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_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Social Security: The Government Pension Offset (GPO)

Christine Scott, Specialist in Social Policy

January 8, 2013

http://www.fas.org/sgp/crs/misc/RL32453.pdf

[full-text, 18 pages]

 

Summary

Social Security spousal benefits were established in the 1930s to help support wives who are

financially dependent on their husbands. It has since become more common for both spouses in a

couple to work, with the result that, in more cases, both members of a couple are entitled to

Social Security or other government pensions based on their own work records. Social Security

generally does not provide both a full retired-worker and a full spousal benefit to the same

individual.

 

Two provisions are designed to reduce the Social Security spousal benefits of individuals who are

not financially dependent on their spouses because they receive benefits based on their own work

records. These are

 

• the “dual entitlement” rule, which applies to spouses who qualify for both

(1) Social Security spousal benefits based on their spouses’ work histories in

Social Security-covered employment and (2) their own Social Security retired or

disabled worker benefits, based on their own work histories in Social Securitycovered

employment; and

 

• the GPO, which applies to spouses who qualify for both (1) Social Security

spousal benefits based on their spouses’ work histories in Social Securitycovered

employment and (2) their own government pensions, based on their own

work in government employment that was not covered by Social Security.

 

The GPO reduces Social Security spousal benefits by two-thirds of the pension from non-covered

government employment. The GPO does not reduce the benefits of the spouse who was covered

by Social Security.

 

Opponents contend that the GPO provision is basically imprecise and can be unfair. Defenders

argue it is the best method currently available for preserving the spousal benefit’s original intent

of supporting financially dependent spouses, and also for eliminating an unfair advantage for

spouses working in non-Social Security-covered employment compared with spouses working in

Social Security-covered jobs (who are subject to the dual entitlement rule).

 

Contents

Background ...................................................................................................................................... 1

Social Security Covered and Non-Covered Work ..................................................................... 1

The Dual Entitlement Rule and the GPO .................................................................................. 2

Dual Entitlement Rule ......................................................................................................... 2

Government Pension Offset Formula .................................................................................. 3

Rationale and Legislative History .................................................................................................... 4

Spouses’ Financial Dependence ................................................................................................ 4

Parity Between Spouses Subject to Dual Entitlement and GPO Provisions.............................. 5

Why a Two-Thirds Reduction? ................................................................................................. 6

Who Is Affected by the GPO? ......................................................................................................... 7

Issues.............................................................................................................................................. 10

Awareness of the GPO and Retirement Preparedness ............................................................. 10

GPO Reduction is Smaller than Dual Entitlement Reduction ................................................. 11

Parity Among Social Security-Covered Workers and Non-Covered Workers ........................ 11

Impact on Low-Income Workers ............................................................................................. 11

Imprecision of the Two-Thirds Offset to Non-Covered Government Pensions ...................... 12

Application of the GPO to Government versus Private Pensions ........................................... 13

Cost of Eliminating the GPO ................................................................................................... 13

The GPO “Last-Day” Rule ............................................................................................................ 13

How Does the Last-Day Rule Affect Exemption from the GPO? ........................................... 14

 

Tables

Table 1. Dual Entitlement Formula ................................................................................................. 2

Table 2. GPO Formula ..................................................................................................................... 3

Table 3. Dual Entitlement Rule Compared with Government Pension Offset ................................ 4

Table 4. Mary’s Spousal Benefit, Before and After GPO Enactment ............................................. 6

Table 5. Number of Social Security Beneficiaries Affected by GPO, by State, Type of Benefit, and Offset Status, December 2011 ...................... 7

 

Contacts

Author Contact Information........................................................................................................... 15

Acknowledgments ......................................................................................................................... 15

 

 

 

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