Action Alert #114 Why the Government Pension Offset is WRONG!
This is a reference page for you to use when documenting the negative effects of the Government Pension Offset.
Use it when you are telling your story about how the Government Pension Offset cheats you out of your earned retirement income. Share it with your Representatives in Congress and in your state legislature. Share it with your union or workers association. Active workers often have only a vague idea about what the offsets will do when they retire. They need to know these facts, also.
The Government Pension Offset reduces the spousal or survivor Social Security benefit by 2/3 of the amount of the pension earned from a public agency which doesn’t pay into Social Security for its workers. Most people affected are women. This penalty usually eliminates ALL the Social Security retirement benefits a public worker’s spouse has paid in for them.
1. This particularly affects women who have earned only a partial pension. Women usually have made less money over their lifetimes than men have. In addition to the well-known pay inequities, women often work fewer years than men. As homemakers and family caregivers they may be out of the workforce for many years. This often results in their having fewer years to build up either Social Security credits or a robust pension. It contributes to greater poverty among retired women.
2. The way the Government Pension Offset works, it ignores the number of years a spouse may be truly dependent on the earner, earning neither a public pension nor a FICA-Social Security contributing income. If the not-employed spouse at a later date earns a pension, the years of dependency are not counted, despite the spouse’s having been in a marriage situation which normally would qualify that person for spousal or survivor benefits. There are ways the Federal Government could use these years of “no pension/no FICA” information to calculate a lesser GPO reduction for many spouses, but even this level of mitigation is not being attempted. Receiving a public pension should not nullify the spousal or survivor Social Security benefits rightfully earned during other parts of a person’s life.
3. The effects of the Government Pension Offset can be erratic and produce unequal results that are grossly unfair.
Social Security regulations generally are designed to provide a higher-percent return for their investment for low-income retirees than for higher-income retirees. Both the GPO and WEP subvert this purpose and produce crude inequities that would be nearly impossible to correct.
Here is an example using the GPO survivor benefit. For a higher-earning retiree with a governmental pension of $3,600 a month and a deceased spouse with the average monthly Social Security benefit of $1,470, the GPO would reduce the survivor’s benefit income by 29%. For a lower-earning retiree with a pension of $2,400, and a deceased spouse with the same monthly average Social Security benefit of $1,470, the GPO would reduce the survivor’s monthly income by 38%. (The two charts below demonstrate these figures.)
Trying to make the offset “more fair” by correcting for individual income anomalies would be a logistically daunting effort for the Social Security Administration.
4. A particularly onerous provision of the GPO is that, because of the way the law was written, every time you get a cost-of-living increase in your non-Social Security pension, the Social Security Administration is supposed to reduce your spousal or survivor SS benefits by two-thirds of that amount. For example, when you get a $30-a-month cost-of-living raise in your pension, the SSA is supposed to reduce your spousal or survivor benefit by $20. Everyone else gets a fair cost-of-living raise, but you don’t. You are responsible for informing the SSA of this raise in your pension. https://secure.ssa.gov/poms.nsf/lnx/0204030090
5. The most prominent argument in favor of maintaining the Government Pension Offset is that its application is necessary to maintain a parallel process with the Social Security Dual Entitlement Reduction. According to current law, a retired dependent spouse is entitled to an amount equal to half of the amount the worker spouse receives; or the person can choose to receive their own earned benefit instead. This lower reimbursement for the lower earner runs counter to the ideas of equality in marriage and community property, which mandate that earnings by either spouse during the marriage must be shared equally. To be fair, the Social Security retirement earnings of both partners gained during the marriage should be added together, and each marriage partner should be allotted half. The fact that the Social Security Dual Entitlement rule discriminates unfairly against the spouse who earns a smaller retirement benefit does not justify the indefensible treatment of spouses by the Government Pension Offset.
The only clean solution to the Government Pension Offset is
FULL REPEAL!
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A. The following statistics are from the 6/21/19 Congressional Research Service report. (Statistics as of 12/19/18).
- 695,059 retirees were affected by the Government Pension Offset.
- 1% of all Social Security beneficiaries were affected by the GPO.
- 54% of those affected were spouses; 46% were widows or widowers.
- 83% of those affected were women.
- Of all potential beneficiaries, 72% lost ALL Social Security benefits.
It is believed that an unknown number of potential spouses or survivors have not applied for benefits because they believe the GPO would eliminate all money for which they might be eligible. (See the whole report on our website at: https://ssfairness.org/wp-content/uploads/2019/11/CRS-GPO-6-2019.pdf)
B. The charts below illustrate the effects of the GPO on lower-income and higher-income workers.
The Government Pension Offset can have a more dramatic effect on lower-income married workers than on higher-income workers. In these cases, both the spousal benefits and the survivor benefits are totally eliminated by the amount of the pension. The figures below use the 2019 average Social Security retirement benefit: $1,470.
Example 1. Higher teacher/government worker pension $3,600 per month
Average SS benefit for SS earner $1,470
Total amount couple receives in retirement $5,070
GPO applied:
2/3 of government pension equals $2,400 which:
Eliminates potential spousal income: $735
Eliminates potential survivor income: $1,470
Percentage lost to GPO: $1,470 divided by original family total of $5,070=29%
At death of Social Security earner, percent of income lost: 29%
Example 2. Lower teacher/government worker pension $2,400 per month
Average SS benefit for SS earner $1,470
Total amount couple receives in retirement $3,870
GPO applied:
2/3 of government pension $1,600 which:
Eliminates potential spousal income: $735
Eliminates potential survivor income: $1,470
Percentage lost to GPO: $1,470 divided by original family total of $3,870=38%
At death of Social Security earner, percent of income lost: 38%