How Government Pension Offset May Affect Some Social Security Benefits
The Government Pension Offset (GPO) is a Social Security rule that affects workers with government pensions who also receive Social Security spousal or survivor benefits. It reduces the amount of those benefits by two thirds. The rule does not affect the worker's own Social Security benefits (if any) nor their government pension, nor does it reduce the benefits belonging to the spouse.
Who Is Affected?
You will only be affected by this provision if you're eligible for a government pension that is based on earnings not covered under the Social Security system—most commonly teachers, law enforcement workers, postal workers, firefighters, and other government employees. These workers are likely to work for an entity that has its own pension system and does not participate in Social Security.
It may also affect you if you receive a pension based on work done outside of the country, because in this case, too, you likely didn't pay into the Social Security program.
In these situations, the Government Pension Offset rule may reduce the Social Security benefits you are eligible to receive as a spouse, ex-spouse, or as a widow or widower.
Benefits you are eligible to receive based on your own earnings record may be affected by a different rule called the Windfall Elimination Provision (WEP).
Whereas the GPO is applied to your benefits as a spouse, the Windfall Elimination Provision is applied to any benefits you earned yourself outside of the non-covered job. If you began your career in the private sector and later became a public school teacher, for example, the Windfall Elimination Provision would reduce the benefits owed to you from the private-sector job, if any.
In enacting these rules, Congress tried to level the playing field between private-sector workers who paid into Social Security and government workers who did not. However, the rule can adversely affect some employees, drastically reducing or eliminating their expected Social Security benefits.
How Your Spousal/Survivor Benefits Are Reduced
If you receive a government pension, your Social Security spousal or survivor benefits will be reduced by two-thirds of the amount of the qualifying pension under the GPO.
For example, if you receive a monthly pension of $1,800 from your work as a public school teacher, then two-thirds of this amount ($1,200) will be deducted from your Social Security spousal or survivor benefit. If that benefit was $1,300, then after the $1,200 government pension offset was subtracted, you would receive $100. If your spousal or survivor benefits were less than $1,200, you would receive nothing at all.
When GPO May Not Apply
There are some instances when the government pension offset might not apply. For example:
- If the government pension you receive is not based on your earnings
- If you were an employee who paid Social Security taxes for at least the last five years of your employment with the government
Estimating Benefits if GPO Applies
The Social Security website provides a government pension offset calculator that will estimate your benefits after the reduction by the GPO. Other commercially available Social Security software calculators allow you to do even more detailed projections where you put your earnings history and pension estimates into the software. Several of the software packages are designed to then produce for you a claiming recommendation based on your personal situation.
As you near retirement, you can also ask your Social Security office to prepare an estimate for you that includes the effects of provisions like the GPO and WEP.
Be prepared for a long wait in the Social Security office; with about 10,000 people a day turning 65, Social Security offices and representatives are often overwhelmed with work. Try to make an appointment ahead of time for office visits or set aside a block of time to call their 800 number.