Revisiting the WEP and GPO

It is important to understand a little of the background of CSRS and FERS to realize how the Windfall Elimination Provision and the Government Pension Offset cause substantial, and often, unfair reductions in Social Security benefits for CSRS retirees. The WEP reduces the earned Social Security benefit for workers who receive pensions from work not covered by Social Security – like those federal workers who retired under CSRS. The GPO reduces the entitlement to spousal or widows benefits of CSRS retirees, in many cases eliminating entitlement to these benefits.   

The WEP and GPO only apply to government workers who receive a pension from work not covered by Social Security. If you are a federal employee who was hired since 1984, you may not be aware that employees hired before that year were covered under the Civil Service Retirement System and they were exempt from paying the Social Security (FICA) tax. 

The CSRS retirement system is a “single benefit” system, where the government retirement benefit is the “complete” retirement. This contrasts with the FERS three-tiered system that includes a government retirement benefit, Thrift Savings Plan, and Social Security, where all three benefits are needed to provide a “complete” retirement.  

It is possible to work long enough under CSRS to replace 80% of your high-three average salary with this retirement benefit. Enough for most people to retire comfortably. No need for Social Security or the Thrift Savings Plan benefits that weren’t an original part of this system.  

The problem, however, was that it took 41 years and 11 months of full-time federal employment to reach the maximum 80% level. Most employees retire with much less service, some with as little as five years of creditable civilian service which is the minimum service requirement to qualify for a retirement benefit under both CSRS and FERS. 

Just like FERS, some CSRS workers spent part of their career working in the private sector or serving in the uniformed services, where FICA taxes were withheld, and Social Security benefits were earned. When Social Security tax withholding began in 1937, only about half of American workers were covered, however, today, 93% of the US workforce pays into FICA. Military personnel have been covered under Social Security since 1957. It was not uncommon under CSRS, as well as today under FERS, for a military retiree with over 20 years of Social Security covered military service to be hired into the civil service to complete their career.   

The WEP was enacted in 1983 and went into effect on April 21, 1983, as part of major amendments to Social Security that were designed to shore up the financing of Social Security. Its purpose was to remove an unintended advantage or “windfall” that the regular Social Security benefit formula provided to workers who also had pensions from non-covered employment. The regular formula was intended to help workers who spent their careers in low-paying jobs, by providing them with a benefit that is relatively higher in relation to their career-average earnings in covered employment than the benefit that is provided for workers with high career-average earnings.  

The GPO was originally established in 1977 (P.L. 95-216) and replaced an earlier dependency test for spousal benefits that had been in law since 1950. The 1977 law provided that 100% of the noncovered government pension be subtracted from the Social Security spousal or widow(er)’s benefit. 

If the original legislation had been left intact, individuals affected by the dual entitlement rule and the GPO would have been treated identically because, in both cases, the Social Security spousal or widow(er)’s benefit would have been reduced by 100% of the pension from noncovered employment. The GPO’s two-thirds offset rule was established by the Social Security Amendments of 1983 (P.L. 98-21). 

The GPO was passed into law when many women worked as clerks and secretaries in federal service, while the higher-level positions were generally held by men. The GPO may have been more reasonable in those days since it prevented most federally employed men, who generally weren’t dependent on their wives’ income, from drawing spousal or widowers' benefits based on their wife’s earned (and generally lower) Social Security benefit. From 1980 to 1989, fewer than 20% of women held professional or administrative positions in the federal government. 

Social Security spousal and widows(ers) benefits are critically important to many federal retirees, especially for those retirees who earned low CSRS retirement benefits due to either working at low wages or because of having shorter federal careers which would not qualify for a high replacement of pre-retirement income. As of FY 2022, more than half of the 2,226,760 federal retirees were employees who retired under CSRS. Approximately half of the CSRS retirees had fewer than 30 years of civilian federal employment at retirement. It is also interesting to note that more than 1.2 million federal retirees (under CSRS and FERS) receive monthly retirement benefits of less than $3,000/month.   

The National Active and Retired Federal Employees Association has actively lobbied to change these rules and repeal these provisions for decades but has never garnered enough congressional support to enact a change in either provision. That was, until this year.  

