The Government Pension Offset (GPO) is a Social Security rule that affects workers with government pensions who also receive Social Security spousal or survivor benefits. That is, it applies when a public sector worker opts to claim the benefits earned by their private sector spouse and then applies to receive those monthly payments. The offset in the rule will reduce the amount of their monthly payment by two-thirds.
If the GPO applies to you, it will not affect your own Social Security benefits (if you have any) nor your pension. It will not affect your spouse in any way or the payments they can expect to receive either. The GPO may sound complex, but once you know the reasons and how it is applied, it will make sense.
- The Government Pension Offset (GPO) affects any worker with a government pension who also receives Social Security benefits through their spouse.
- The GPO reduces the amount of Social Security spousal or survivor benefits by two-thirds of the amount of the pension.
- Although the rule does not affect a worker's own Social Security benefits, the Windfall Elimination Provision (WEP) may reduce those payments.
- There are rare cases in which the GPO is waived even for public sector workers, such as if you paid Social Security taxes, or if your pension is a bonus.
What Is the Purpose of the GPO?
Most people who have worked in the U.S. pay Social Security taxes. Then when they retire years later, they receive some of those earnings back in the form of monthly benefit payments. In many cases, married people can opt to collect their spouse's benefits rather than their own. The intent is to provide extra help to couples and to support the spouse who has perhaps stayed home to allow the other to work.
In this setup, a public-sector worker who receives a pension rather than a Social Security benefit would be able to claim their private sector spouse's benefits while also getting their own pension. This defeats the purpose of the rule. Congress enacted the GPO in order to prevent extra payments to people who claim their spouse's benefits, yet who have not paid into the system, and receive pension on their own.
Who Is Affected by the GPO?
You will only be affected by the GPO if you are due to receive a government pension that is based on earnings that are not covered under the Social Security system. This group may include teachers, police and law enforcement workers, postal workers, firefighters, nurses and healthcare workers, state DMV workers, and many other government employees.
The reason these workers are not subject to the GPO is that they often work for an entity that has its own pension system, and in the course of these careers, they have paid into that pension system. They have not paid into the Social Security system.
The rule may also affect you if you receive a pension based on work done outside of the country. It would have been rare for you to pay into the Social Security program while working outside of the U.S.
In all of these cases, the GPO may reduce the Social Security benefits you can receive as a spouse, ex-spouse, or as a widow or widower.
Will the GPO Reduce My Own Earnings?
Since the GPO applies only to your benefits as a spouse, there is a second rule to catch extra payments that may occur based on your own earnings. Benefits you receive based on your own earnings record may be affected by a second rule called the Windfall Elimination Provision (WEP).
The WEP is a part of the GPO that applies to any benefits you earned on your own outside of the job for which you receive a pension or work out of the country. If you began your career in the private sector and later became a public school teacher, for instance, the WEP would reduce the money owed to you from the private sector job, if any.
In enacting both the GPO and the WEP, Congress tried to level the playing field between private sector workers who paid into the system and public sector workers who did not. But the rules can have an unfair effect on some workers by cutting the payments they expect to receive.
How Does the GPO Offset Work?
Under the GPO, if you receive a pension from your work in the public sector, your spousal or survivor benefits will be reduced by two-thirds of the amount of your pension.
For example, if you receive a monthly pension of $1,800 from your work as a public school teacher, then two-thirds of this amount ($1,200) will be deducted from your spousal or survivor benefit payment. If that payment was $1,300, then after the $1,200 GPO pension offset is taken away, you would receive $100. If your spousal or survivor benefits were less than $1,200, you would receive nothing at all.
Are There any Exceptions to the GPO?
There are some cases when the GPO offset might not apply. These include:
- If the pension you receive is not based on your earnings.
- If you paid Social Security taxes for at least the last five years of your work in the public sector.
How Can I Calculate the GPO Offset?
The best way to get an idea of your future earnings and offset is to go straight to the source. The Social Security website provides a pension offset calculator that will estimate what you can expect to receive in monthly payments after the GPO takes effect.
Visit Your Local SSA Office
As you get closer to the age that you plan to retire, you can also ask your local Social Security office to prepare a report for you that includes the effects of rules like the GPO and WEP.
If you choose to visit your local Social Security office in person, be prepared for a long wait; with about 10,000 people a day turning 65, reps are often very busy. If you can, call ahead of time to get in line.
Other Tools and Online Sources
There are many sources of tools online to help you figure out your future payments when you retire, but if you go this route, make sure you vet the site first. You can also purchase more advanced software that will allow you to predict the amount of your future payments with greater detail. Many versions will ask you to input your full earnings over time and the amount of your pension. Then you can play around with these numbers to view all outcomes. Some tools may even offer advice or suggest actions to take, such as when to start your claim.