In a recent Social Security workshop I received an interesting question that comes up frequently.
The workshop participant wanted to know whether CalPERS members are subject to the Windfall Elimination and Government Pension Offset provisions.
For those who are not familiar with these provisions of the Social Security system, if an individual earns a pension outside of the Social Security system (in other words they were not paying Social Security taxes while earning this pension) then the amount of their Social Security benefit may be reduced (Windfall Elimination provision) and the amount of their spousal or survivor benefit may be reduced (Government Pension Offset provision).
The Windfall Elimination provision can reduce a Social Security benefit by up to $442.50 per month.
The Government Pension Offset provision reduces the spousal or survivor benefit by 2/3 of the amount of the government pension being received in retirement.
So, are CalPERS members subject to these reduction provisions?
Well, the short answer is… it depends. There are two types of CalPERS members.
One type of CalPERS member pays only into the CalPERS system and NOT into Social Security. This type of CalPERS member WOULD be subject to both provisions since the pension being earned is outside the Social Security system (no Social Security taxes are being withheld).
There is a second type of CalPERS member that pays into the CalPERS pension system AND the Social Security system. In this circumstance, the CalPERS member is NOT SUBJECT to the Windfall Elimination and Government Pension Offset provisions, due to the fact that they ARE paying Social Security taxes and earning a Social Security benefit.
How do you know which type of CalPERS member you are?
It’s as easy as looking at your pay stub to see if Social Security taxes are being withheld.
Please note that this discussion is not in reference to CalSTRS members, such as teachers, which ARE subject to both Windfall Elimination and Government Pension Offset provisions.
If you have any questions about the concepts discussed in this article, please contact me.
