Government Employees and Social Security Benefits

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Most government workers at all levels pay into and are covered by Social Security, but that wasn't always the case. Federal employees did not pay Social Security taxes before 1984. Many state and local government workers also were exempt from paying Social Security tax and some continued to be exempt. Because Social Security benefits are based in part on the amount of Social Security tax you have paid, your Social Security retirement benefits will be lower if your government employment included periods in which you were not paying into or covered by the Social Security system.

Military service and civil service affect Social Security benefits somewhat differently than other types of government service.

Federal Government Employees

Employees of the U.S. government, other than members of the military and civil service, were covered under the Civil Service Retirement System, or CSRS, until 1984. Work and income that was covered by CSRS was not covered by Social Security. In 1984, the federal government introduced the Federal Employees Retirement System, or FERS. Work and income that was covered under FERS was subject to Social Security taxes and is represented in your Social Security retirement benefits. Workers who were working for the federal government at the time of the switch had the option of switching to FERS. If you switched, you paid Social Security taxes and will be eligible for Social Security benefits based on that period. Federal government employees hired since 1984 are covered by FERS and are eligible for Social Security, just like private sector employees who have a private pension and are covered by Social Security.

If you were covered under the CSRS system, your spouse or widow/widower Social Security benefits -- benefits based on your spouse's Social Security entitlement -- will be reduced by two-thirds of your government pension. For example, if you have a government pension of $900 per month, your spouse or widow benefits will be reduced by $600 per month. Likewise, if you are receiving a CSRS pension and are also eligible for Social Security based on other, covered employment, your benefit could be reduced under the Windfall Elimination Provision. The Social Security Administration maintains an online calculator you can use to determine how your Social Security benefits will be affected.

The Windfall Elimination Provision was designed to prevent a form of "double dipping" from both Social Security and a pension from a job that was not subject to Social Security withholdings. Before 1983, many people who were not covered by Social Security had their benefits calculated as if they were long-term, low-wage workers. Obviously, that isn't the case for the majority of government workers. The Windfall Elimination Provision was designed to take away that advantage.

State and Local Government Employees

Some state and government employees are covered by both Social Security and their government pensions. Others are covered only by their government pensions. If you paid Social Security taxes during your time of government employment, you will receive benefits like any other person who paid into Social Security. If you did not, and you receive a government pension from a period in which you did not pay Social Security taxes, your Social Security benefits will be reduced under the Windfall Provision. If you have 30 or more years of earning under the Social Security system -- meaning you paid Social Security taxes -- the Windfall Provision does not apply to you.

Most state and local government employees are eligible for Social Security benefits as a result of Section 218 agreements that their state or local government entered into with the Social Security Administration. Social Security benefits were also extended to state and local government employees not covered by Section 218 agreements in July 1991 under federal law. You can find out if you are covered by a Section 218 agreement by contacting your State Social Security Administrator. You can find that contact information on the National Conference of State Social Security Administrators website.

Tip

  • Social Security and pension benefits are both important facets of most Americans' retirement plans. The earlier you can determine what you can expect to receive from Social Security and your government retirement -- and how much, if any, your government retirement will affect your Social Security benefits -- the better.

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