How Does Government Pension Offset Work?

One of the most valuable perks of working for the government is the pension. Previously, government pensions could reduce or eliminate spousal or survivor benefits from Social Security due to a policy known as the Government Pension Offset (GPO). These reductions often caused financial concerns for retirees who expected to receive both incomes in retirement. However, as of early 2025, the Social Security Fairness Act repealed the Government Pension Offset along with the Windfall Elimination Provision (WEP). This change increases Social Security benefits for 3.2 million people and includes retroactive payments dating back to January 2024.

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What Was the Government Pension Offset?

Congress passed the Government Pension Offset in 1977 to reduce Social Security benefits for individuals receiving non-covered pensions – pensions from jobs where employees did not pay Social Security taxes. This affected workers such as state and local government employees, educators, police officers, and firefighters.

The GPO was designed to prevent double benefits by reducing Social Security spousal and survivor benefits for individuals receiving non-covered pensions. Policymakers argued that this created fairness between government retirees and private-sector workers who paid into Social Security throughout their careers.

In reality, the GPO disproportionately reduced benefits for government employees and often resulted in spouses or widows losing most or all of their expected Social Security payments.

How Did the Government Pension Offset Work?

Before its repeal, the GPO reduced spousal and survivor Social Security benefits by two-thirds of a retiree’s government pension. For example, if someone had a $900 monthly pension, their Social Security benefit would have been reduced by $600. If the offset was greater than their Social Security benefit, they would receive nothing.

Originally, this rule reduced Social Security benefits dollar-for-dollar, but it was amended in 1983 by Congress to a two-thirds reduction.

To better understand the potential impact of the GPO on retirement income, the Social Security website provided a government pension offset calculator. It estimated how much Social Security benefits were reduced based on government pension income.

For many retirees, the GPO created financial uncertainty, particularly for widows and widowers who had counted on spousal benefits in their retirement planning. Since the rule applied only to spousal and survivor benefits, workers’ own Social Security benefits could still be affected by another provision — the Windfall Elimination Provision (WEP).

With the 2025 repeal of both the GPO and WEP, retirees will now receive full Social Security spousal and survivor benefits, without any offset reductions.

Who Was Affected by the Government Pension Offset?

The Government Pension Offset impacted spouses, widows, and widowers who received benefits from both a non-covered government pension and Social Security. These pensions can be from a federal, state or local government position.

According to the Congressional Research Service, nearly 746,000 Social Security beneficiaries were subject to the GPO in December 2023. The SSA estimates that approximately 3.2 million people in total will see their benefits increase as a result of the repeal of the WEP and GPO.

How Does the GPO Repeal Impact Government Retirees?

With the passage of the Social Security Fairness Act, retirees who previously had their benefits reduced or eliminated due to the GPO will now receive full Social Security payments without offsets.

The law restores full Social Security spousal and survivor benefits to 3.2 million retirees. It also eliminates reductions that previously lowered or eliminated payments for government workers. Additionally, retroactive payments will be issued to retirees who lost benefits from January 2024 through early 2025.

Those who believe they are eligible should check with the SSA to confirm their new benefit amounts and any back payments owed.

Who Avoided the Offset Affecting Social Security Benefits?

While the Government Pension Offset affected spouses, widows and widowers with non-covered pensions, there are seven beneficiary types who were not affected by these cuts.

• Government pension not based on earnings.
• Last day of employment prior to July 2004. Government employees who paid Social Security taxes and their last day of employment was before July 1, 2004, avoided the Government Pension Offset.
• Filed for spousal, widow or widower benefits before April 2004. Even if your last day of employment was after this date, if you filed for and were eligible for spousal, widow or widower Social Security benefits by April 1, 2004, your benefits were not affected.
• Paid Social Security during the last five years of service. If you paid Social Security taxes on your earnings during the last 60 months of government services, your benefits were not cut.
• Federal employees who switched from CSRS to FERS after December 1987. Employees who switched after Dec. 31, 1987, and met one of three following conditions did not have their benefits cut: 1) Last day of service was before July 1, 2004, 2) Paid Social Security taxes for 60 months or more after January 1988 and ending with the first month of entitlement benefits or 3) Filed for and were entitled to survivor benefits before April 1, 2004.
• Eligible to receive government pension before 1982. If you received or were eligible to receive a government pension before December 1982 and met all of the Social Security spouse benefits in effect as of January 1977.
• Eligible before July 1983 and received 50% spousal support. If you received or were eligible to receive a government pension before July 1, 1983, and were receiving one-half support from your spouse.

Bottom Line

For decades, the Government Pension Offset reduced or eliminated Social Security benefits for government retirees with non-covered pensions. However, when President Joe Biden signed the Social Security Fairness Act into law in 2025, the GPO and WEP were completely repealed. As a result, millions of retirees will receive higher Social Security benefits and retroactive payments dating back to January 2024.

For government retirees planning their Social Security and pension benefits, these changes provide new financial opportunities that were previously unavailable under the old offset rules.

Retirement Planning Tips

• A financial advisor can help you navigate the sometimes complex process of retirement planning. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• To know whether you’ll have sufficient savings for a lifestyle in retirement that covers your annual retirement expenses use SmartAsset’s retirement calculator.
• To understand the impact on your retirement income, use the Social Security Administration’s government pension offset online calculator or contact your local Social Security office.

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