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CIVIL SERVICE RETIREMENT – SPOUSAL SOCIAL SECURITY BENEFITS
GOVERNMENT PENSION OFFSET
DOMESTIC RELATIONS ORDERS

Among the problems confronting an attorney drafting a Property Settlement Agreement and subsequent Domestic Relations Order in a matter involving a Civil Service Retirement System (CSRS) pension and a spouse who is a participant in the Social Security Retirement System (OASDI) is the Government Pension Offset (GPO). Note this harsh offset rule has been affirmed by the U.S. Supreme Court; Heckler v. Mathews, 465 U.S. 728 (1984). In addition to GPO significance in matters involving CSRS employees, it is of heightened importance to family attorneys as it relates to some state and municipal employees in: Alaska, California, Colorado, Louisiana, Maine, Massachusetts, Nevada, New Jersey and Ohio.

Part One. Explanation of the Government Pension Offset (GPO).

The GPO reduces the monthly Social Security Income (SSI) benefit payable to the Federal employee due to his or her spouse’s SSI. The amount of the CSRS employee’s SSI reduction is two-thirds (2/3) of the Federal employees basic pension. Be clear, the Federal pension is not reduced. Rather, size of the Federal pension determines the amount of the SSI “offset”. It is the CSRS employee’s SSI benefit derived from his or her spouse’s SSI benefit that will be reduced. The non-CSRS employee will receive an unreduced SSI benefit, but, the CSRS employee will receive a lesser or no SSI benefit as is illustrated below.

For example:
Wife is the CSRS employee with a monthly pension of $1,800.00.
Husband though other employment (not with a government entity) is entitled to a monthly Social Security Pension Benefit of $1,200.00.

Let’s do the math and compute the GPO offset that will reduce the Wife’s SSI to $00.00.

Step I.
Begin with the CSRS employees monthly pension. $1,800.00

Step II.
Then, Multiply the her CSRS Step I, benefit by two-thirds (.67)

$1,800.00 multiplied by .67 = $1,206.00
This sum, $1,206.00 represents two-thirds of the Federal employee’s monthly pension and as illustrated below is the amount of the GPO applied to reduce Wife’s SSI (based on Husband’s entitlement to SSI from his non-government employment).

Step III.
Non-federal employee’s total monthly Social Security Pension Benefit is $1,200.00.
Note: a spousal SSI benefit is equal to fifty percent (50%) of this spouse’s SSI benefit.
In this case;
$1,200.00 ÷ 2 (half) = $600.00
Thus, the federal employee is entitled to a monthly SSI benefit of $600.00, from his non-government employee spouse’s SSI. BUT, that SSI benefit payable to her is prior to imposition of the Government Pension Offset.

Part Two. EFFECT OF THE GOVERNMENT PENSION OFFSET.

Step IV.
The SSI benefit shown immediately above and payable to the CSRS employee must be reduced by two-thirds (.67) of her CSRS monthly pension. Thus, the SSI monthly benefit of the federal employee (wife) is reduced by the amount shown in Step III. Her entitlement from husband’s SSI of $600.00 is reduced by the Step II amount (but not below $00.00).
$600.00 reduced by $1,206.00 = $00.00

Note: The mathematical result is a value less than zero, however, the GPO bars a reduction to a benefit to a value of less than zero.

Let’s do another quick illustration. In this illustration the Husband is the CSRS employee and the Wife is the non-government employee.
Husbands CSRS monthly pension: $2,200.00
Wife’s monthly SSI pension: $900.00
Half of Wife’s SSI due to Husband: $450.00
GPO monthly offset amount: $1,467.00 (2/3’s of $2,200)
Husband gets from Wife’s SSI: $00.00
Calculation:
$450.00 less GPO of $1,467.00 = $00.00 (a sum not less than zero)

There is an interesting discussion of this issue in the matter of Panetta v. Panetta, 851 A.2d 720 (2004). This decision highlights the problems of attempting to currently recognize a future offset, when it is clear that such offsetting amounts are not ascertainable at the time of divorce (unless both parties are at that time receiving pension benefits). It is for this reason that Troyaninc suggests that in matters where this offset is or could be relevant to a determination of what constitutes an equitable distribution of retirement benefits that the parties consider two Domestic Relations Orders. One issued at the time of divorce and a second at the time the SSI and CSRS benefit are in pay status. As a caution, note that this suggestion will only be effective in cases for which a well crafted Property Settlement Agreement exists.