Can You Get Social Security & State Retirement Benefits at the Same Time?

When the Social Security program began in 1937, government employees -- including state workers -- did not participate. Social Security amendments in 1950 permitted states to enter into agreements with Social Security, allowing their employees to contribute to the Social Security system. As of 2007, approximately 70 percent of state and local employees pay into Social Security. When employees retire, become disabled or die, they and their dependents are eligible for Social Security as well as their state pension benefits.

Affected State Employees

• State retirees can collect their Social Security benefits along with their state pension without any offset if their state employment was covered by Social Security. "Covered" means their state withheld Social Security taxes from each paycheck. However, nearly 30 percent of state and local employees do not participate in Social Security. Their pensions from state employment will impact the amount of Social Security they can receive. The amount of the benefit reduction depends on whether her Social Security benefits are based on his own earnings or the record of earnings of a spouse or former spouse.

Windfall Elimination Provision

• State employees may acquire Social Security coverage if they work in covered employment outside of or prior to their government service. The Windfall Elimination Provision (WEP) affects her when she applies for Social Security benefits. WEP uses a different formula to compute his Social Security benefit. The regular formula benefits workers who worked in low-paying jobs all their life. Social Security benefits are figured using the average monthly wages during a specific number of years -- the number varies with the worker's age and benefit type. The standard formula divides the monthly average into three segments. The monthly benefit consists of 90 percent of the lowest segment of wages, 32 percent of the next and 15 percent of the rest. The amount composing each segment changes annually with the average wages of all workers. State employees subject to WEP receive only 40 percent instead of 90 percent of the lowest tier.

WEP Offset Amounts

• The WEP reduction varies with the amount of earnings assigned to the lowest tier, which changes annually. In 2010, the WEP reduced the state retiree's Social Security benefit by $380.50. The reduction is smaller if the employee has over 20 years of substantial earnings under Social Security. The amount of earnings considered substantial varies. In 1965 it was $1,200; in 2009 it was $16,800. If he has 21 years of substantial earnings the WEP reduction in 2010 is $342.50; $190.30 with 25 substantial work years. Substantial earnings during 30 years eliminates the WEP. As of December 2007, WEP affected the benefits of almost one million Social Security beneficiaries.

Government Pension Offset

• Government Pension Offset (GPO) affects state workers who are eligible for Social Security benefits as widows, widowers, spouses or former spouses of individuals who worked under Social Security. The offset deducts two-thirds of the state pension from the Social Security dependent's benefit. For example, a state employee is eligible for a Social Security widower's benefits of $800. His own state pension is $1,500. Social Security deducts two-thirds of $1,500 -- $1,000 -- from his widower's benefit, reducing it to zero. In June 2007 GPO reduced the benefits of over 464 thousand Social Security recipients.

WEP Exception

• WEP does not affect Social Security survivor benefits. For example, if a state employee whose Social Security is reduced by WEP should pass away, the SSA refigures benefits paid to survivors to eliminate WEP. The WEP reduction cannot exceed 50 percent of the government pension. For example, if the state pension is only $350, WEP cannot reduce the Social Security benefit by more than $175.