So, you’re a CSRS employee and you’ve earned (or will earn) enough credits to be eligible for a Social Security benefit. Now you want to know if that Social Security benefit will be affected by the fact that you are covered by CSRS.
If you are a CSRS employee – not CSRS Offset; we’ll come to them later – you will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who has fewer than 30 years of substantial earnings under Social Security and receives an annuity from a retirement system where he didn’t pay Social Security taxes. The way that’s done is by changing the percentage used to calculate the first benefit amount in the Social Security formula.
For example, in 2006 the formula calls for the first $656 of average indexed monthly earnings to be multiplied by 90 percent. That would produce a benefit of $590.40. However, for every year in which you have fewer than 30 years of substantial earnings, the multiplier is reduced by 5 percent. The maximum reduction is reached if you have 20 or fewer years of substantial earnings under Social Security. For you, the multiplier would now be 40 percent, which would produce a benefit of only $262.40. The remaining multipliers remain the same: 32 percent of your average indexed earnings from $656 to $3,955, and 15 percent of all earnings above $3,955. So, while your Social Security benefit can be reduced by the WEP, it can never be eliminated.
Being employed under CSRS also changes your ability to receive a Social Security spousal benefit if your spouse’s employment has been covered by Social Security. Under the government pension offset, any Social Security spousal benefit to which you would be entitled would be reduced by $2 for every $3 you receive in your CSRS annuity. In most cases, the GPO eliminates the Social Security spousal benefit.
CSRS Offset employees are treated differently. For example, if you’re covered by CSRS Offset, the GPO doesn’t apply to you. You may receive a spousal Social Security benefit. However, because you are contributing to Social Security and will be entitled to a Social Security benefit on your own work record, you will be treated like all other Social Security-covered married couples. You’ll only be eligible to receive the larger of the two Social Security benefits, your own earned benefit or the spousal benefit. In almost every case, that means you will receive only your own benefit.
On the other hand, you will be affected by the WEP unless you were first hired by the federal government after December 31, 1983. Many CSRS Offset employees fall into that category. However, if you are one of those who was first hired before that date, left the government, and later returned and were covered by CSRS Offset, you will be subject to the WEP. The good news is that you will have been paid substantial earnings over a considerable number of years and may well have 30 years of those earnings under your belt when you retire.
