THERE ARE TWO TYPES OF Public Sector professionals who are impacted by the Social Security program: those who are enrolled in Social Security during their government and teaching careers and those who are not.

Who is in?  Who is out?

There are more than six million state and local employees who do not participate in Social Security during their public service years.  This includes 40% of public-school teachers and over 65% of police officers and firefighters. Most public employees in Alaska, Colorado, Louisiana, Maine, Massachusetts, Nevada and Ohio are not in Social Security. This list can be expanded for public school teachers to include California, Connecticut, Georgia, Illinois, Kentucky, Missouri, Rhode Island and Texas (i.e., most teachers in these states—and the District of Columbia—are excluded from Social Security).

Social Security coverage may vary greatly within the borders of some states. In California, many state and local employees enrolled in the California Public Employees Retirement System (CalPERS) are in Social Security, but not all.  However, teachers enrolled in the statewide educators’ fund (CalSTRS) are not in Social Security.  At the county level and large cities, employees are often excluded from Social Security.

In Illinois, most local fire and police are excluded from Social Security participation, along with the state university system, public school teachers, and all employees of Cook County and the City of Chicago and related agencies. County workers other than Cook County and non-police/fire municipal workers outside of Chicago are in Social Security.

In Arizona, school teachers and non-sworn state and local employees are in Social Security.  However, almost all fire and police personnel and corrections officers are excluded from Social Security (other than employees in a small number of local jurisdictions that have historically participated in the federal program).

In Pennsylvania, state workers and school teachers are in Social Security. At the municipal, borough and special district level, it varies by locality. Of the 2,120 local pension plans that reported information to the Pennsylvania Auditor General in 2021, 433 of the plans (20%) covered employees who were not in Social Security while in public employment.  And a large majority of those local plans, 359 to be exact, covered police and fire personnel.

A bit of a pattern emerges. Seven states exclude almost every public employee from Social Security. Conversely, government workers in most states do participate in SSA. When there are exclusions, they tend to be public school teachers statewide or police/fire and similar emergency workers at the local level. Sometimes, it’s both groups (teachers and many local fire/police, such as in Texas and Illinois).

You know if you are in or out of Social Security at the firehouse, classroom, police station, city hall or state office.  If you are out of Social Security at your career job, the information in this website and referenced book and publications is of particular importance to you.

How Does this Affect Benefits?

Workers who participate in Social Security during their public service careers receive the same benefits from Social Security as any private sector worker.  Don’t believe any rumors to the contrary.  You and your employer paid into the Social Security system for all of your wages and you receive the same benefits as everyone else.

If you are not in Social Security at your career government employer, you are still eligible for benefits based on any time you worked before, during (part-time) or after  public service.  In order to qualify, you must attain so-called forty (40) “credits” under Social Security.  A credit in 2023 is attained if you earn $1,640; you can earn up to four credits each year.  Note that this dollar threshold for earning a credit is indexed to inflation – it was lower in the past and will be higher in the future.

So if you work roughly forty calendar quarters or ten years in private sector employment, you will receive a benefit from Social Security.  However, there are some formulas that specifically affect employees who earn a pension outside the Social Security system.  They are:

The Windfall Elimination Provision (WEP- Social Security Publication 05-10045).  The Social Security formula is progressive in nature.  That means that low-income workers receive a higher rate of their wages replaced than do higher income people.  A teacher, police, fire or similar pension plan does not work this way.  A deputy fire chief with 30-years of service receives the same percentage of salary in his or her pension as does a firefighter with the same service.

But under Social Security, a person who works a career as a hotel maid gets a higher percentage of her wages reflected in her Social Security check than does the high-paid management consultant.  The executive’s Social Security check is most certainly higher than the hotel maid, maybe his $3,500 to her $1,100.  But the percentage of earnings being paid is much higher for her, maybe 60% of inflation adjusted covered wages to the well-off guy’s 30%.

This progressive formula is the reason why the government felt the need to put in the Windfall Elimination Provision (WEP).  A retired teacher is not a low-income worker, but the Social Security computer would see her as one when it looks only at her Social Security wages.  The government does not want to pay her at a 70% wage-replacement rate, so the WEP formula moderates her payment down more towards the 40% level, commensurate with other full-time workers who are covered under Social Security.

This provision of the Social Security law is explained in more detail on this website and in the excellent two-page Social Security Publication 05-10045.  Click the link on the sidebar for more information.

The Government Pension Offset (GPO – Social Security Publication 05-10007).  This offset reduces the benefit a government retiree might earn from his or her spouse’s record, not the Social Security benefit earned on the employee’s record.  In Social Security, a person normally can be paid a benefit from their own earnings history or one-half of their spouse’s benefit, if that would be higher.  So if Ward is receiving a Social Security benefit of $2,000 and his wife June is entitled to $700 from her own earnings record, June will actually be paid $1,000 per month (one-half of Ward’s benefit)

But a retiree who has a pension from work outside of Social Security will see any Social Security benefit he might receive from his spouse’s earnings record offset by two-thirds of his public pension.  This essentially eliminates any spousal benefit and most if not all of a survivor’s benefit from of a spouse’s record.  So there is a simple rule:

You will likely not receive much of a Social Security benefit from your spouse’s record, if any.

This provision of the Social Security law is explained in more detail on this website and in the excellent two-page Social Security Publication 05-10007.  Click the link on the sidebar for more information.

Takeaways.  As I have reviewed the information referred to in this website and in the Social Security publications, I’ve come to the following conclusions or takeaways.  You’ll see if you agree or disagree once your review is complete, but here they are:

Public employees who participate in Social Security at their government job earn and receive the exact same benefits as their private sector counterparts.

Public employees who do not participate in Social Security while in government or education often qualify for Social Security benefits from their private sector work before, during and after their public service careers.

Public employees who earn pensions from work that is not covered by Social Security are subject to different Social Security rules and benefit formulas than those whose career work is covered under Social Security. These special formulas are intended to be fair and generally do not punish or penalize public servants when compared to private sector workers with similar lifetime earnings.

The special formulas appear complex, but their essential operation can be easily understood.

Time to move on to the links on this website to learn more about how your government pension might affect your Social Security benefits.