July 24, 2015
Social Security: The Windfall Elimination Provision (WEP) and
the Government Pension Offset (GPO)
of $ 413 (90% of $826, compared with 40% of $826). For
The Windfall Elimination Provision (WEP) and the
each year of work in covered employment in excess of 20,
Government Pension Offset (GPO) are two separate
the first factor increases by 5%. For example, the first factor
provisions that reduce standard Social Security benefits for
is 45% for those with 21 years in covered employment. The
people who have pensions from employment that was not
WEP factor reaches 90% for those with 30 (or more) years
covered by Social Security, such as some employment in
in covered employment and at that point is phased out.
state, local, and federal government.
What is the Rationale for the WEP?
The Windfall Elimination Provision
The Social Security benefit structure is progressive: It helps
How Does the WEP Work?
workers who spent their working lives in low paying jobs
by providing them with a benefit that replaces a higher
The WEP applies to most people who receive both a
proportion of their earnings than the benefit that is provided
pension from uncovered work and Social Security benefits
to workers with high earnings. Without the WEP, people
based on fewer than 30 years in covered employment. It
who spent only part of their careers in covered employment
reduces a worker’s standard monthly Social Security
would be provided with the same benefit as those who had
benefit by up to 55%, with a maximum reduction of $413.
lower annual earnings but had a full career in covered
employment. The WEP removes this advantage.
The Social Security benefit formula is designed to benefit
workers with low average lifetime earnings in Social
How Many People Are Affected by the WEP?
Security-covered employment. Those workers receive a
benefit that is a larger proportion of their earnings than do
According to Social Security Administration data, as of
workers with high average lifetime earnings. The benefit
December 2014, 1.6 million people, or about 3% of all
formula does not distinguish, however, between workers
Social Security beneficiaries, were affected by the WEP.
who worked for many years at low wages in Social
The vast majority of those—1.4 million people—were
Security-covered employment and those who worked
retired-worker beneficiaries, which was about 4% of all
briefly in Social Security-covered employment at higher
retired-worker beneficiaries. The remainder were disabled-
wages. Under the benefit formula, workers who split their
worker beneficiaries and family members of workers.
careers between Social Security-covered and non-covered
employment would therefore receive higher total benefits—
The Government Pension Offset
sometimes referred to as a “windfall”—than would exist in
the absence of the WEP.
How Does the GPO Work?
The standard Social Security benefit formula applies three
The GPO reduces spousal and widow(er)’s benefits
progressive factors—90%, 32%, and 15%—to three
received by people who receive a pension from
different levels, or brackets, of a worker’s average indexed
employment not covered by Social Security. The Social
monthly earnings (AIME), which is a measure of lifetime
Security benefit is reduced by an amount equal to two-
earnings. The result is the “primary insurance amount”
thirds of the pension.
(PIA), which is the base benefit amount. In 2014, the PIA is
determined as follows:
Social Security pays benefits to spouses of retired and
disabled workers and to widow(er)s of deceased workers. In
Table 1. 2014 Social Security Benefit Formula
general, the spousal benefit equals 50% of the worker’s PIA
and the widow(er)’s benefit equals 100% of the worker’s
Factor
Portion of Average Indexed Monthly Earnings
PIA. Those benefits are intended to help support financially
dependent spouses.
90%
of the first $826 of AIME, plus
Under its “dual entitlement” rule, Social Security does not
32%
of AIME over $826 and through $4,980, plus
provide both a full retired-worker and a full dependent
benefit to the same individual. In general, beneficiaries
15%
of AIME over $4,980
receive either a benefit based on their own work or the
dependent benefit, whichever is larger.
For people who worked in employment covered by Social
Security for 20 or fewer years, the WEP reduces the first
factor from 90% to 40%, resulting in a maximum reduction
www.crs.gov | 7-5700

