How Could The Windfall Elimination Provision And The Government Pension Offset Potentially Affect You?

For most federal workers under the Federal Employees’ Retirement System, they do not have to worry about the Windfall Elimination Provision or the Government Pension Offset. However, many under the Civil Service Retirement System (CSRS) may have to adhere to these provisions if their pensions are based on income made Social Security did not cover that. For those that were not required to pay taxes on Social Security during their federal service, if you are eligible to claim SS benefits, there may be an altered formula utilized to calculate how much you will get in benefits, which will likely reduce your benefit.

In this article, we will go over situations in which you may get hit with the WEP or GPO provisions.

If you are getting a pension that was not covered by Social Security, which means you did not have to pay taxes to the SSA, your benefits may be affected by these provisions. For instance, this would likely mean a worker under CSRS or someone that was in CSRS but moved into the FERS. CSRS workers did not have to pay SS taxes, which was protected by law.

This can also affect teachers working for the state as a retirement plan at the state level may be exempt from tax deductions to Social Security.

For those that do pay taxes to Social Security will not be affected by the WEP or GPO, which involves those under CSRS Offset and FERS.

Another way you may be affected by the WEP or GPO is if your spouse receives a pension but was exempt from paying SS taxes throughout their career. Your spouse may have their Social Security reduced if they have less than 30 years of substantial employment that was covered under Social Security. The WEP fact sheet from Social Security will have information on substantial earnings for every year. Also, with the Government Pension Offset, your partner can be facing a reduced spouse or survivor’s benefit that is based on your SS history, which has been known to completely do away with receiving these benefits.

However, the Windfall Elimination Provision will not affect you directly if you had earnings that were covered by Social Security. Your survivor’s benefit will also not be affected by the GPO as you are not the individual that received a government pension from earnings that were exempted from Social Security taxes. If your spouse passes away before you, your survivor’s benefit will also not be affected by the WEP, which actually may have you get a much higher SS benefit from your partner’s work history than what your spouse had been allowed.

If you are not married to someone that is or will be receiving a pension not covered by Social Security, you will not have to worry about the WEP or GPO.

For those of you that do not have at least 30 years of substantial earnings where you paid Social Security taxes, you will be hit by the WEP. For the others that will be receiving a pension that is covered by Social Security, you will not have to worry about the WEP or GPO.

Also, current and former federal workers that are under the Civil Service Retirement System may be partially or fully exempt from the Windfall Elimination Provision depending on how many years of substantial earnings you have that were covered by SS. Some may also not be affected by the GPO if you have earned salary covered by Social Security the last five years of your federal position.

Though there have been many proposals to remove or alter the WEP and GPO over the years, there has not been one that has succeeded in becoming law.