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- Windfall Elimination
Government Pension OffsetReleased: June 2016
BACKGROUND: The Government Pension Offset (GPO) adjusts Social Security spousal or widow(er) benefits for people who receive “non-covered pensions.” A non-covered pension is a pension paid by an employer that does not withhold Social Security taxes from your salary, typically, state and local governments or non-U.S. employers.
Congress created the GPO in 1977 to help ensure that spousal and widow(er) benefits of those with covered or non-covered lifetime earnings would be roughly equal.a Under Social Security's dual-entitlement rule, spouses with their own covered earnings have their spousal benefits offset dollar-for-dollar by their own earned benefit. The GPO has a similar intention; the offset originally was dollar-for-dollar for non-covered pensions, but Congress reduced it to two-thirds in 1983.
HOW THE GPO WORKS: The GPO reduces the spousal or widow(er) benefit by two-thirds of the monthly non-covered pension and can partially, or fully, offset an individual's spousal/widow(er) benefit, depending on the amount of the non-covered pension. The chart below shows how the GPO would affect spousal benefits for two non-covered pension amounts.
CHARACTERISTICS OF GPO BENEFICIARIES:b In 2014, the GPO applied to approximately 9.7 percent of the 6.5 million spousal or widow(er) beneficiaries c (630,000 beneficiaries). Beneficiaries affected by the GPO had an average monthly non-covered pension of $2,250, which was $500 more than the average Social Security retired worker benefit of $1,708 in 2014. Nearly three-quarters of beneficiaries affected by the GPO had their entire spousal or widow(er) benefit offset and had an average monthly non-covered pension of $2,769. Those with partially offset benefits had an average non-covered pension of $840.