FAQs on Texas Educators and Social Security Benefits

The state of Texas operates the Teacher Retirement System (TRS) for public education employees. Active school employees contribute a portion of their income to the TRS pension fund, and contributions are also made on behalf of the employees by the state and each school district. TRS retirement benefits are regulated by the Texas State Legislature, which controls the amount of state funding contributed to the fund and numerous other state laws related to educators’ pensions. The TRS Board of Trustees administers the pension fund and oversees TRS as a state agency.

Social Security benefits are administered by the federal government through the Social Security Administration. Employees and employers contribute to Social Security through payroll taxes. The U.S. Congress is responsible for regulating Social Security through the enactment of federal laws. (State lawmakers have little to no control over Social Security because it is a federal law.)

Because all Texas school districts participate in and contribute to TRS, they are not required to participate in Social Security. In fact, most school districts in Texas do not pay into Social Security or withhold Social Security taxes from their employees. ATPE recommends that you check with your school district to find out if it is one of the few that does participate in Social Security in addition to TRS.

To be eligible for a Social Security pension benefit, you must be at least 62 years old and have a minimum of 40 Social Security credits. A credit is equal to a designated amount of earnings that increases from year to year based on national earnings averages. For example, in 2021, employees will receive one credit for every $1,470 of earnings on which they pay Social Security taxes. Because an employee can earn a maximum of four credits per year, you must have worked in a job in which you paid Social Security taxes for at least 10 years or 40 quarters to meet Social Security eligibility requirements.

However, if your spouse is eligible for a Social Security pension, you might be eligible for a spousal or widow(er) benefit. Typically, spousal benefits are equal to 33.75% to 50% of the spouse’s Social Security benefit and are paid to the dependent spouse while the other spouse is still living. Widow(er) benefits are usually equal to 71% to 100% of the spouse’s benefit and are paid to the dependent spouse after the other spouse’s death. Eligibility is based on age and the number of years married to a qualified spouse. Individual benefits vary depending on several factors.

Contact your local Social Security office for complete information on which benefits you are eligible to receive.

No, but there are two offset rules in federal law that can reduce the amount of Social Security benefits you may be eligible to receive if you are also eligible for a government pension, such as the TRS pension for Texas educators:

• The Government Pension Offset (GPO) will affect you if you are eligible for a spousal or widow(er) Social Security benefit.
• The Windfall Elimination Provision (WEP) will affect you if you are eligible for a Social Security pension either from previous employment that paid only into Social Security or from employment in a job that pays into both TRS and Social Security.

Texas educators eligible for either a spousal or widow(er) Social Security benefit and their own TRS pension benefit are subject to the Government Pension Offset (GPO). The GPO reduces the amount of the spousal or widow(er) Social Security benefit they are eligible to receive by two-thirds of the amount of their TRS pension benefit. In many cases, this calculation results in a negative amount, so these educators do not receive any spousal or widow(er) benefits.

Social Security spousal and widow(er) benefits were created to provide security for people who typically did not work full-time and were financially dependent on their spouses. They provide the spouse who does not work with some Social Security benefits based on the working spouse’s Social Security earnings.

However, if both spouses worked and are eligible for individual Social Security pensions, one spouse could still file for a spousal or widow(er) benefit even though he or she is not dependent on the other spouse. This is known as dual entitlement. To prevent dual entitlement, the government implemented rules that reduce the amount of spousal or widow(er) benefits a person can receive by the amount of their own Social Security pension benefit earned by virtue of having worked. These dual entitlement rules prevent double-dipping—or receiving both a personal Social Security pension benefit and a spousal or widow(er) benefit from Social Security.

However, some government employees, including Texas educators, work in jobs that pay into government pension programs (such as TRS) rather than Social Security. Because these employees have little or no Social Security-covered employment, it appears that they are dependent on their spouses when in reality they are not. This situation allowed these public employees to apply for spousal Social Security benefits without being subject to dual entitlement rules. That was the motivation behind the enactment of the GPO.

