GOVERNMENT PENSION OFFSET OF SPOUSE AND WIDOW BENEFITS

BACKGROUND:
In 1977, the U.S. Supreme Court ruled it was unconstitutional to ask men to prove they had been dependent on their wives in order to receive Social Security spouse and survivor benefits when the same proof was not required of women. This ruling made men receiving public pensions eligible for benefits on a wife's Social Security record. To limit benefits to men, Congress required that all spouse and survivor Social Security benefits be offset by public pensions received. Initially, Social Security spouse and widow(er) benefits were reduced by 100 percent of the public pension being received.

The offset was reduced to two-thirds for persons eligible for benefits after June 1983. Congress rationalized its decision by saying that the offset treated couples where one spouse worked as a public employee and the other in Social Security employment the same as couples who both worked under Social Security. This is not always the case, and in many instances, the spouse or widow benefit offset is far greater than would have occurred had the public employee spent a full work life in Social Security employment. This is particularly true for spouses or widows with long work careers or who have earned both a public annuity and a personal Social Security retirement benefit. In the latter case, there is a double offset of personal Social Security benefits and two-thirds of the public annuity.

NATIONAL COMMITTEE POSITION:
The National Committee supports repeal of the offset or at a minimum, modification to alleviate its severity.

NATIONAL COMMITTEE ARGUMENTS:
Hundreds of thousands of government retirees relied on Social Security's guaranteed benefit promise in their retirement planning. However, they later found that their spouse and/or widow benefits had been substantially or totally eliminated. Those most adversely affected are widows and separated or divorced women. Ironically, many women often entered government employment and intentionally accepted lower pay than they might have earned elsewhere because government employment provided much desired pensions. As everyone is urged to do, but few actually do, these women planned ahead for retirement only to have their planning undermined by a change in law. In many cases, they would have adequate retirement income if they could receive their pensions and a fair share of their Social Security spouse or widow benefits. However, the pension offset often leaves them with incomes that are close to or even below the federal poverty level.

Individuals receiving pensions from employment not covered by Social Security are not always treated in the same manner. Retirees from non-profit organizations or persons who have earned pensions from other non-Social Security employment and whose pensions are closely analogous to government pensions, do not lose their spouse or widow benefits. Only government annuitants have Social Security spouse or widow benefits offset by pensions.

Since low-income retirees do not pay income tax on Social Security benefits, these dollars have greater value than government pension dollars. However, every dollar of government pensions, over and above already taxed retirement contributions, can be subject to federal and state taxation.