In many cases, yes, the GPO does wipe out the Social Security spousal benefit that otherwise would be payable. Image: Dmytro Mykhailov/Shutterstock.com
By: Reg JonesOnly a few percent of federal employees are now under the Civil Service Retirement System. But the government is big, so that still means a lot of people. And they still keep asking me questions about their upcoming benefits, especially about Social Security.
In many cases, they ask whether one or both of two forms of reduction, the Government Pension Offset and the Windfall Elimination Provision, will totally wipe out any benefit they might receive from Social Security. The answer, ironically, is that while the “elimination” provision will only reduce one type of benefit, the “offset” provision probably will eliminate another type.
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 like CSRS where they 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 2023 the formula calls for the first $1,115 of average indexed monthly earnings to be multiplied by 90 percent. That would produce a benefit of $1035. However, for every year in which you have fewer than 30 years of substantial earnings, the multiplier is reduced by 5 points.
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 $446.40. The remaining multipliers remain the same. So, while your Social Security benefit can be reduced by the WEP, it can never be eliminated.
Being employed under CSRS also affects 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 many cases, yes, the GPO does wipe out the Social Security spousal benefit that otherwise would be payable.
If you are a CSRS Offset employee, you are treated differently. For example, 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.
On the other hand, you will be affected by the WEP unless you were first hired by the federal government after December 31, 1983. Not many CSRS Offset employees fall into that category. However, if you are one of them, left the government, later returned and were covered by CSRS Offset, you will be subject to the WEP. The good news is that many of you will have been paid substantial earnings over a considerable number of years and may well have 30 years under your belt when you retire.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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