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    V I E W P O I N T

    GOVERNMENT PENSION OFFSET OF SPOUSE AND WIDOW BENEFITS

    BACKGROUND

    In 1977, the U.S. Supreme Court ruled it was unconstitutional to ask men to prove they had been dependent on their wives in order to receive Social Security spouse and survivor benefits when the same proof was not required of women. This ruling made men receiving public pensions eligible for benefits on a wife's Social Security record. To limit benefits to men, Congress offset Social Security spouse and survivor benefits by 100 percent of a public pension unless the public employment was covered by Social Security.

    The Social Security Amendments of 1983 reduced the offset to two-thirds for persons eligible for benefits after June 1983. Congress rationalized its decision to offset government pensions by insisting that the offset treats couples alike whether one spouse worked as a public employee and the other in Social Security employment or both worked under Social Security.

    The "offset" is a very imprecise and often inaccurate measure of comparability. In countless instances, the spouse or widow benefit offset is far greater than that which would occur had the public employee spent a full work life in Social Security employment at identical lifetime earnings. This is particularly true for spouses or widows with long work careers. The retirement income they worked long years to gain is lost to the Government Pension Offset (GPO). Spouses and widows who divided their careers between public and Social Security covered employment face a double offset. Spousal benefits are reduced first by any personally earned Social Security benefit and second by two-thirds of the public annuity.

    NATIONAL COMMITTEE POSITION

    The National Committee supports repealing the GPO or, at a minimum, modifying the GPO to achieve comparability.

    Hundreds of thousands of government retirees rely on Social Security's guaranteed benefit promise in their retirement planning only to find that their spouse and/or widow benefit is substantially or totally eliminated. Widows and separated or divorced women are most adversely affected. Ironically, many women enter government employment and intentionally accept lower pay than they might earn elsewhere because government employment provides a pension. These women who planned ahead for retirement have seen their planning undermined by an unfair provision in Social Security law. In many cases, receipt of a fair share of their Social Security spouse or widow benefits would provide an adequate retirement income. Instead, the loss of Social Security leaves them an income that is close to, or even below, the federal poverty level.

    All individuals receiving pensions from employment not covered by Social Security are not treated in the same manner. Retirees from other non-Social Security employment do not lose spouse or widow benefits. Only government annuitants have Social Security spouse or widow benefits offset by pensions.

    Since low-income retirees do not pay income tax on Social Security benefits, these dollars have greater value than government pension dollars. Every dollar of a government pension, over and above already taxed retirement contributions, can be subject to federal and state taxation.

    Facts About the Government Pension Offset

    • The GPO affects local, state, and Civil Service Retirement System (CSRS) federal employees retiring December 1977 and later.
    • Only government annuitants have Social Security spouse or widow benefits offset by pensions.
    • The GPO affects 401,207 Social Security beneficiaries, and that number increases by 15,000 annually.
    • The GPO impacts government employees and retirees in virtually every state, but their impact is most acute in 15 states: Alaska, California, Colorado, Connecticut, Georgia (certain local governments), Illinois, Louisiana, Kentucky (certain local governments), Maine, Massachusetts, Missouri, Nevada, Ohio, Rhode Island, and Texas .
    • The Social Security spousal benefit (wife, husband, widow, widower) is offset by two-thirds of the annuitant's own government annuity. This can reduce or totally eliminate the Social Security spousal benefit.
    • The following classes of individuals are exempt: anyone eligible for a government annuity before December 1982, and who meets the 1977 amendment requirements; anyone who is a federal survivor annuitant (not a federal retiree); anyone eligible for a government annuity before July 1, 1983, and who received one-half support from the spouse; FERS employees and annuitants and CSRS employees who transferred to FERS; former CSRS employees rehired beginning January 1, 1984, following a separation of one year or more.

    Arguments for Restoring Fairness to Social Security Spousal Benefits

    • Widows and separated or divorced women are the most adversely affected. The offset can leave them with poverty or near-poverty income.
    • Reducing spousal benefit by two-thirds of their government pension is an imprecise measure of what the spousal benefit would be had the government job been covered by Social Security.
    • Any pension received by a career employee that is less than equal to the earned Social Security benefit is a very poor pension plan.
    • Public employee spouses with substantial years of earnings do not receive equal treatment. The offset to a full career worker with moderate earnings frequently exceeds the maximum Social Security benefit payable to an earner with lifetime Social Security earnings at the maximum taxable wage base.
    • The Government Pension Offset treats one-third of an annuity as if it were the pension portion and the other two-thirds as the Social Security portion. An adequate pension plan in the private sector would consistently provide a career employee a pension that exceeds the Social Security benefit payable.
    • A widow benefit can be totally offset even when the public annuitant is the lifetime low earner in the couple. A widow benefit is always payable to the lower lifetime earner when both husband and wife have worked in Social Security covered employment.
    • Federal employees under the CSRS have always paid a higher contribution rate than private sector employees have paid into Social Security. These higher contributions should translate into more retirement income for federal retirees.

    Government Relations and Policy, January 2008

    The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.