Q & A
Ask Rusty – Government Pension Offset (GPO)
Dear Rusty: Several years ago the husband of a friend of mine died before he collected any of his Social Security. She applied for widow benefits from his Social Security, but she was told that because she had never paid into Social Security and because she had a pension from her employer, she was not eligible to draw survivor’s benefits on his Social Security. What has this got to do with her not getting his Social Security? Please help us understand this. Signed: Helpful Friend
Dear Helpful: It sounds as though your friend’s survivor benefits are affected by something called the Government Pension Offset (GPO). The GPO affects people who have a pension from employment which did not contribute to Social Security, such as a State or local government agency, a school system, college or university, or even older Federal employees who were covered under the Civil Service Retirement System (CSRS). Under the GPO, Social Security reduces spousal and survivor’s benefits by $2 for every $3 received from a government pension. This can partially, and often totally, offset the Social Security benefit a person might otherwise be entitled to. For example, if your friend was entitled to a Social Security survivor benefit of $1,500 per month, and she is receiving a civil service pension of $3,000 per month, she would get no Social Security benefit because 2/3rds of her civil service pension ($2,000) is more than her Social Security survivor’s benefit. This appears to be what has happened in your friend’s case.
Public service employers who don’t participate in the Social Security program usually offer employees an enhanced alternative pension program designed to replace Social Security benefits. GPO was first enacted in 1977 in order to prevent those employees from “double dipping” by receiving both a pension from work where they did not pay into the Social Security system and Social Security (which they did not contribute to). The Government Pension Offset, as well as another Social Security rule called the Windfall Elimination Provision (WEP), as you can imagine, are not very popular with those affected by them. GPO affects a non-covered worker’s spousal and survivor benefit, while WEP affects a non-covered worker’s Social Security retirement benefits and their spouse’s spousal benefit, but not their spouse’s survivor benefit. Despite their unpopularity these are, nevertheless, existing laws which affect Social Security benefits for those receiving a pension from work in which they did not contribute to Social Security.
The trend appears to be that more and more public service employers are now participating in the Social Security program. Even the Federal Government, which prior to 1984 didn’t participate in the Social Security program, switched to a retirement system called the Federal Employee Retirement System (FERS) which now requires employees to pay into Social Security and, thus, be eligible for Social Security benefits. Federal employees covered under FERS, and public service employees with a pension from an employer who participates in Social Security, are not affected by the Government Pension Offset.
For information, the Social Security Fairness Act of 2017 (H.R. 1205 and S.915) proposes to eliminate both the GPO and the WEP, and has been referred to appropriate committees in both the House and the Senate, but there is currently no estimated probability of passage.
The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed are the viewpoints of the AMAC Foundation’s Social Security Advisory staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA, the AMAC Foundation, and the Foundation’s Social Security Advisors are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government. Furthermore, the AMAC Foundation and its staff do not provide legal or accounting services. The Foundation welcomes questions from readers regarding Social Security issues. To submit a request, contact the Foundation at info@amacfoundation.org.
I was married to my ex-husband for 30 years. For 14 of those years, I was an unemployed mom and community volunteer. After my sons were grown, I began teaching in California and earned about half a teacher pension. That half teacher pension eliminates ALL the spousal benefits my husband paid for. How can that be justified? I, like a number of my retired friends, rent out rooms in my house to be able to live on half a pension and none of my earned spousal benefits.
Bonnie,
I can only say that your frustration is shared by many retirees from public service in States which do not participate in the federal Social Security program – that is, neither the employee nor the State contributes to Social Security. There are about 26 states who exempt at least some of their employees (and themselves) from paying Social Security payroll taxes, and those states are obligated to provide retirement benefits robust enough to offset the loss of SS benefits which will occur later life when they retire. As controversial as these laws (the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)) are, they have withstood legal challenges since they were enacted four decades ago.
Because you have a “non-covered” pension from your state employment, WEP reduces your personal, elsewhere-earned, Social Security retirement benefit and, from what you’ve shared, the GPO has eliminated the spousal benefit you might otherwise have been entitled to from your ex-husband. Like you, many so affected believe this to be unfair, but Congress has steadfastly refused to enact legislation to repeal these provisions, or even to soften their impact. The likely reason is that Congress has evaluated the premise of the provisions and concluded they appropriately equalize the way benefits are paid to all Social Security beneficiaries.
It might help to think of it this way: in normal circumstances, if one spouse has a personally earned Social Security benefit which is more than 50% of their partner’s full retirement age (FRA) amount, no spousal benefit is paid (the spouse benefit is offset by the recipient’s own SS retirement benefit). The GPO (the SS provision which affects spousal benefits) makes that same logic apply for a spouse who has a “non-covered” pension earned outside of the Social Security program – their spousal benefit is offset by the amount of the person’s own retirement pension. The one difference is that the GPO offset is actually a bit smaller (3/4ths of the “non-covered” pension vs. 100% for a spouse with their own SS retirement benefit). Both WEP (which reduces your CA teacher’s pension) and the GPO (which reduces your spousal or survivor benefit) are consequences of working for a State which has chosen to not participate in the federal Social Security program, and those states are obligated to inform their employees of the consequences therefrom. I know that doesn’t make your situation any less frustrating, but Congress “justifies” these provisions as being necessary to equalize how benefits are paid to all Social Security beneficiaries. There are about 2 million beneficiaries affected by WEP and over 700,000 affected by the GPO, all of whom share your displeasure, but Congress has so far maintained the provisions as originally enacted. You may wish to contact your Congressional Representative to voice your opposition.
Russell Gloor
National Social Security Advisor
The AMAC Foundation
Is there a point where if you have paid into social security for a number of years that your benefit is not cut just because you did not pay into the system for 20 years?
Neal, you need to have at least 40 quarter credits (about 10 years of work) to be eligible to collect Social Security. Then when they compute your benefit amount they will adjust all your lifetime working years for inflation and use the 35 years in which you had the highest earnings to determine your benefit. If you had less than 35 years, they would put zero in those years. So if you have 20 years working and paying into Social Security, you would have 15 years which would have zero earnings, which would mean your benefit would be quite low. For each year you work, you eliminate one of those zero years, which would increase your benefit a bit. If you would like more detail about how benefits are computed, please email us at info@amacfoundation.org, or call us at 1-888-750-2620.