On Wednesday, federal retirees who retired under the Civil Service Retirement System, current CSRS employees and a host of other state and local public service employees who receive pensions from work not covered by Social Security applauded the Senate voted on a motion to invoke cloture.

The agreement to invoke cloture was based on the motion to proceed with H.R. 82 (a bill to amend Title II of the Social Security Act to repeal the federal pension offset provisions and eliminate windfall gains). The proposal was approved with 73 votes in favor and 27 against, which could mean increased Social Security benefits for CSRS retirees if approved before Congress passes this week.

If you’ve never heard of the term cloture, don’t feel bad, I hadn’t either before Wednesday. The Senate website describes it like this: The tradition of unlimited debate in the Senate has allowed the use of the filibuster, a loosely defined term for measures intended to prolong debate and delay or allow a vote on a bill, resolution, amendment, or other contentious issue impede. Before 1917, Senate rules provided no way to end debate and force a vote on a measure. This year, the Senate passed a rule allowing a two-thirds majority to end a filibuster, a procedure known as cloture. In 1975, the Senate reduced the number of votes required for cloture from two-thirds of voting senators to three-fifths of all duly elected and sworn senators, or 60 of the 100-member Senate.

The National Active and Retired Federal Employees Association has continually worked toward its goal of eliminating this reduced formula and restoring earned Social Security benefits to affected federal retirees. Earlier this week, John Hatton, NARFE vice president for policy and programs, told Federal News Network that he hopes “one of those days is next week and the Senate votes on it and passes it.” We’ve been working on this for 40 years. It penalizes people simply for earning their state pension and then separately earning their Social Security benefits by working in the private sector. And that’s how our members, the CSRS retirees, never understood it. They were always upset about it. They view it as theft, as we do, and so do the firefighters, police officers, teachers and city employees across the country who are affected by it.”

If you’ve never heard of the Windfall Elimination Provision and the Government Pension Offset, then they probably don’t apply to you. The late Mike Causey used the phrase “The Evil Twins” to describe WEP and GPO. The Evil Twins negatively impact earned Social Security retirement benefits as well as a spouse’s spousal and survivor benefits that would be paid to those who have retired or will retire under the older CSRS. These are two provisions that do not affect retirement benefits under the Federal Employees Retirement System (unless the FERS retirement benefit includes a CSRS component).

The Windfall Elimination Provision

To be eligible for Social Security retirement benefits, you must acquire 40 insurance points or the equivalent of 10 years of employment subject to social security contributions. Many CSRS-covered employees had sufficient work or military service* outside of their federal civilian careers to be eligible for Social Security retirement benefits, even though their wages were largely exempt from FICA withholding under CSRS (some temporary federal service was subject to FICA).

Employees covered by the CSRS offset pension coverage pay FICA taxes on their wages. However, most CSRS offset covered employees have prior federal employment where they were exempt from FICA withholding while under “pure” CSRS. In 1983, a law changed the formula to reduce the final calculation of the Social Security pension so that the pension earned was less than the normal calculation for people receiving a pension from work not covered by Social Security.

These effects of the WEP are illustrated using the following example of someone who turns 62 in 2024 and has more than 40 credits but less than 20 years of significant Social Security income. WEP can reduce your Social Security pension by up to $587 per month if you wait until age 67 to claim your pension.

Let’s assume that a CSRS retiree who turns 62 this year has earned a Social Security benefit of $1,396 per month, payable at age 67, his full retirement age. After the WEP, the benefit would only be $809/month ($1,396 – $587). If they choose to start their benefit this year at age 62, which is their first year of eligibility, they will only receive 70% of their benefit because they would receive the benefit for an additional 60 months (5 years) before reaching their FRA to reach.

