Social Security Cheat Sheet 2021 Benefit Reductions for Government Pensions

March 8, 2021

Government Pension Offset can affect some or all your spousal and survivor benefits entitlement if you are collecting a government pension based on earnings that were not subject to Social Security taxes. This offset will reduce the amount of your benefit by 2/3 the amount of your pension. For example, if you are a civil service employee and have a $600/mo. pension, the reduction of spousal benefit will be $400/mo. There are exemptions for some civil service or federal employees who paid Social Security taxes on pension eligible wages.

Windfall Elimination Provision (WEP) The Windfall Elimination Provision can affect how much Social Security retirement and/or disability benefit you receive based on the number of years of “substantial earnings” you have on your individual record and whether you had earnings that were not subject to Social Security taxes. The amount of the reduction could be up to 50% of the first “Bend Point” based on the number of years you paid into Social Security and could reduce your benefit by as much as $480/mo. in 2020. To qualify for individual benefits, even if reduced due to government pension(s), you still need at least 10 quarters of coverage (QC).