Retirement Insights

A federal rule deprives some public retirees of Social Security benefits.

Tens of thousands of AFSCME members who were hoping to supplement their retirement income with a Social Security spousal benefit may be in for a rude surprise. Those public workers who are not required to pay into Social Security — roughly one in four AFSCME members — may have to give up part or all of their spousal benefit because of a federal law called the Government Pension Offset (GPO).

Here is how it works: Let’s say that Harry has worked for 50 years and contributed to Social Security. His wife Anne has worked 30 years and has contributed to a state pension fund only. Upon retirement, Anne is entitled to the benefit from her state pension fund and a Social Security spousal benefit based on Harry’s contribution. But the GPO reduces her Social Security spousal benefit by two-thirds of her state pension benefit.

GPO VICTIM. A typical GPO victim is Chrystal Carroll, a member of Ohio AFSCME Retiree Chapter 1184. Carroll retired in 1990 after 28 years as a food service worker with the Warren (Ohio), City School District. Her public-pension check is $526 a month.

As with many public employees who are affected by the GPO, Carroll didn’t know about the offset until she got ready to retire. It came as a shock. She was expecting to receive a normal spouse benefit — 50 percent of her husband’s $1,000 Social Security check. Instead, she receives around $100 a month, from which she still has to deduct her Medicare premium. This leaves her with a total retirement income, from pension and Social Security, of less than $600 a month.

"My husband and I are raising our two grandchildren, each of whom has a serious disability," Carroll said. "After a lifetime raising children and now grandchildren, working for the community and contributing to society, I think I deserve a bit more retirement income than the GPO allows."

HOPE AHEAD. But there’s some good news coming out of Washington, D.C., for Carroll and other GPO victims. Two bills have been introduced in Congress by Sen. Barbara Mikulski (D-Md.) and Rep. William Jefferson (D-La.) that would allow retirees to keep as much as $1,200 a month in combined pension and Social Security spouse (or widow) benefits before the two-thirds offset is imposed. This would help thousands of public retirees in non-Social Security states such as Ohio, Massachusetts and Maine, and localities such as Minne-apolis, Los Angeles and Chicago.

These cities, counties and states are among those that have never participated in Social Security on behalf of their employees. They account for about 25 percent of the state and local government workforce. Thousands of federal government employees and retirees also never participated in Social Security and are also hurt by GPO.

OFFSET HURTS WOMEN. AFSCME favors GPO repeal, but the cost to Social Security would be high. The reform bills have a better chance in Congress. They’re designed primarily to protect short-hour or lower-wage women such as clerical workers, school bus drivers or cafeteria workers, who retire with relatively small pensions. Since these women have to stretch their retirement income over a longer life span than men, they are particularly vulnerable to the income loss that results from the GPO.

Under the Mikulski and Jefferson bills, Chrystal Carroll’s monthly income would rise to $1,026 and would greatly improve her quality of life.