If they delay claiming their benefit until age 70, they would receive 36 months of late retirement credits (8%/year) between ages 67 and 70, and the benefit would be 24% higher than in old age Benefit payable from age 67. The benefit is payable at age 70 in this example would be $1,003/month ($809 x 124% = $1,003). If the WEP had not applied, the benefit at age 70 would have been $1,731. In this example, the WEP was applied only to benefits paid to the employee and does not take into account future COLA increases. Additionally, the WEP reduction may be greater if family members are eligible for benefits based on the same record.

For lower earned Social Security retirement benefits, the FRA benefit will not be reduced by more than half of your CSRS retirement benefit amount for post-1956 earnings on which you did not pay Social Security taxes. To learn more about how WEP might affect your Social Security benefits, search the WEP table for the year you turned age 62. If you have records of your Social Security earnings, use the WEP online calculator to determine the impact of WEP on your Social Security benefit. You can use the “Check Your Complete Earnings Records” option on the Eligibility and Earnings tab in your personal account to access a list of your Social Security-taxed lifetime earnings.

For more information on understanding WEP, see the WEP Fact Sheet. The only full exemption to this reduction for CSRS retirees is if you have had significant employment subject to Social Security for 30 or more years (a partial exemption applies to significant earnings of more than 20 years up to 30 years).

The WEP applies to individuals who reached age 62 after 1985 or who developed a qualifying disability after 1985. If the latter is true, you must first be entitled to a monthly pension based on work for which you paid no Social Security taxes after 1985. This rule applies even if you are still working. This was the WEP, and affected federal employees had been trying to repeal this unfair provision since the law was signed in 1983.

The state pension equalization

The GPO reduces and often eliminates benefits that Social Security pays to spouses and surviving spouses of Social Security employees who receive a retirement pension from work where they did not pay FICA taxes such as CSRS. These are considered “dependent” benefits.

These benefits, introduced in the 1930s, were intended to compensate spouses who stayed home to raise a family and were financially dependent on the working spouse. Today, it is common for both spouses to work and each receive their own Social Security pension. The law requires that the spouse’s or surviving spouse’s pension be offset against the dollar amount of the recipient’s own retirement pension.

For example, let’s say someone worked and earned their own $800 monthly Social Security benefit, but was also eligible for a $500 spousal benefit on their spouse’s file. Social Security could not pay this spouse’s benefit because their own benefit offsets it. Before the GPO Act was enacted in 1977, there was no compensation if that person was a government employee who did not pay into Social Security and received a state pension of $800. Social Security would pay them full spousal benefits and full state pensions. If their government activity were subject to Social Security tax, the spouse or surviving spouse’s benefits would be reduced based on their own Social Security pension. You can find out more about the GPO in this fact sheet.

I remember once teaching a pre-retirement course at the National Institutes of Health when a woman taking the course came up to me during break to make sure she had heard me correctly The impact of the GPO explained would reduce the Social Security spousal or widow’s benefit by two-thirds of the CSRS retirement benefit amount.

This woman was widowed in her mid-40s and had to work to support her family. She got a job with the federal government and was insured through CSRS. She wanted to stay for 30 years and was in her mid-70s when she took my course. She finally felt like she could afford to retire.

As a widow, she received her late husband’s Social Security benefit (there is no “earnings limit” once you reach your Social Security FRA) and now planned to receive her earned CSRS retirement benefit based on 30 years of federal service. Until that moment, she did not know that she would be exchanging the widow’s pension she had received for her CSRS benefit. The GPO would reduce her Social Security widow’s benefit by 2/3 of her CSRS retirement salary, leaving her with a $0 Social Security widow’s benefit.

She left the classroom in tears, knowing she could no longer afford to retire comfortably. She said she was told when she left federal service that her widow’s pension would be subject to a “minor” adjustment based on her CSRS benefit, but she never imagined it could be eliminated.

If you are reading this column, you may know the results of the vote. Whatever the outcome, the effort to repeal these provisions is the furthest along, but many CSRS retirees are hoping for an early Christmas present from Congress that they say is long overdue.