Railroad Retirement Spouse and Widow(er)s’Benefits,
Annuities and
Public Service Pensions
October 2006
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
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
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
Office of Public Affairs 312-751-4777
Posted: 04/15/07