The Government Pension Offset (GPO)

NOTE: CPRS doesn’t have a formal position on any specific legislative proposal regarding the GPO; however, since the employees and retirees of CPRS members are directly affected by this provision of the Social Security law, we will continue to monitor these issues and provide updates as appropriate.

History –

In 1939, spousal and survivors benefits were added to the Social Security program, though they weren’t extended to men until 1950, and then in a restricted form. The spousal benefit allows a husband or wife to collect as much as half of his or her spouse’s Social Security retirement benefit, while the survivors benefit provides up to the full amount of the deceased retiree’s benefit to the widow or widower. In no case, however, can a person collect both a full retirement benefit and a full spousal benefit or a full retirement benefit and a full survivors benefit. The amount of benefits a person can collect are capped at the higher of the two. This “dual entitlement rule” was put into place because “a Social Security spousal benefit is based on the concept of ‘dependency,’ and someone who receives his or her own Social Security benefit as a retired worker is assumed to be financially independent of his or her spouse.”

For nearly 40 years, any woman who was not eligible for Social Security retirement benefits could automatically receive full spousal and survivors benefits. A husband or widower in the same situation, though, had to prove that he was dependent on his wife for at least half of his financial support in order to receive these benefits. In 1977, the Supreme Court in Califano v. Goldfarb held that this “constituted invidious discrimination against female wage earners by affording them less protection for their surviving spouses than is provided to male employees.” Congress responded to the decision with the gender-neutral government pension offset.

The GPO originally mandated that any retiree receiving a pension from a job not covered by Social Security – which primarily meant certain federal, state and local retirees – could only receive spousal or survivors’ benefits that had been reduced by the full amount of the pension. In 1983, Congress revised the offset so that only two-thirds of the pension would have to be subtracted, under the rationale that two-thirds of the pension represents the Social Security retirement benefit the retiree would have received from working in a job covered by the program.

This formula is still in place. So, for example, a retiree from a non-covered job who receives a pension of, say, $400 and who is married to a person who collects a Social Security retirement benefit of $900 would not be able to get a spousal benefit of $450. That amount would be reduced by two-thirds of the $400 non-covered pension ($266.67), leaving a spousal benefit of $183.33.

While born of the Califano decision, the GPO is also intended to replicate the dual entitlement rule. Government pensions are, to a large extent, a substitute for Social Security benefits. The result of enactment of the GPO is that spouses and surviving spouses are treated similarly, regardless of whether their jobs are covered under Social Security or not. Thus, the GPO helps ensure that those who receive Social Security benefits as dependents were, in fact, dependent to some extent on the worker for financial support.

Public employee groups argue that the GPO has had significant – and unfair – negative effects on the state and local retirees who are subject to it. Some estimates indicate that nine out of 10 public employees affected by the GPO lose their entire spousal benefit. The offset has the harshest impact on those who can least afford the loss: lower-income women.

Social Security Administration Fact Sheet

Congressional Research Service – Social Security: The Government Pension Offset