Prepared by Public Affairs 312-751-4777
Railroad Retirement Act spouse and widow(er)s’ annuities (including divorced
spouse, surviving divorced spouse and remarried widow(er)s’ annuities) are
subject to reduction when social security benefits or dual railroad retirement
annuities are also payable. Such railroad retirement benefits may also be
reduced when a spouse or widow(er) is entitled to a public service pension
unless certain exemption requirements are met.
Since the payment of railroad retirement spouse or widow(er)s’ annuities can be
affected by entitlement to certain other government benefits, such dual
entitlement, if not reported to the Railroad Retirement Board (RRB), can result
in benefit overpayments which have to be repaid, sometimes with interest and
penalties. The following questions and answers describe how payments are
adjusted by the RRB for spouse and widow(er) annuitants entitled to public
service pensions.
1. For social security or railroad
retirement purposes, what is considered a public service pension?
A public service pension is any periodic benefit payment, as well as lump-sum
payments made in lieu of periodic payments, based on an individual's own
employment with a Federal, State, or local government unit. Some examples are
pensions paid to teachers, police officers, and civil service personnel on the
basis of age or disability. Full salary benefits paid to a retired or resigned
judge under the Federal judiciary retirement system are also considered public
service pensions.
Most military service pensions and payments from the Department of Veterans
Affairs will not cause a reduction. A pension paid by a foreign government or an
interstate instrumentality also has no effect on a spouse or widow(er)’s
annuity.
2. How is the public service pension
reduction applied to railroad retirement spouse or widow(er)s' annuities?
For spouses and widow(er)s subject to the public service pension reduction, the
tier I reduction is, under current law, equal to 2/3 of the amount of the public
pension. The amount of the public service pension is the current gross amount,
before any deductions for income tax withholding, Medicare premiums, health
insurance or other benefits.
3. What is the background of the public
service reduction in spouse and widow(er)s’ annuities and how does it affect
such payments?
The public service pension reduction in social security and railroad retirement
spouse and widow(er)s’ benefits was brought about by 1977 social security
legislation which also applied to the tier I benefits of railroad retirement
spouses and widow(er)s. The tier I portion of a railroad retirement annuity is
based on railroad retirement credits and any social security credits an employee
has acquired. It is computed under social security formulas and approximates
what social security would pay if railroad work were also covered by that
system. Tier I benefits are, therefore, reduced in the same manner as social
security benefits when certain other benefits are also payable.
Since a social security spouse or widow(er)’s benefit is reduced if the spouse
or widow(er) is also entitled to a social security benefit based on her or his
own earnings, it was considered equitable that a social security spouse or
widow(er)’s benefit also be reduced for a public service pension based on the
spouse’s or widow(er)’s own non-social security earnings.
The exemption requirements were subsequently tightened by legislation enacted in
March 2004. That legislation required that State and local government workers be
covered by social security throughout their last 60 months of employment with
the pension-paying government entity in order to be exempt from a reduction.
This 60-month requirement is being phased in over a 5-year period ending March
1, 2009, and there are some exceptions. Under prior law, a reduction generally
did not apply to social security or railroad retirement spouse or widow(er)s’
benefits if the government job that the public pension is based on was covered
under the Social Security Act on the last day of public employment.
4. How does the public pension reduction law
provide a transition or phase-in period for those who will not be retiring for a
few years?
The law provides a transition for workers whose last day of government
employment occurs within 5 years after March 2, 2004. Any State or local
government worker whose last day of government employment occurs after June 30,
2004, and before March 2, 2009, could have the requirement for 60 consecutive
months of social security-covered government employment reduced. For these
workers, the requirement for 60 consecutive months of social security-covered
employment would be shortened by the total number of months that the worker had
in social security-covered government service under the same retirement system
before March 2, 2004, but not to less than 1 month. If the 60-month period is
shortened, the remaining months of social security-covered service needed to
fulfill the requirement must be performed after March 2, 2004, and must continue
through the worker’s last day of public service employment.
5. Are there any other provisions that would
exempt railroad retirement spouse or widow(er) annuitants from the public
pension offsets?
The public pension reduction does not apply to a spouse or widow(er) who filed
for and became entitled to her or his railroad retirement annuity before
December 1977, or to a spouse or widow(er) whose public pension is
not based on
her or his own earnings.
Annuities payable for any months after November 1977 to spouses and widow(er)s
may also be exempt from the public pension reduction at the time of filing if
both of the following two
requirements are met.
The first requirement is that they began to receive or were
eligible to receive their Federal,
State or local government pension before December 1982. This means they must
have met the age and service requirements for their pensions before December
1982, even though they did not apply for their pensions before then.
The second is that they meet all requirements for spouse and widow(er)s’
benefits in effect under social security law in January 1977. At that time, for
example, a divorced woman's marriage must have lasted at least 20 years, rather
than 10 years as required today. Also, a husband or widower must have received
at least one-half support from his wife.
Even if spouses and widow(er)s do not meet these criteria, they still may be
exempt from the reduction beginning with railroad retirement benefits payable
December 1982 if they received or were eligible to receive their Federal, State,
or local government pensions before July 1, 1983,
and they were receiving at least
one-half support from their spouses at the time their spouses retired or died.
This provision applies to men and women.
6. Where can more specific information on
how these pension offsets affect railroad retirement benefits be obtained?
Individuals should contact the nearest
field office of the RRB for information
as to how their public service pensions could affect their railroad retirement
benefits.
They can find the address and phone number of the RRB office serving their area
by calling the automated toll-free RRB Help Line at 1-800-808-0772 or by
visiting www.rrb.gov. RRB field offices are open to the public from 9:00 a.m. to
3:30 p.m., Monday through Friday, except on Federal holidays.
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