The GPO was designed to mirror dual entitlement rules that would otherwise apply and prevent anyone, including those receiving government pensions, from receiving both their full Social Security or pension benefit and their spouse’s Social Security benefit. Anyone filing for spousal benefits who is not eligible for a pension would have their spousal benefits reduced by the entire amount (100%) of their personal Social Security benefit, effectively providing them with the greater of the two benefits. Those affected by the GPO, such as Texas educators, have their spousal benefits reduced by only two-thirds of their pension, instead of 100% of their personal Social Security benefit. Simply being eligible for a pension through TRS does not preclude you from receiving spousal benefits; however, since most people’s TRS pension is greater than a typical Social Security benefit, the two-thirds reduction effectively eliminates the spousal benefit.

There was a GPO exemption that applied only to employees who applied for spousal or widow(er) Social Security benefits before April 1, 2004, and met certain conditions, including having worked in positions covered by both Social Security and their government pension system (TRS).

Yes. You will not lose your spousal Social Security benefits as long as you maintain your status as a retiree under TRS. You can retire and return to work in a TRS-covered position while still maintaining your status as a retiree by following the guidelines for employment after retirement outlined in the TRS Benefits Handbook.

You may be subject to a reduction in Social Security benefits due to the Windfall Elimination Provision (WEP).

The WEP affects Social Security benefits for people who are eligible for both Social Security benefits and government pensions (such as TRS) by modifying the formula used to calculate their Social Security benefit.

The standard formula for figuring Social Security benefits is a complicated one that starts with a determination of the person’s average monthly earnings (AME). To calculate the AME, the government looks at the person’s 35 highest earning years prior to retirement and calculates a monthly average. The AME is then split into three tiers with a different multiplier applied to each tier. The dollar amounts for determining those tiers vary yearly according to inflation. Tier one earnings are multiplied by 90%. Tier two earnings, which fall between the dollar amounts of tier one and tier three, are multiplied by 32%. Tier three earnings are multiplied by 15%. Finally, the results of the tier one, tier two, and tier three calculations are added together to determine a person’s monthly annuity. The amount of earnings that qualify for each tier changes over time, and the standard formula does not take into account the impact of early or deferred retirement age.

For employees who are also eligible for a government pension (such as TRS), the WEP modifies this already complex formula for determining their Social Security benefit. The WEP multiplies the first tier of the person’s AME by a smaller percentage that is based on the number of years the person paid Social Security taxes on “substantial earnings” (a designated amount adjusted yearly to reflect economic trends).

The percentage increases from 40% to 90% as an individual’s years of substantial earnings increase from 20 to 30. For example, a person who has paid Social Security taxes on substantial earnings for 20 or fewer years will have the first tier of their AME multiplied by 40%, whereas a person with 26 years of substantial earnings will have the first tier of their AME multiplied by 70%, and so on up to 30 years. Once a person reaches 30 years of substantial earnings, they are restored to the full 90% multiplier and are no longer affected by the WEP. Keep in mind that these are examples provided for illustration purposes only, and your benefit calculations may vary.

The Social Security system calculates employee incomes based on the total amounts of their Social Security contributions. When figuring incomes in this way, employees such as Texas educators, who work most if not all of their careers in jobs that do not pay into Social Security, appear to have low income from wages. The WEP was intended to correct the misidentification of public employees as individuals who have earned little to no wage-based income when they actually earned wages from jobs that simply did not pay into Social Security. The WEP modifies the standard formula to prevent public employees, such as Texas educators, who have earned wages that were not subject to Social Security tax withholding from receiving a higher percentage of their pre-retirement earnings than that given to employees who have paid into Social Security for their entire careers.

If you are eligible for both Social Security benefits and a TRS pension, the only way to be exempt from having your Social Security benefit reduced by the WEP offset in federal law is to pay into Social Security for 30 or more years of substantial earnings.

If you withdraw from TRS before meeting the minimum eligibility requirements for a TRS pension, you will not be subject to the WEP. If you withdraw after meeting the minimum eligibility requirements for a TRS pension, you will be subject to the WEP.

