It is crucial that government retirees, particularly those with Social Security non-covered government employment, know how Social Security interacts with government pensions. If you receive a government pension based on your own contributions, it can impact your spouse’s Social Security benefits under the Government Pension Offset (GPO) provision. The present article discusses how the GPO operates, how it impacts spousal benefits, and some other issues to be taken into account.
What is the Government Pension Offset (GPO)?
The Government Pension Offset (GPO) is a policy that deducts Social Security spousal, widow, or widower benefits from those receiving pensions from federal, state, or local government employment that did not pay into Social Security. The GPO was instituted to maintain equity among retirees who contributed to Social Security and those who did not contribute but are eligible for spousal benefits.
How the GPO affects you
The GPO reduces spousal or survivor benefits by two-thirds of your government pension’s value. Let’s say your government pension is $900 a month. Your spouse’s Social Security spousal benefit will be reduced by two-thirds of $900, which is $600. If your spouse’s spousal benefit would be $1,000 a month otherwise, it will now be cut to $400 after the application of the GPO.
Does the GPO decrease your spouse’s own benefits?
It should be noted that the GPO doesn’t decrease your spouse’s own Social Security disability or retirement benefits. The reduction is only applicable in the amount of the spousal or survivor benefits they would otherwise be eligible for under your earnings record. For instance:
- If your spouse has earned Social Security retirement benefits on his or her own work history, the GPO doesn’t reduce those benefits.
- But if they qualify for spousal benefits on your record and you receive a government pension from work not covered by Social Security, their spousal benefit may be affected.
Who is subject to the GPO?
The GPO impacts those who:
- Are receiving a pension from non-Social Security-covered government work.
- Qualify for Social Security spousal or survivor benefits on their spouse’s earnings record.
Examples of employees impacted include teachers in some states, police, firefighters, and other government workers whose jobs were exempt from paying Social Security taxes.
How much will spousal benefits be reduced?
The reduction is solely on the basis of the size of your government pension. Here’s how it breaks down:
- If your government pension is minimal, the cut in spousal benefits will be minimal as well.
- If your government pension is large enough that two-thirds of its value is greater than the total amount of combined spousal benefit, then the spousal benefit can be cut back to zero.
Why was the GPO introduced
The rationale of the GPO is sound:
- Spousal benefits were initially intended to help financially dependent spouses with little or no income who did not work.
- For those receiving large pensions from non-Social Security-covered employment, the GPO keeps them from receiving out-of-proportion benefits on their entire career compared to those who worked and contributed Social Security taxes their entire lives.
Exceptions and exemptions
There are a few instances where the GPO does not apply:
- Exemptions for individual employees: Some government employees may be exempted if their Social Security taxes on government employment were relevant to some extent.
- Foreign pensions: Foreign government pensions generally do not activate the GPO unless they are directly related to U.S. labor laws.
- Early retirement: If you retired prior to July 1, 1983, and have certain qualifications, you might be exempted from the GPO.
Can you avoid or reduce GPO reductions?
Although it’s not possible to completely eliminate the GPO if you’re eligible for a non-Social Security-covered pension and spousal benefits, there are some strategies that can help:
- Work in a Social Security-covered job: Working at least 40 credits in a Social Security-covered job could make you eligible for retirement benefits based on your own earnings record instead of using spousal benefits.
- Delay taking benefits: Waiting until later to take spousal or survivor benefits may sometimes help you get the most from them.
- See a professional: A financial planner familiar with Social Security regulations can assist you in handling difficult situations and maximizing your retirement income.
If you have a government pension based on non-Social Security covered work, it may lower your spouse’s Social Security spousal or survivor benefits under the Government Pension Offset (GPO).
Read more: What is the current maximum amount of taxable earnings for Social Security in 2025?