The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study

Social Security Bulletin. 74(3): 55-69.

15 Pages Posted: 5 Aug 2014 Last revised: 25 Apr 2015

See all articles by Alan L. Gustman

Alan L. Gustman

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography

Nahid Tabatabai

Dartmouth College - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: August 1, 2014

Abstract

This article uses Health and Retirement Study data to investigate the effects of Social Security's Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) on Social Security benefits received by households. The provisions reduce benefits for individuals or the dependents of individuals whose work histories include jobs for which they were entitled to a pension and were not subject to Social Security payroll taxes (“noncovered” employment). We find that about 3.5 percent of households are subject to either the WEP or the GPO, and that the provisions reduce the present value of their Social Security benefits by roughly one-fifth. Households affected by both provisions experience benefit reductions of about one-third. Under the WEP, the Social Security benefit reduction is capped at one-half of the amount of the pension from noncovered employment, which substantially reduces the WEP penalty and prevents the WEP adjustment from falling disproportionately on households in the lowest earnings category.

Keywords: Wealth, Wealth Distribution, public economics, welfare, retiree, retirement, pension, retirement pension, social security, civil service, government employees, public employee, public sector, public sector labor markets, public sector labour markets

JEL Classification: D31, E21, H55, I3, J14, J26, J32, J45

Suggested Citation

Gustman, Alan L. and Steinmeier, Thomas L. and Tabatabai, Nahid, The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study (August 1, 2014). Social Security Bulletin. 74(3): 55-69., Available at SSRN: https://ssrn.com/abstract=2475965

Alan L. Gustman (Contact Author)

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Center
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603-646-2641 (Phone)
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography ( email )

Lubbock, TX 79409-2101
United States
806-742-2201 (Phone)

Nahid Tabatabai

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

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