Government Pension Offset

The government pension offset is a mechanism that ensures that persons with public pensions from non-Social Security work do not receive preferential treatment when they become eligible for Social Security Disability or retirement payments. The government pension offset is applicable to everyone who receives a pension from an employer that is not covered by Social Security Disability Insurance. Prior to 1983, the majority of those affected by the government pension offset worked for the federal, state, or local governments. These employees have been enrolled in Social Security Disability Insurance and other SSA programs since 1983.

Since the inception of Social Security Disability, retirement, and survivor benefits, recipients have been prohibited from collecting both their Social Security retirement and survivor payments. Rather than that, they accumulate the greater of the two. Essentially, their survivor benefits were lowered by their own Social Security or pension benefits on a dollar-for-dollar basis. Prior to the government pension offset, persons employed by the government were exempt from this requirement because their retirement benefits were not regulated by the Social Security Administration. As a result, a widow (or widower) of a government employee might earn both survivor benefits (which were not regulated by Social Security) and his or her own Social Security benefits.

The government pension offset provision was intended to bring the benefits available to government employees and their surviving spouses more in line with those available to other retirees. The government offset provision is not without critics, and there is a continuous effort to remove it, partly because public pensions (such as those obtained by government employees) typically need substantially higher employer and employee contributions. In general, Social Security Disability benefits are unaffected by the government offset provision that affects retirement and old-age benefits.