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There are different types of benefit reductions designed to prevent workers from collecting benefits greater than they are entitled to collect. The Windfall Elimination Provision directly affects your retirement benefits, while the Government Pension Offset affects spousal benefits available to your spouse.
Before 1983, people whose primary job was not covered by Social Security had their benefits calculated as if they were long-term, low-wage workers. They had the advantage of receiving a Social Security benefit representing a higher percentage of their earnings, plus a pension from a job for which they did not pay Social Security taxes. Congress passed the Windfall Elimination Provision to remove the advantage.
This provision can affect you when you earn a pension from an employer who did not withhold Social Security taxes and you qualify for Social Security retirement or disability benefits from work in which you did pay taxes. This affects how your retirement or disability benefits are calculated. If you receive a pension from an employer who does not withhold Social Security taxes from your salary, then receiving a pension may reduce your Social Security benefits.
THERE ARE SOME EXCEPTIONS.
The Government Pension Offset ensures that the benefits of government employees who do not pay Social Security taxes are calculated in the same manner as those of workers in the private sector who pay Social Security taxes.
If you did not contribute towards Social Security, but you receive a pension from a federal, state or local government, then your spouse, widow or widower benefit may be significantly reduced.
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Call your local BNY Mellon Wholesaler for a copy of our client-use Social Security Resource Guide
Call for a copy of our Social Security Resource Guide
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