The government pension offset is little-known and nevertheless frustrating to be affected...
In Texas, where 95 percent of public school employees do not pay into Social Security, workers are more likely to be hit by the government pension offset, which lowers the amount of Social Security spousal benefits that pension-eligible employees receive in retirement.A little-understood rule may reduce Social Security benefits for people who have a public pension and don’t pay into Social Security.
In Texas, where 95 percent of public school employees do not pay into Social Security, workers are more likely to be hit by the GPO. Texas has the third-highest number among all states of Social Security beneficiaries affected by the GPO —Lisa Avila, who has taught in the San Antonio Independent School District for the last five years, plans to retire in about a year.
For 71 percent of people affected, according to the Social Security Administration, the GPO totally wipes out their spousal benefit. This hurts.can help you determine how much your spousal benefit will be reduced. In Avila’s case, her husband makes more money than she does, and the cost of losing the Social Security spousal benefit in retirement due to the GPO could have been more than $1,000 per month.
Congress caught on to that trick, as the Government Accountability Office in 2002 noticed that 4,819 people in Georgia and Texas had used the one-day employment gimmick, which cost the federal government an estimated $450 million. Legislation closed the loophole in 2004.For Avila, there’s more at stake than her financial comfort in retirement, as she has two children who work in public schools.