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Will taking the APB (Accelerated Pension Benefit) affect my Social Security benefits? Thumbnail

Will taking the APB (Accelerated Pension Benefit) affect my Social Security benefits?

Taking the APB is going to be something many inactive TRS-covered teachers deal with in the upcoming years. However, this isn’t just a decision that should be made in a vacuum, as it has an important knock-on effect for those earning Social Security benefits after having left teaching.

In a short answer to the question, the answer is “Yes”. Your Social Security benefits will still be affected if you take the APB.

But there’s more detail to it than just “Yes.”

Thankfully, this situation is not new to the Social Security Administration (SSA). Many inactive federal, state and public-sector employees across the country have taken refunds of their pension benefit through the last 50 years, so the SSA has a code in place to determine what happens if that refund is taken and that individual files for Social Security benefits at a later date. 1

For those looking at the APB to see if it an option for them, there are two scenarios:

  1. Take the refund and invest it for future retirement expenses
  2. Elect to keep funds in the pension and take lifetime payments at a late date

Note that spending the refund wasn’t an option! This is retirement money, so it needs to be saved for the future in 99% of cases.

Let’s tackle scenario 2 first. If you elect to keep to your pension where it is and take payments at a later date, and then also file for Social Security payments as well based on your record, you’ll be subject to the Windfall Elimination Provision (WEP) in the Social Security code. This is where your government pension will reduce your Social Security benefits by a stated amount depending on how large your pension is. You’ll still get a Social Security benefit, but now it will be smaller. This prevents people from “double-dipping” and getting two, full government benefits to fund their retirement. (We’ll save that discussion/argument for another day!). 2


“But in scenario 1, haven’t I taken a refund and erased my benefit in TRS so now won’t have competing government pensions?”

While that may seem the logical, it’s not. There is a provision in the Social Security code that allows them to look back to see if an individual has taken a lump-sum payout from a government pension over their lifetime. (The SSA has links to the IRS so can see all of your employment and tax history for your lifetime). Once they see you’ve taken a payment, they will treat it as though you’re receiving this payment for the rest of your life, and then reduce your Social Security benefits accordingly – just like in scenario 2


“So, what should I do?”

Making this refund decision is bigger than accepting the money or the lifetime pension. It has to come into play as part of your overall financial plan. The refund may work for some, and it may not others. For those who haven’t worked after teaching and whose spouse is going to receive a large pension, then taking a refund may make sense. For those who’ll need the full pensionable amount, and can’t afford to take the 60% discounted value that the APB provides, then keeping the pension intact is crucial.

What you end up doing is customized and personal to you.


“How do you help?”

One of my specialties is designing financial plans for Illinois TRS Tier 1 educators. My wife is a Tier 1 educator, so all of the changes (AAI, etc.) will affect us personally, so our plan is built around all the same variables as my clients. It behooves me to know these details VERY well!

If you’re looking for guidance, check out the Services page and see if we’d be a fit to work together.


1 A refund of benefits is not the same as a refund of “contributions and interest”, as this will not trigger WEP to come into play.

2 If you have over 30 years of work in a Social Security-covered position, the WEP does not apply. You’ll be able to receive full Social Security benefits as well as your pension.