Q & A
What’s the difference between WEP and GPO?
Complete Question: I know a government pension affects Social Security benefits in some way, but what’s the difference between WEP and GPO? How do I know which one applies to me?
Answer: You are right that government pensions affect Social Security benefits. There are many people (such as teachers who work outside of the school during the summer) who are eligible for both government pensions and Social Security. If this applies to you, your Social Security benefits could be reduced because of your government pension. Both the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) are related to this issue. There is one major difference between them, though.
WEP applies when you worked for a government agency that did not withhold Social Security taxes, but is paying you a pension, while at the same time you paid into Social Security at some other point and earned enough credits to receive Social Security benefits. If this applies to you, you will receive your pension, which could possibly reduce your Social Security benefit depending on how many years you paid into Social Security. (You can email me at email@example.com if you would like to determine how WEP will affect your specific situation.) WEP does guarantee that it will not eliminate all of your Social Security benefit, just in case your pension is fairly low. The provision guarantees that the reduction in your Social Security benefit will not be more than half of the amount of your pension. For example, if your pension is $500/month and your Social Security is $1000/month, WEP guarantees that your SS benefit will not be reduced by more than $250. This means your MINIMUM total benefit would be $1,250 ($500 pension + $750 Social Security). Note that this is a minimum, and a true calculation can only be determined after examining a person’s specific work history.
A Government Pension Offset (GPO) is different because it applies to spousal and survivor benefits (WEP applies only to the worker’s benefits). Just like WEP, GPO might lower your Social Security Survivor or Spouse benefits if you are receiving a government pension. Furthermore, the GPO does NOT have a guarantee. There is a possibility that Spousal or Survivor benefits can be reduced to $0. It is also important to note that WEP and GPO reductions are calculated differently.