You will not be subject to the GPO if you withdraw from TRS, regardless of whether you meet the eligibility requirements for a TRS pension. However, you will only be able to withdraw your own contributions plus interest and not the TRS contributions made by the employer (the state and your school district) on your behalf.

For those considering TRS withdrawal to avoid the GPO, it is important to remember that the overall benefits you would receive if you were eligible for full spousal Social Security benefits would rarely be more than those you receive by being eligible for both a TRS pension and Social Security spousal benefits reduced by the GPO.

Furthermore, you may be subject to penalties and taxes on the contributions you withdraw, further reducing the value of the investment. It may be possible to avoid these penalties and taxes by rolling your TRS contributions into a qualified investment. ATPE recommends that you contact a qualified financial planner for details before making any decisions that could affect the long-term value of your retirement benefits.

ATPE encourages members to schedule appointments with their local Social Security offices and meet with benefits counselors to determine their eligibility for Social Security and understand any offsets that will reduce their federal benefits based on their individual circumstances. To learn more about your state retirement benefits, TRS provides a wealth of information on its website at trs.texas.gov, including the TRS Benefits Handbook, retirement checklists and planning resources, individual benefits counseling, and webinars.

We urge Texas educators to investigate their options and situations thoroughly and seek advice from qualified, professional financial advisers before making any long-term decisions.

ATPE has a long-standing position supporting the repeal of the GPO and WEP provisions in federal law. ATPE believes these offsets have a negative impact on the supply of certified teachers in Texas. These provisions are especially detrimental to efforts to attract mid- or late-career private-sector professionals with a significant number of years vested in the Social Security system into the education profession. ATPE believes repeal of these offsets would be an effective way to attract new teachers to the profession and retain experienced educators who may be considering leaving the profession.

Bills that would fully repeal the GPO and WEP offsets are filed by members of the U.S. Congress every year and supported by ATPE, but they are expensive proposals. In addition to bills proposing a full repeal, ATPE has also lobbied for legislation that would replace these offsets with other formulas that are more transparent and equitable for active and retired educators. Such bills have been filed by Republican and Democratic lawmakers alike, and ATPE has worked with leaders in both parties to advance these reforms.

However, ATPE opposes mandating Social Security coverage for all Texas public school employees due to the possible damage it would cause to the TRS system. Additional payroll taxes needed to support statewide Social Security would inevitably reduce state contributions to TRS, compromising the system’s stability and ultimately reducing benefits for all retired educators.

ATPE’s professional lobby team and state officers have regularly advocated this position to the Texas congressional delegation seeking their support. In addition to our Austin-based lobbyists, ATPE employs a federal contract lobbyist in Washington, D.C., who has expertise on this issue. For years ATPE has worked closely with the authors of legislation that would repeal and/or replace the GPO and WEP with more equitable solutions, including the current and former chairs of the U.S. House Ways and Means Committee that oversees Social Security legislation. We have also submitted testimony on this issue to congressional committees, and we have urged members of Congress to co-sponsor bills that would repeal and/or replace the GPO and WEP. ATPE has been a leading voice in efforts to convince other associations representing affected employees in Texas and other states to join our effort and support these bipartisan reform efforts.

ATPE will continue to support a full repeal of these offsets, along with other measures to give Texas educators relief and improve their retirement benefits.

ATPE encourages educators to contact their federal lawmakers in the U.S. House and U.S. Senate to advocate for repealing and/or replacing the GPO and WEP offsets in federal law.

ATPE members can use our simple grassroots tool, Advocacy Central, to identify and communicate with their elected lawmakers about this and other issues. Located on the ATPE website, Advocacy Central is a members-only hub that provides contact information and links to federal and state elected officials, details on any state or federal bill that has been filed, and sample messages and scripts you can use to advocate for public education issues, including reforming the federal Social Security laws. Visit atpe.org/advocacy to learn more.

For the latest updates on Social Security legislation and other public education issues, visit ATPE’s advocacy blog at TeachtheVote.org and follow us on Twitter @TeachtheVote.