---

Social Security: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)
The actual benefit for a spouse or widow(er) is figured by
How Many People are Affected by the GPO?
reducing the dependent benefit by 100% of the amount of
his or her own worker’s benefit.
About 630,000 Social Security beneficiaries, or about 1%
of all beneficiaries, had spousal or widow(er)’s benefits
Table 2 shows three scenarios in which “Mary,” who is
reduced by the GPO in December 2014. (Additional people
eligible for a spousal benefit,
were likely affected indirectly, because some people who
were potentially eligible for spousal or widow(er)’s benefits
1. works in employment covered by Social
were probably deterred from filing for them because of
Security,
their expectation that the GPO would eliminate the spousal
2. works in noncovered employment, if the
or widow(er)’s benefit). Of the people directly affected by
GPO were repealed, and
the GPO, 56% were spouses and 44% were widow(er)s.
3. works in noncovered employment and is
subject to the GPO, as under current law.
Legislative History
The benefit is lowest in the first scenario and highest in the
The WEP was enacted as part of Social Security
second scenario.
Amendments of 1983 (P.L. 98-21). The 40% WEP formula
factor was the result of a compromise between a House bill
Table 2. “Mary’s” Benefit in Hypothetical Scenarios
that would have substituted a 61% factor for the regular
90% factor and a Senate proposal that would have
“Mary”
substituted a 32% factor. Before that, the standard benefit
works in
formula applied to workers regardless of whether they
Social
“Mary” works in
received a pension from uncovered employment.
Security-
Non-Social
Covered
Security-Covered
The GPO was originally established in 1977 (P.L. 95-216)
Position
Position
and replaced a “dependency test” for spousal benefits that
had been in law since 1950. Under the 1977 law, the Social
Without
With
Security spousal or widow(er)’s benefit was reduced by

GPO
GPO
100% of the non-covered government pension, in effect
1) Retired-worker
$900
$0
$0
treating the entire pension as equivalent to a Social Security
benefit (based on Mary’s
worker’s benefit. The offset factor was reduced from 100%
earnings record)
to two-thirds by the Social Security Amendments of 1983.
One section of the House version of this law proposed that
2) Non-Social Security-
$0
$900
$900
the amount used in calculating the offset be one-third of the
covered pension
government pension. The Senate version contained no such
3) Maximum spousal
$1,000 $1,000
$1,000
provision and would therefore have left standing the 100%
benefit (50% of husband’s
offset that existed at the time. The conferees adopted the
benefit)
two-thirds offset that is now law.
4) Reduction in spousal
$900 n.a.
n.a. Dozens of bills to repeal or amend the GPO and WEP have
benefit (from line 1)
been introduced since 1983, but no other legislative action
has been taken on the issue. For example, the Social
5) Reduction in spousal
n.a. n.a.
$600
Security Fairness Act, which would completely repeal both
benefit due to GPO (2/3
the GPO and the WEP, has been introduced in every
of line 2)
Congress since 2001. No legislative action on the bill has
6) Net spousal benefit
$100
$1,000
$400
been taken.
“Mary’s” total benefit
$1,000 $1,900
$1,300
Related CRS Reports
(lines 1+2+6)
For more information, see CRS Report 98-35, Social
Source: Illustrative example provided by CRS.
Security: The Windfall Elimination Provision (WEP), and
Notes: n.a. = not applicable.
CRS Report RL32453, Social Security: The Government
Pension Offset (GPO), both by Gary Sidor.
What is the Rationale for the GPO?
For general background on Social Security, see CRS Report
When a spouse or widow(er) receives a pension based on
R42035, Social Security Primer, by Dawn Nuschler.
uncovered federal, state, or local government employment,
the dual entitlement rule does not apply, so the GPO was
Gary Sidor, gsidor@crs.loc.gov, 7-2588
adopted with a similar goal. Under the GPO, spousal and

widow(er)’s benefits are reduced by two-thirds of the
pension from non-covered government employment.
IF10203
www.crs.gov | 7-5700

---