Offset: Government pension offset (GPO)

There is a number of offsets which could reduce social security payments, including:
(1) Windfall Elimination Provision (WEP), (2) Government Pension Offset (GPO), (3) Workers’ Compensation and Public Disability Benefit and (4) Treasury Offset Program (TOP).

Government pension offset (GPO).

A provision that reduces Social Security spousal and widow/widower’s benefits, if they’re based on the earnings record of a worker who spent part of his or her career in government employment not covered by Social Security.

The GPO is a reduction to spousal or survivor benefits if you have a pension where you did not pay Social Security taxes. The reduction is 2/3 of your pension amount! For example, if your pension is $3,000, the SSA will subtract nearly $2,000 from any spousal or survivor benefits before you are paid. This large reduction often completely wipes out any benefit for which you are eligible.

If you have a pension from ‘mixed’ earnings, the entire pension amount should not be used in calculating the 2/3 reduction! Only the amount that came from the months where you did not pay Social Security taxes should be used.

The Social Security rules make this clear: “Some entities may pay a pension based on both government employment and private employment. For pensions based on a combination of federal, state, or local government employment and private employment (i.e., non-government employment), GPO applies only to the portion of the pension based on government employment. [emphasis added]

Example. John receives SSA of $1600/mo. Mary had worked as an educator for the Austin, TX unified school district and receives pension of $1000/mo. If John passed away, what is the net SSA benefit that Mary would receive? $1,600 less (2/3 x $1,000) = $1,600 – 667 = $933

Further readings:




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