension replaces Social Security, and other public sector (government) employees who receive a pension but do not pay into Social Security.
Bi-vocational ministers have often paid into Social Security through one job but opted out of Social Security for their ministerial pay. Some plan participants opted out of Social Security when they were young, enrolling in the Pension Plan to prepare for retirement. Later in life, they became chaplains, counselors, or worked in a role where they paid into Social Security. Now, applying for Social Security, they are alarmed to hear about a potential WEP bite out of their planned monthly benefit.
Sadly, we cannot address the WEP for those who serve as a teacher or work for a local government, but we can help those who say the Social Security Administration claimed their ministry pension would cost them hundreds of dollars each month for their lifetime. A ministry pension, like the Christian Churches Pension Plan, is exempt from the WEP!
The Social Security Program Operations Manual System on “Windfall Elimination Provision Exceptions” states: “D. Exception Based On Service As A Minister – A monthly periodic payment to a minister based on service as a minister is not considered a pension for purposes of WEP.” (The link to this online document in the ssa.gov website is provided.)
Social Security was never intended to be more than a replacement for SOME of our pre-retirement income. Individuals and families have always been responsible for their own savings allowing them to pursue their passions in the latter years of life.
The Christian Churches Pension Plan was established 5 decades ago to serve as a foundation upon which a retirement income may be built. We are honored that thousands of people have voluntarily included us in their future financial plans. None of us can remove the hardships that are a part of life, but our prayer is that you will be able to pursue your passions!