While there may not be too many Civil Service Retirement System employees left in the federal workforce, the Windfall Elimination Provision and Government Pension Offset can affect Social Security benefits for CSRS retirees. The WEP and GPO are 2 provisions of Social Security law that can affect Social Security benefits that CSRS retirees may be entitled to.
The WEP can also apply to CSRS Offset and FERS Transferee retirees. However, the GPO does not apply to CSRS Offset and FERS Transferees once they have worked for 5 years under CSRS Offset or FERS.
As with many aspects of retirement rules, both can cause confusion among current and prospective CSRS retirees.
- The Windfall Elimination Provision doesn’t eliminate a Social Security benefit, but it will drastically reduce it.
- The Government Pension Offset’s offset of any Social Security benefits you’re entitled to on the earnings record of another is generally so severe that it eliminates a benefit.
Both benefits were introduced in the 1980’s to ramp up the Social Security system. Public employee supporters in Congress have been trying to repeal/revise them since then, with no success.
“The Windfall Elimination Provision affects only Social Security benefits to which you are entitled based on your own earnings record.” If you have earned 40 credits (formerly known as quarters of coverage), you’ll receive some kind of Social Security benefit.
The Social Security system has a “need-related” component designed to replace a much greater portion of a low wage earner’s income than that of a high wage earner. CSRS employees possibly have many years on their Social Security earnings record where they had little or no employment covered by Social Security. They look like low wage earners to the Social Security system, despite the fact they’d been working at a good job and earning a pension the entire time.
Social Security benefits are based on lifetime earnings. Below is how they were computed in 2017.
- Lifetime earnings are indexed for inflation.
- The highest 35 inflation indexed years are added together.
- The total is divided by 420 (number of months in 35 years) to get the average indexed monthly earnings (AIME).
- AIME is multiplied by:
- 90% x the first $885
- 32% x $886-$5,336
- 15% x amount over $5,336 up to the Social Security cap
If you are affected by the WEP, the multiplication factor for the first point above will be less than 90%. The reduction depends on how many years of substantial earnings you have under Social Security. If you have 20 or fewer years, as most CSRS employees do, your benefit computed using the 40% factor. If you have over 20 years, the factor increases by 5% a year until it reaches 90% after 30 years.
CSRS Offset and FERS Transferees should know they must meet the same 30 years of substantial earnings test to avoid the WEP.
If you receive Social Security statements form the Social Security Administration on an annual basis, and have earned 40 credits, there is an estimated benefit listed on your statement. You can either go to ssa.gov and use their WEP calculator or try the following computation:
- If the monthly benefit on your statement is less than $885, cut it in half.
- If the monthly benefit on your statement is greater than $816, subtract $443 from it.