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

  • Alan L. Gustman
  • Thomas L. Steinmeier
  • Nahid Tabatabai

This paper uses data from the Health and Retirement Study to investigate the effects of Social Security's Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) provision on Social Security benefits received by individuals and households. WEP reduces the benefits of individuals who worked in jobs covered by Social Security and also worked in uncovered jobs where a pension was earned. WEP also reduces spouse benefits. GPO reduces spouse and survivor benefits for persons who worked in uncovered government employment where they also earned a pension. Unlike previous studies, we take explicit account of pensions earned on jobs not covered by Social Security, a key determinant of the size of WEP and GPO adjustments. Also unlike previous studies, we focus on the household. This allows us to incorporate the full effects of WEP and GPO on spouse and survivor benefits, and to evaluate the effects of WEP and GPO on the assets accumulated by affected families. Among our findings: About 3.5 percent of households are subject to either WEP or to GPO. The present value of their Social Security benefits is reduced by roughly one fifth. This amounts to five to six percent of the total wealth they accumulate before retirement. Households affected by both WEP and GPO lose about one third of their benefit. Limiting the reduction in the Social Security benefit to half the size of the pension from uncovered employment reduces the penalty from WEP for members of the original HRS cohort by about 60 percent.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19724.

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Date of creation: Dec 2013
Date of revision:
Publication status: published as Social Security Bulletin 74(3), 2014: 55-69.
Handle: RePEc:nbr:nberwo:19724
Note: AG LS PE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Gustman, Alan L. & Steinmeier, Thomas L. & Tabatabai, Nahid, 2013. "Redistribution under the Social Security benefit formula at the individual and household levels, 1992 and 2004," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(01), pages 1-27, January.
  2. Gustman, Alan L. & Steinmeier, Thomas L., 2001. "How effective is redistribution under the social security benefit formula?," Journal of Public Economics, Elsevier, vol. 82(1), pages 1-28, October.
  3. Jeffrey R. Brown & Scott Weisbenner, 2012. "The Distributional Effects of the Social Security Windfall Elimination Provision," NBER Working Papers 18342, National Bureau of Economic Research, Inc.
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