State pension means test warning as Labour has power to check your bank account (2024)

FAQs

Can you collect both a government pension and Social Security? ›

How much will my Social Security benefits be reduced? We'll reduce your Social Security benefits by two- thirds of your government pension. For example, if you get a monthly civil service pension of $3,000, two-thirds of that, or $2,000, must be deducted from your Social Security benefits.

Your benefit might be reduced if you get a pension from a government employer who wasn't required to withhold Social Security taxes. This reduction is called the “Government Pension Offset” (GPO).

The Windfall Elimination Provision (WEP) can affect how Social Security calculates your retirement or disability benefit. If you work for an employer who doesn't withhold Social Security taxes from your salary, any retirement or disability pension you get from that work can reduce your Social Security benefits.

Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes.

So the short answer is no, your FERS pension is not going to reduce your Social Security. As a FERS employee you certainly can get your full Social Security while getting your FERS pension.

You can retire with Social Security and a pension at the same time, but the Social Security Administration (SSA) might reduce your Social Security benefit if your pension is from a job at which you did not pay Social Security taxes on your wages. There are two different kinds of pensions: covered and noncovered.

More In Help. If you receive retirement benefits in the form of pension or annuity payments from a qualified employer retirement plan, all or some portion of the amounts you receive may be taxable unless the payment is a qualified distribution from a designated Roth account.

A non-covered pension is a pension paid by an employer that does not withhold Social Security taxes from your salary, typically, state and local governments or non- U.S. employers.

Although there's no direct “bonus,” strategies exist to maximize your benefits. The Social Security Administration (SSA) calculates benefits based on lifetime earnings. Delaying benefits until age 70 can significantly increase your annual benefits, potentially up to $16,728.

The WEP includes a guarantee that the reduction in the benefit amount caused by the WEP formula can never exceed more than one-half of the noncovered pension. Thus, for workers who become eligible for benefits in 2024, the maximum reduction under the WEP may be less than $587.

What is the maximum monthly WEP reduction? ›

The WEP does not become effective until you start to collect the non-covered government pension. A private pension has no impact on the WEP. The maximum WEP reduction in 2023 is $558. The maximum WEP reduction is applicable to people who have less than 20 years of “substantial earnings” in the Social Security system.

In some states, the percentage of retired workers affected by the WEP was substantially higher than the national figure of 2.8 percent. More than one-tenth of the retired workers in Alaska and the District of Columbia were affected as well as about 5 percent of those in Colorado, Maine, Maryland, Nevada, and Ohio.

For the earnings limits, we don't count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.

Windfall elimination provision

The WEP may apply if you receive both a pension and Social Security benefits. In that case, the WEP can reduce your Social Security payments by up to 50% of your pension amount.

To be eligible for SSI, your assets must be less than $2,000 for an individual and less than $3,000 for a married couple. However, not all assets count towards the resource limits. The Social Security Administration lists 44 resource exclusions.

Unlike most employer-sponsored pensions in the private sector, CSRS annuities were not intended to supplement Social Security benefits. Yet, most Federal workers who earn a CSRS annuity also receive Social Security benefits at some time.

You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase.

There is nothing that precludes you from getting both a pension and Social Security benefits. But there are some types of pensions that can reduce Social Security payments.

In the case of pensions, contributions are often made through payroll deductions. This means the employee doesn't really have a say in contributing; money is simply deposited for them (along with a contribution by their employer). Social Security, on the other hand, involves payroll taxes.