Social Security Offset & Your Retirement Benefits

If you worked for a federal, State or local government where you did not pay Social Security taxes, the pension you receive from that agency could reduce your Social Security benefits. Since there are limited situations where this offset applies, it's important you understand when this can happen - and if your benefits could be impacted.

It's important to remember, that not all CalPERS members are impacted by these two laws. The offset impacts you only if you worked for a local, State, or federal government agency where you didn't pay Social Security taxes. Even if some of your service is covered under Social Security, your not-covered time qualifies you for this reduction. The reduction is to your Social Security benefit and does not impact or reduce your CalPERS benefits.

There are two laws that may impact benefits.

  • The Government Pension Offset (GPO) applies only if you receive a government pension and are eligible for Social Security benefits as a spouse or widow. The GPO reduces or eliminates Social Security spousal and survivor’s benefits for those who collect pensions from jobs that were not covered by Social Security.

    If this is your situation and you expect to receive a Social Security spousal benefit upon retirement, that benefit would be sharply reduced or eliminated because of your public pension. The same is true for the Social Security survivor’s benefits, that are paid upon the death of your spouse.

  • The Windfall Elimination Provision (WEP) affects how your retirement or disability benefits are figured if you receive a pension from work not covered by Social Security. The formula used to figure your benefit amount is different, giving you a lower Social Security benefit. The WEP reduces the Social Security benefits in addition to a pension from a non-covered job.

    If you also spent time in a job covered by Social Security and expect to collect Social Security retirement benefits, you will find that the benefit amount is about half of what had been projected in the benefit estimates you receive in the mail each year from Social Security.

Currently, there are several bills in Congress that repeal these offsets. If you'd like to support these reforms, contact your Congressional representatives.

If you need more information on the GPO and WEP offsets, or are not sure if these offsets apply to you, contact your financial planner or visit the Social Security Administration’s website.


Additional Resources

The Windfall Elimination Provision (Social Security Administration Publication No. 05-10045)
Government Pension Offset (Social Security Administration Publication No. 05-10007)

Dated: 04-13-2007