Some government employees, such as teachers, have retirement plans from jobs where the employer does not pay into the Social Security fund. If a teacher is covered by her state's Teacher Retirement System (TRS), but is otherwise eligible for Social Security benefits, some special rules apply that may reduce the amount the teacher receives from Social Security.
Government Pension Offset
The Government Pension Offset is a rule that applies to those who receive spousal, widow's or widower's benefits from Social Security and also receive a TRS pension. In this case, the recipient Social Security benefit is reduced by 2/3 of her TRS pension. For example, if the person's pension is $300 per month, $200 is deducted from his Social Security payment. So, if his payment is set at $400 per month, it becomes $200 per month under the Government Pension Offset.
Teachers who have government pension plans where Social Security taxes are not withheld from their pay are subject to a rule called the Windfall Elimination Provision. This rule usually comes onto play if a teacher has worked another job long enough to qualify for a Social Security benefits as well as her TRS pension. The provision involves a complex mathematical formula that reduces an individual's monthly Social Security payments.
The Windfall Elimination provision was passed because Social Security benefits are intended to replace only a percentage of a worker's pre-retirement income. Congress believed that some worker's were receiving more than their fair share of retirement payments and in 1983 enacted the provision and tightened the regulations regarding the percentage of pre-retirement replacement benefits teachers and other government workers would receive. The provision does not apply to government workers hired after 1983.
Over the years, some teachers' were caught by surprise when they neared retirement and discovered that either GPO or The Windfall Elimination Provision would reduce the amount of their benefits. In order to correct this, the Social Security Protection Act of 2004 contained a section requiring employers who do not pay Social Security taxes to inform their employees of the potential impact that GPO and the Windfall Elimination provision might have on their retirement income. The employer must also have the the employee sign a statement certifying that he was given this information.
- SSA: Government Pension Offset
- SSA: Windfall Elimination Provision
- Government Finance Officer's Association: Social Security Protection Act
- Social Security Administration. "Social Security Benefit Amounts." Accessed Sept. 2, 2020.
- Social Security Administration. "Your Retirement Age and When You Stop Working." Accessed Sept. 2, 2020.
- Social Security Administration. "Survivors Benefit Amount." Accessed Sept. 2, 2020.
- Social Security Administration. "Retirement Benefits - Information for Government Employees." Accessed Sept. 2, 2020.
- Social Security Administration. "Retirement Benefits - Receiving Benefits While Working." Accessed Sept. 2, 2020.
- Social Security Administration. "Starting Your Retirement Benefits Early - Starting Your Retirement Benefits Early." Accessed Sept. 2, 2020.
Mark Pendergast has worked as a freelance writer since 2007, focusing on topics such as health, sports and finance. He has worked as a newspaper reporter and librarian and has written for the "Northside Sun" and "Jackpot," among other publications. Pendergast holds a Bachelor of Arts from Millsaps College.