How Will Our Benefits Be Affected By By Non-Covered State Pension?

Apr 5 2017 - 6:30am

Larry,
I am a state employee in a non social security state and also work part time in the private sector. In a couple of years when I retire, my social security earnings will exceed 30 years with about 15 years of substantial earnings. How will this affect my social security benefit? My wifes social when she retires will be greater than mine as she will have 30+ years of substantial SS earnings. Will her SS be reduced after my death when she receives my survivor benefit (2/3 of my pension)?
Thank you

Hi,

If you receive a government pension based on work where your earnings were exempt from Social Security taxes, a less generous formula will likely be used to compute your Social Security retirement benefit rate. This is due to the Windfall Elimination Provision (WEP). For more specific information on WEP, refer to this Social Security publication: https://www.ssa.gov/pubs/EN-05-10045.pdf.

There is a separate provision that offsets spousal and widow(er)'s benefits for people who receive a non-covered government pension based on their own work. That's called the Government Pension Offset (GPO) provision, and the amount of the offset is 2/3rds of the amount of the non-covered government pension (https://www.ssa.gov/pubs/EN-05-10007.pdf).

Your wife would not be directly affected by either the WEP or GPO provisions unless she receives a non-covered pension based on her own work. Her Social Security benefits, including potential widow's benefits from your record, would not be affected by the receipt of a survivor pension from your State government work. And, if you die before your wife, her potential widow's rate on your record would be calculated using the normal calculation methods, not the alternate WEP formula.

The maximization software available on this website is programmed to handle the effects of both WEP and GPO. It can closely approximate the benefit rates that you and your wife can expect to receive, and can help you determine your best filing strategy.

Best, Jerry