Retirement & Financial Planning Report

SSA has said it will improve its system for keeping track of spousal beneficiaries affected by the government pension offset, following an inspector general report disclosing that the records needed to determine that offset are often incomplete or wrong.

The government pension offset reduces spousal (and survivor) Social Security benefits of those who have an annuity from a retirement system that does not include Social Security—such as the federal CSRS system and some state and local government retirement systems. In many cases, the offset eliminates the Social Security benefit entirely for those persons. (A separate offset applies when both spouses worked under Social Security; each receives the higher of their own earned benefit or the spousal/survivor benefit, eliminating the other in all cases.)

The report said that some 438,000 Social Security persons do not receive a spousal benefit from that program because of the offset. However, it found problems with the data used to determine the offset. The auditors found that nearly 7,800 of those could be eligible for a benefit, however, and that nine-tenths of an identified group of about 1,000 who are receiving an incorrect amount are being underpaid.

“Generally, these errors occurred because SSA employees had not resolved alerts that required they verify and update the MBR [master beneficiary record] with current pension and GPO amounts. We also found that SSA employees recorded incorrect pension and GPO amounts on the MBR,” the report said.

For example, it said, SSA incorrectly recorded a federal retiree’s annuity amount for a spousal beneficiary. The beneficiary was receiving a $4,927 monthly federal annuity as of August 2012. However, beginning in September 2012, SSA was incorrectly recording on the MBR a monthly amount of $48.63. As a result, SSA under-withheld GPO and overpaid the beneficiary $19,608 over a two-year period—money the agency is moving to recover.