PUBLIC PENSION OFFSET

Prior to 1977, a worker who was eligible for a public employee pension based on non-Social Security covered work could also receive an unreduced Social Security spousal benefit. However, men were required to establish financial dependence on their spouses in order to receive the benefit. In the Goldfarb decision in 1977, the Supreme Court ruled that the dependency test for men was unconstitutional.

Faced by a sudden increase in Social Security spousal benefits for men of several hundred million dollars, Congress decided in 1977 to reduce the spousal benefit for those who enjoy non-Social Security covered public employee pensions. Initially the pension was offset dollar for dollar or 100 percent, against the Social Security spousal benefit. During the 1983 session of Congress, which overhauled the Social Security system, the House passed legislation to reduce the spousal offset to only one-third of the public pension. In a compromise with the Senate, the offset was reduced in law to two thirds of the public employee pension. Accordingly, a wife, husband, widow, widower, or dependent mother or father who is entitled to derivative benefits under Social Security, and is entitled to a public pension based on their own employment, will have the Social Security benefit reduced by two-thirds of the value of the pension.

The spousal offset amounts to an unwarranted discrimination against public employees. Social Security spousal benefits are not reduced in the case in which an individual receives a supplemental private pension or even in the case of a public pension not based on one's own employment. The American Federation of Teachers believes that a spousal Social Security benefit should be paid in full to all individuals who qualify to receive it. (Executive Council)