The amount of your Social Security benefits is determined by how long you've been in the workforce, how much you've earned, and when you retire. Most employees are covered by Social Security and have Social Security taxes withheld automatically by their employers. Although most federal workers hired after 1983 are covered by Social Security, public-sector workers in many states aren't covered.
Pension plans are offered and maintained by both private- and public-sector employers. You, and many other retirees, may collect both Social Security benefits and a monthly pension check. Receiving a pension doesn't automatically reduce your Social Security benefits. The key factor in determining whether your Social Security benefits will be affected by your pension is whether you receive a pension from government or other non-covered work.
Receiving a Private Pension
If you worked only in jobs for which you were covered by Social Security and your employers withheld Social Security taxes from your paycheck, your pension payments won't have any effect on your Social Security benefits. You can receive your full Social Security benefit and your full pension without penalty.
Receiving a Public Pension
If you earned a public pension, the Windfall Elimination Provision or Government Pension Offset may affect your benefits. Each rule is described below.
Windfall Elimination Provision (WEP)
If you earned a pension from a job in which your employer didn't withhold Social Security taxes from your paycheck, and you also worked at least 10 years in other jobs to qualify for Social Security retirement benefits, you may be affected by the WEP. The WEP rules affect how retirement or disability benefits are calculated and may require a lower Social Security benefit.
The WEP reduction is limited to no more than one half the amount of the pension from employment that isn't covered by Social Security. For example, if a public-sector pension is $600 per month, the WEP reduction in Social Security benefits can't be greater than $300. The maximum WEP reduction is $413.
WEP also affects the benefits of dependents. If you're affected by the WEP and receive a reduced Social Security benefit of $800 per month, your spouse would receive a maximum spousal benefit of $400, one-half your WEP benefit amount. However, if you die, the WEP reduction is removed and your surviving spouse's Social Security benefit is returned to the standard benefit formula.
Government Pension Offset (GPO)
If you receive a pension from a government job in which you didn't pay Social Security taxes, some or all of your Social Security spousal or survivor benefit may be offset. Usually, Social Security spousal benefits are equal to half the worker's benefit if claimed at the spouse's full retirement age or less if claimed at an earlier age. Survivor benefits are equal to the full amount of the worker's benefit if claimed at the survivor's full retirement age and less if claimed at an earlier age.
The GPO reduces the amount of your Social Security spousal or survivor benefit by two-thirds of the amount of your government pension. For example, if you receive a monthly government pension of $600, two-thirds of that amount, or $400, must be used to offset your spousal or survivor benefit. If you're eligible for a $500 spousal benefit, you'd receive $100 per month from Social Security.
Some individuals are exempt from the GPO. Generally, your Social Security spousal or survivor benefit won't be reduced if you:
Need Legal Help?
The WEP and GPO rules can be complicated and require careful review. For more information, including information on GPO exemption, you may contact your Social Security office. If you would like legal assistance, you should contact a Social Security attorney.