The Social Security Fairness Act, reintroduced by Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La., reintroduced the bill in January 2023 for the 118th Congress, where this bipartisan legislation has been highly supported by gaining 326 House cosponsors, forcing a discharge vote in the House. The discharge petition required 218 signatures — a simple House majority — to force a floor vote, which will take place when Congress returns from recess after Nov. 12.  From most accounts, this bill continues to be a longshot, but this is a very rare occurrence to get enough bipartisan support to force a vote in the House.   

Another opportunity to repeal or amend the GPO and WEP may be likely within the next 10 years when Congress will have to make some significant changes to Social Security.  At that time, the projected Social Security Trust Fund's reserves will become depleted and continuing total fund income will be sufficient to pay only 83% of scheduled benefits. According to the Brookings Institution, Social Security also faced a financing challenge back in 1983, prompting significant reforms—including an increase in the retirement age—that averted the immediate crisis and put the program on a stable footing for decades. 

According to a fact sheet from the National Active and Retired Federal Employees’ Association, as of December 2020, about 1.9 million Social Security beneficiaries are impacted by the WEP. Those workers include state and local government employees as well as many retirees under CSRS. In 2022, the GPO applied to approximately 12.6% of the 5.84 million spousal or widow(er) beneficiaries (734,601 beneficiaries). Nearly 70% of beneficiaries affected by the GPO had their entire spousal or widow(er) benefit offset and had an average monthly non-covered pension of $3,502.  In comparison, as of September of this year, there were 54,049,000 beneficiaries receiving Social Security retirement benefits and an additional 1,876,000 spouses receiving benefits and 3,473,000 widows(ers) receiving Social Security survivor benefits.   

WEP Example 

Here is an example of the impact of the WEP on a lower salaried employee with 20 years of federal employment from 1983 – 2003 who retired under CSRS at age 60. Before this employee went to work for the federal government, they worked for 20 years under Social Security. 

CSRS Retirement: 

The CSRS Retirement was based on 20 years of service and a high-three average salary of $31,200 for an unreduced retirement benefit of .3625 x $31,200 = $11,310/year or $942/month in 2003. 

Social Security Retirement: 

Their wage history covered under FICA (non-federal employment) ranged from $4,291 in 1962 to $14,531 in 1982, providing a Social Security retirement benefit payable at age 66 of $1,000/month. 

Due to the WEP, the formula for Social Security was modified to provide a reduced benefit of $690/month instead. Combined with the CSRS retirement benefit of $942, the income at age 66 was $1,632/month. After COLAs from 2008 – 2024, this would have increased to approximately $2,400/month in 2024 and they are now 82 years old. The WEP reduction of $310 in 2008 would now be more than $450/month.   

WEP Fact Sheet:  https://www.ssa.gov/pubs/EN-05-10045.pdf 

WEP Planner:  https://www-origin.ssa.gov/benefits/retirement/planner/wep.html  

GPO Example: 

CSRS Retirement 

CSRS retirement for 2024 for a 62-year-old employee with a high-three average salary of $55,000 (GS 7 earned between $49,000 - $63,000 in 2024 using the Rest of the US Locality Chart) and 40 years of service under CSRS who was hired at the end of 1983, would have a retirement computed as: 76.25% x $55,000 = $41,937.50/12 = $3,494.79/month CSRS retirement benefit.   

Social Security Retirement 

The spouse of the federal retiree working under Social Security covered employment is receiving a retirement benefit from Social Security of $2,400/month starting at their full retirement age.    

The spousal benefit payable at age 62 would be computed as 32.5% of the full Social Security benefit amount or .325 x $2,400 = $780/month.   

GPO calculation 

However, due to this being “offset” (reduced) by 2/3 of the CSRS retirement, there would be $0 spousal benefit payable. $3,494.79 x 2/3 = $2,329.86 or a 100% reduction in the spousal benefit.  

If the CSRS spouse becomes widowed after his/her full retirement age, the widow’s benefit of $2,400/month would also be offset by 2/3 of the CSRS retirement leaving around $70/month payable instead of the full widow’s benefit of $2,400/month.