The Social Security Administration has issued a final rule that revises its Government Pension
Offset ( “GPO”) regulations. The new Social Security Administrative regulation, effective July 15,
2015, will act to reduce the Social Security benefits received from a spouse or a widow in order to avoid and eliminate windfalls under certain circumstances. (80 Fed. Reg. 34048-01 (June 16,
2015), effective July 15, 2015, amending 20 C.F.R. § 404.408a(a) and (b)(6) to (8) and (d))
Before the enactment of the GPO, it was possible for individuals to receive a pension from a federal, state or local government based on work for which Social Security taxes were not paid, as well as Social Security spousal and widow/er benefits. Today, however, spouses and widow/er s’ benefits may be subject to an offset if the individual also received a pension from a government job in which Social Security taxes were not paid.
In explaining the reason behind the benefit reduction, the Social Security Administration in its
GPO literature stated : “Benefits we pay to spouses, widows, and widowers are ‘dependent’s’ benefits. Set up in the 1930s, these benefits were to compensate spouses who stayed home to raise a family and were financially dependent on the worki ng spouse. It’s now common for both spouses to work, each earning their own Social Security retirement benefit. The law requires a person’s spouse, widow, or widower benefit to be offset by the dollar amount of their own retirement benefit.
” (“Government Pension Offset”, SSA Publication No. 05-10007, July 2015)
As an example, the Social Security Administration explained that if an individual was entitled to a monthly governmental pension of $600.00, 2/3 of that pension -- or $400.00 -- would be deducted from the individual’s Social Security benefits if the spouse, widow or widower is receiving a pension from federal, state or local government work in which Social Security taxes were not paid.
In this way, the GPO ensur es that the calculation of benefits for government employees who don’t pay Social security taxes is the same as for workers in the private sector who pay Social Security taxes.
Continuing to use the example above, if an individual is eligible for a spouse’s or widow/er’s benefit from Social Security in the amount of $500.00, the individual will receive $100.00 a month from Social Security based upon the following calculation ($500.00 - $400.00 (the 2/3 reduction noted above) = $100.00).
OBKCG / Outside Publications / WRT - SSA Government Pension Offset article /183082

There are several exemptions to the GPO, but two of the more common exemptions are:
(1) the spouse or widower receives a government pension that was not based upon the individual’s earnings; and
(2) if the individual is a federal, state or local government employee and the government pension is from a job for which the individual paid Social Security taxes and the individual filed for benefits before April 1, 2004; or the individual’s last day of employment was before
July 1, 2004; or paid Social Security taxes on his or her earnings during the last 60 months of government service.
Individuals who may be subject to GPO should pay specific attention to determine their eligibility to receive an appropriate exemption. Note that the GPO applies only to Social Security benefits received as a spouse or widow/er. Benefits may also be reduced due to another provision of the law called the “Windfall Elimination Provision.”
William R. Thomas is a partner with Ottosen Britz Kelly Cooper Gilbert & DiNolfo, Ltd. at the firm’s Elburn office. He received his J.D. degree from Valparaiso University School of Law in
1991. Mr. Thomas focuses primarily on the general practice of law.
OBKCG / Outside Publications / WRT - SSA Government Pension Offset article /183082