By Tom Margenau
I have written many past columns about provisions of Social Security law that impact people who spend the bulk of their careers working at jobs not covered by Social Security. (Since 94 percent of Americans work at jobs where they pay into Social Security, I sometimes think I devote way too much time to this topic that affects only a small percentage of my readers. But they are a very vocal minority!)
Today’s column is devoted to one of those provisions that impact non-Social Security covered workers. It’s called the government pension offset, or GPO. It essentially says this: Non-Social Security retirement pensions will be treated just like Social Security retirement pensions in that they will offset any spousal benefits potentially due to the retiree off of a husband or wife’s Social Security record. So anyway, here is the email that sparked today’s column.
Q: I have written to you before about the government pension offset. You wrote back and said it was fair. But please see the attached link that shows Congress is trying to repeal the law. If it is unfair, why is it being repealed?
A: Almost every year for the past 30 years, various bills have been introduced in Congress to try to repeal the GPO. By the way, these bills are usually written by union lobbyists representing groups impacted by GPO and are sponsored by a clueless politicians pandering for votes from said unions. And every year, the bill goes down to defeat. Why? Because it would make no sense to repeal the legislation. The following examples explain why I believe GPO should be expanded, and not repealed.
Fred and Wilma both worked at jobs covered by Social Security. Fred gets $2,000 per month in Social Security retirement. Wilma gets $2,100 per month in her own Social Security retirement. Fred dies at age 73. Wilma, who is 71, will not get a nickel of Social Security widow’s benefits, because her own Social Security benefit offsets her widow’s rate dollar for dollar. (One Social Security benefit has always offset another Social Security benefit.)
Their neighbor, Barney, worked at a job covered by Social Security and he gets $2,000 per month in Social Security retirement benefits. His wife, Betty, was a teacher in a state where teachers do not pay into Social Security. She gets $2,100 per month in a teacher’s retirement pension. Like Fred, Barney dies at age 73. Before the GPO law was in place, 71 year old Betty would have received Barney’s full Social Security pension, or $2,000, in widow’s benefits in addition to her own full teacher’s pension.
Why should Betty (the teacher) get a widow’s benefit when Wilma (the non-teacher) doesn’t get widow’s benefits? The GPO law simply eliminated that loophole. So again I must ask: Why should the GPO be repealed?
In fact, even with the GPO law, Betty the teacher comes out ahead of Wilma the non-teacher. All of Wilma’s Social Security retirement benefit offsets her possible widow’s benefit, meaning Wilma (the non-teacher) gets nothing. But only two thirds of Betty’s teacher’s pension offsets her widow’s benefits. Two thirds of her $2,100 teacher’s pension is $1,386. So you deduct that from Barney’s Social Security, and that leaves $614.
In other words, Betty, the teacher, still gets $614 in widow’s benefits, even with the GPO, while Wilma, the non-teacher, gets nothing.
Instead of repealing the GPO law, I think it should be expanded. And to explain why, I will introduce you to a third couple: Dudley and Nell.
Nell is a U.S. citizen who worked her whole life in this country and is now retired and gets $2,000 in Social Security benefits. Her husband, Dudley, is a Canadian citizen who worked for 30 years in Toronto before moving to the U.S. about 10 years ago where he met and married Nell. Dudley gets $2,100 per month in the form of a Canadian Social Security benefit. Sadly, Nell dies. Because Dudley does not get an American Social Security retirement benefit, and because the GPO law does not include foreign government pensions, Dudley will quality for a full widower’s benefit off of Nell’s Social Security record. In other words, he will get $2,100 in his Canadian retirement pension and he will get $2,000 in Social Security widower’s benefits.
So finally, let’s review our three widowed spouses and try to decide what is fair and not fair.
First, we have Wilma, the non-government employee who gets her own Social Security retirement check of $2,100 and does not qualify for any widow’s benefits on her husband’s Social Security record.
Second, we have Betty, the teacher who did not pay into Social Security, who gets her own teacher’s retirement check of $2,100 and who also qualifies for $614 in widow’s benefits on her husband’s Social Security record.
And finally we have Dudley, the Toronto native now living in the U.S. getting $2,100 from the Canadian Social Security system and who also is receiving $2,000 per month from his wife’s U.S. Social Security account.
So should the GPO law be repealed, allowing Betty to get the same benefits Dudley is getting? (And where does that leave poor Wilma?) Or should the GPO law be strengthened, so that Canadian citizen Dudley isn’t allowed to reap U.S. Social Security benefits that neither Wilma nor Betty can get?