Retirement issues can be confusing, especially when there is a pension involved and one spouse has Social Security benefits. It is up to each state to decide whether (and which) government employees would be covered by Social Security. Therefore, a state could choose for teachers to participate in Social Security even if they are covered by a stand-alone retirement plan (such as TRS).
Illinois is one of 15 states that do not participate in Social Security for teachers. Thus, teachers in Illinois do not pay Social Security taxes. If a teacher has other employment, through which they do participate in Social Security though, the Social Security benefit is diluted by the Teachers’ Retirement System (“TRS”) pension.
Until 1986, all teachers were allowed to collect both their TRS benefits and Social Security benefits earned from other jobs. This resulted in the Windfall Elimination Act (“WEP”), which was enacted by Congress in 1986. WEP lowered Social Security benefits for retired TRS members unless the teacher acquired 30 years of “substantial earnings” from another job. This means that they had to hold a second full-time job.
Similarly, Congress also passed the Government Pension Offset, which addresses teachers participating in the TRS from receiving benefits as a “dependent” spouse. This is for spouses, widows, or widowers. Under the GPO, the benefit to the TRS member-spouse is reduced from the benefit the member could have been expected to receive from a spouse’s Social Security.
For instance, Social Security benefits to a spouse will be reduced by two-thirds of the TRS benefit. When spouses of teachers are alive, the teachers are only allowed to receive 50% of the spouses’ Social Security benefit. However, usually the TRS pension is higher than 50% of their spouse’s Social Security benefit so they will not end up receiving Social Security. If the teacher-spouse is a widow/widower, though, the teacher-spouse is entitled to all of the deceased spouse’s benefit, but only if it is larger than their own TRS benefit.