The Government Pension Offset, sometimes called the public pension offset, affects Social Security benefits you might receive as a spouse or survivor. Some or all of your Social Security spousal or survivor benefit may be offset if you receive an annuity from a job where you did not pay Social Security taxes, such as work under the Civil Service Retirement System.
The offset will reduce the amount of your Social Security spousal or survivor benefits by two-thirds of the amount of your other annuity. In other words, if you get a monthly CSRS annuity of $1,200, two-thirds of that, or $800, must be used to offset your Social Security spousal or survivor benefits. If you’re eligible for a $900 Social Security survivor benefit, you’ll receive $100 per month from Social Security ($900 – $800 = $100).
If you take your annuity in a lump sum, the offset is figured as if you chose to receive regular monthly benefits.
In many cases the offset totally wipes out any Social Security spousal or survivor benefit that otherwise would be payable. The reason is that Social Security spousal or survivor benefits represent only a percentage of the full benefit earned by the spouse or deceased spouse under Social Security (see the Family Benefits and Survivors Benefits sections for exact figures). A CSRS annuity against which the Social Security benefit is being offset is very likely to be significantly higher than the amount payable as a Social Security spousal or survivor benefit. That’s because the benefit accumulation rate under CSRS is more favorable than those Social Security benefits. The main exception would be if the CSRS annuity was based on government work that was low-paid or for a relatively short career, or both.
Avoiding this offset was one of the main attractions to many of the CSRS system employees who chose to join the Federal Employees Retirement System during the open season switching opportunities in 1987-1988. The law was changed afterward, however, to require anyone switching to FERS in any later open season (or during rehiring after a break in service, in some instances) to serve at least five years in FERS in order to be exempt from the offset. That five-year requirement affects anyone who switched in the 1998 open season opportunity.
As a practical matter, the offset becomes a moot point for many transferees