Government Pension Offset and Windfall Elimination Provision

          Contemplating retirement finances is complicated at best. For many Americans setting in place private pensions, social security, life insurance, medical insurance to accompany Medicare, and converting assets into annuities means understanding a maze of incomprehensible regulations, eligibility provisions, and risk/reward calculations. For those who work for government and their spouses, there is the additional consideration of rules designed to minimize "double-dipping"-partaking of two separate government retirement plans.
          Most working Americans pay into Social Security, a government program designed to insure that they have a pension when they retire. Many will also combine social security with a pension plan offered by a private sector employer or union. Employees of local, state or the federal government may instead participate in a pension program just for them. The Civil Service Retirement System began before Social Security was created, and was the basic retirement program for federal workers until 1984 when a new program, the Federal Employment Retirement System went into effect.
          The Government Pension Offset (GPO) was part of the 1977 Social Security amendments passed by Congress. The GPO was a response to a court decision that had suddenly made a government employee eligible for a spouse's social security benefit in addition to his or her own government pension. As one lobbyist explained, "The legislative objective then . . . was to prevent this unexpected benefit, or so-called 'windfall,' from accruing to non-covered male government retirees. And, at the same time, Congress decided to do something about applying the 'dual entitlement' [restriction] to all government employees, women included." The Windfall Elimination Provision (WEP) is a related piece of legislation that applies to government employees who worked at other jobs at some point in their lives where they were enrolled in the social security system.
          The two government policies limit the combination of a civil servant's pension with social security retirement benefits or social security survivor benefits. For someone who qualifies for both social security and a pension from service in the government, social security benefits are reduced by two-thirds of the government pension. For example, widower Sam retires with a government pension of $600 a month. It turns out that he's also eligible as a widower for a spousal benefit of $500 a month. Since the offset rule requires that the social security benefit be reduced by two-thirds of the civil service pension, Sam loses $400 in the social security benefit, which leaves him with $100 of social security on top of his government pension for a total monthly check of $700. (Two-thirds of $600 is $400; the $400 is deducted from the $500 social security spousal benefit; the remaining $100 of the spousal benefit is added to the $600 government pension for a total of $700.)
          Those affected by these provisions regard the offset and windfall provisions as unfair and believe they are being penalized by working for the government. Organizations like the National Association of Retired Federal Employees and the American Federation of Government Employees worked to bring the issue to the fore in the 106th Congress. These interest groups knew that they had no chance of legislative action in that session and focused on raising awareness of the issue. In the 107th Congress they were stymied and could not get the bill out of committee in the House.