What Pensions Will Affect Social Security? Government Pension Offset

Government Pension Offset (GPO) is today’s topic, concluding the series about pensions that can affect Social Security benefits.  

Earlier posts established that most pensions have no impact on Social Security benefits because they are based on work covered by Social Security. Exceptions are government pensions from work not covered by Social Security. This mainly involves federal, state or local government pensions. 

Since 1983, a government pension from work not covered by Social Security can affect your Social Security in two ways. The Windfall Elimination Provision (WEP), involves benefits payable to you on your own SSA record. A different formula is used to compute the Social Security benefit amount when the WEP is involved. Use the separate WEP calculator on the Social Security website if the WEP will affect you.  

The Government Pension Offset (GPO) affects Social Security benefits payable to you based on the SSA record of someone else. Unlike the  WEP, the Government Pension Offset is a direct offset against potential Social Security benefits. Some or all of your Social Security benefit as a spouse, widow or widower may be offset because of your government pension.

The GPO reduces the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. The GPO is based on the gross amount of your government pension. 

Why is there a Government Pension Offset? Social Security law has always required that a benefit paid to a person based on someone else’s work record be offset dollar for dollar by the amount of his or her own SSA retirement benefit. This includes benefits to wives, husbands, widows, widowers and others.

 Before the 1983 GPO legislation, a person receiving a government pension from work not covered by Social Security was not subject to the same dollar for dollar offset.This person could potentially have received a full SSA spousal or survivor benefit plus their government pension. 

With the Government Pension Offset provision, Congress intended to ensure that when determining the amount of spousal benefit, government employees who did not pay Social Security taxes would be treated in a similar manner to those who worked in the private sector.  

Exceptions exist to when the GPO applies. If the GPO might affect you, more information, including these exceptions, is in Government Pension Offset, SSA publication 05-10007, available from any SSA office and online at http://www.socialsecurity.gov/pubs/10007.html#a0=3.