Answers to the frequently asked questions about GPO WEP FAQ
What is the Government Pension Offset (GPO)?
The Government Pension Offset is a Social Security provision that penalizes individuals who apply for Social Security spousal or survivor benefits, if they themselves worked for a state or local government in non-SS-covered employment and are entitled to a government pension from that employment. Once they receive that benefit, their earned Social Security spousal or survivor benefits will be reduced by two-thirds of their non-SS-covered pension.
What is the Windfall Elimination Provision (WEP)?
The WEP penalizes those who those who have had two jobs: One job which entitles them to a Social Security retirement or disability benefit from work which paid the required SS taxes and a second job which did not pay Social Security taxes, but instead entitled them to a pension from a separate pension system. The Windfall Elimination Provision affects individuals who apply for their own (not spousal) Social Security benefits. If you do not have 30 years of “substantial income” in Social Security covered work, a complex formula will significantly reduce your benefit. The reduction may be no more than one-half of the government pension to which the person is entitled in the initial month of entitlement to the pension.
Who is penalized by GPO/WEP?
Teachers in 15 states and police, firefighters, postal workers, air traffic controllers, federal government employees (hired before 1983 -CSRS), & some state, county, local & special district workers are penalized by GPO/WEP. Even a foreign pension can reduce or eliminate Social Security benefits.
In which 15 states are teachers penalized by the GPO/WEP?
In which 26 states are state, county, municipal and special district employees penalized by the GPO/WEP?
There are 26 states where this occurs, with the largest populations in California, Colorado, Illinois, Louisiana, Ohio and Texas.
How many people are penalized by the GPO/WEP offsets?
GPO: According to the Congressional Research Report for Congress 2013, 568,000 had their spousal benefits reduced by the GPO — 1% of all beneficiaries (not counting those who did not apply) Of those people penalized by GPO 80% are women and of those women, 74% lose their entire Social Security benefit.
WEP: According to the Congressional Research Service Report of 2013, about 1.4 million Social Security beneficiaries were penalized by the WEP. About 1.3 million people (92% ) affected by the WEP were retired workers. About 2.5% of all Social Security beneficiaries (including disabled and spouse beneficiaries), and about 3.5% of all retired worker beneficiaries, were affected by the WEP. Of retired workers affected by the WEP, approximately 63% were men.
What are the exceptions to the GPO?
The GPO does not apply for persons who:
- Work the last five years of a state or local government job in a position covered both by Social Security and the same government pension as the non-SS-covered position;
- Receive a government pension from state or local government employment that is not based on their own earnings (such as a survivor’s annuity from a deceased spouse);
- Were eligible for a dependent/survivor benefit before December 1, 1977;
- Were eligible to receive a government pension from non-SS-covered employment before December 1, 1982, and met the requirements for a dependent/survivor benefit in effect in January 1977; or
- Receive a government pension from non-SS-covered military reserve service.
What are the exceptions to WEP?
The WEP does not apply for persons who:
- Have 30 or more years of coverage under Social Security. Those with 21 to 29 years of coverage are eligible for a partial exemption; or
- Have a government pension from non-SS-covered military reserve service.
Do the offsets apply if one retires from non-SS-covered employment, draws the government pension, and then works in SS-covered employment?
Yes. The trigger is receipt of the pension from non-SS-covered employment.
Does the WEP apply if one moves from non-SS-covered employment to SS-covered employment?
Yes, unless one forfeits the right to the government pension from the non-SS-covered employment (by withdrawing contributions and interest before becoming eligible to receive such a pension). The trigger is whether the person is eligible for the pension from the non-SS-covered work.
Does the WEP penalize the Social Security survivor benefit to which a spouse and minor children are entitled if a wage earner dies?
No. If an individual subject to the WEP dies and has one or more survivors entitled to a benefit, the SSA recomputes the amount in a manner that eliminates the WEP and results in a higher benefit.
Do the offsets apply if a government pension from non-SS-covered employment is taken as a lump sum?
Yes. For purposes of the GPO, SSA will determine how much the government pension would be if paid monthly and then reduce the monthly survivor/dependent benefit accordingly. For purposes of the WEP, the pension-paying agency will usually prorate the lump sum to determine a monthly amount. If it does not, SSA has a method for determining the amount.
Why is the GPO an unfair policy?
When it enacted the GPO, Congress forgot that the original purpose of the dependent/survivor benefit was to provide additional income to help a financially dependent husband or wife once the breadwinner retires, is disabled or dies. By reducing the dependent/survivor benefit, the GPO harms the financially dependent spouse. Of those penalized by GPO, 80% are women, many of whom have spent much of their lives raising their families and have worked outside the home for only a short period of time. The GPO has a harsh effect and undermines the original purpose of the Social Security dependent/survivor benefit.
Why did Congress enact the WEP?
SSA uses a formula for computing Social Security benefits that provides individuals with low average lifetime wages a proportionally higher rate of return on their contributions to Social Security than individuals with relatively high average lifetime wages. Those who have spent most of their careers in non-SS-covered employment with a state or local government and a minimal amount of time in SS-covered employment will appear to SSA as lower-paid workers. Congress enacted the WEP in the belief that one should not receive a Social Security benefit as a low-paid worker, plus receive a government pension from non-SS-covered employment.
Why is the WEP an unfair policy?
The WEP penalizes those who have had two jobs: One job which entitles them to a Social Security retirement or disability benefit from work which paid the required SS taxes and a second job which did not pay Social Security taxes, but instead entitled them to a pension from a separate pension system. These pensions were earned separately and differently from Social Security, yet they are used to reduce the amount of Social
Security benefits that a worker receives during retirement. When participation is required by both Social Security and also State and local pensions, the public pension is earned and collected separately.
All who pay full Social Security taxes should receive full benefits.
Why do the offsets penalize public employees in only some jobs and some states?
In the 1960s, state and local employees were given the opportunity to elect to participate in the Social Security system. Public sector employees in some states opted to enroll in Social Security in the 1960s and 1970s. The remaining states (or local governments in some states) chose instead to maintain and enhance their existing retirement systems. Since public employees in these states don’t pay into Social Security, they are affected by the offsets. The unintended issue was that many public sector employees also held Social Security covered jobs.
Why should public service workers in all states care?
The offsets penalize those who have worked in federal jobs (hired before 1983 -CSRS) and a variety of other public employment in one of the impacted states. Teachers are penalized in 15 states and many other public employees in 26 states. Today’s mobile population assures that there are impacted individuals everywhere. The offsets limit choices for educators and other public employees who might be unable or unwilling to relocate to an impacted state. Most importantly, the offsets represent unfair public policy.
What can be done to address the offsets?
Addressing the offsets requires congressional action. We seek total repeal of both the GPO and WEP. In 2011 the House Social Security Fairness Act, was HR 235, introduced by McKeon (R-CA) and the Senate Social Security Fairness bill was S. 2010 introduced by John Kerry (Dem – CA). Both of these bills sought repeal of the GPO and the WEP.
What are the arguments on the other side?
Some of those who oppose repeal of the GPO and WEP cite cost as a factor. Others believe that allowing a person to receive both a full government pension and Social Security survivor/dependent or earned benefits would constitute “double dipping.” Such a scenario should be treated no differently than receipt of a private pension and Social Security benefit. “Double dipping” is not an appropriate characterization when an individual has worked two jobs and earned two benefits.