Can You Collect a Pension and Social Security in Massachusetts?

Many people wonder if they can receive both a pension and Social Security benefits. Understanding how these income streams interact is important for retirement planning. This article explores the general principles for collecting both benefits, with a focus on considerations for individuals who have worked in Massachusetts.

Collecting Both Benefits

Individuals can generally collect both pension and Social Security benefits simultaneously. A pension is an employer-provided retirement plan, often a defined benefit plan, offering a specific monthly payment based on factors like years of service and salary. Social Security benefits are federal retirement payments based on a worker’s earnings history, funded through payroll taxes, and administered by the Social Security Administration (SSA).

For most private sector employees, receiving a pension does not impact their Social Security benefits. If Social Security taxes were withheld from wages, the earnings contribute to the individual’s Social Security earnings record, and the resulting benefits are calculated independently of any private pension. The Social Security Administration does not consider a pension as earned income, meaning it does not add to earnings records or affect the Primary Insurance Amount (PIA) calculation. This foundational compatibility allows many retirees to draw income from both sources.

Impact of Non-Covered Pensions

Historically, certain pensions from “non-covered employment” could significantly impact Social Security benefits. Non-covered employment refers to work where Social Security taxes were not withheld, often in public sector jobs where employees contributed to a separate government retirement system. To address a perceived advantage for individuals who worked in both covered and non-covered employment, two provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), were enacted.

The Windfall Elimination Provision (WEP) was a formula that adjusted Social Security retirement or disability benefits for individuals who also received a pension from non-covered employment. Its purpose was to prevent individuals from receiving a Social Security benefit calculated as if they were low-wage earners, despite substantial earnings from non-covered work. The Government Pension Offset (GPO) reduced Social Security spousal or survivor benefits for individuals who received a pension from non-covered government employment. The GPO aimed to ensure spousal and widow(er) benefits were roughly equivalent for those with covered or non-covered lifetime earnings.

However, a significant change occurred in early 2025 when the Social Security Fairness Act was signed into law on January 5, 2025. This act officially eliminated both the Windfall Elimination Provision and the Government Pension Offset. These reductions are no longer applied to Social Security benefits for eligible individuals. The repeal applies to benefits dating back to January 2024, and affected individuals are expected to receive increased monthly payments and retroactive reimbursements.

Calculating Benefit Adjustments

Before their repeal in early 2025, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) altered how Social Security benefits were calculated for those with non-covered pensions. The WEP specifically affected a worker’s own Social Security retirement or disability benefit. Instead of applying the standard Social Security benefit formula, which uses a 90% factor for the first portion of average indexed monthly earnings (AIME), the WEP reduced this percentage.

The reduction depended on the number of years of substantial earnings in Social Security-covered employment, with the percentage decreasing for those with fewer than 30 years of covered earnings. For instance, workers with 20 or fewer years of substantial covered earnings would see the initial 90% factor reduced to 40%. The WEP also included a guarantee that the reduction to the Social Security benefit could not exceed one-half of the monthly non-covered pension amount. For example, if an individual’s non-covered pension was $500 per month, their Social Security retirement benefits could not have been reduced by more than $250 per month.

The GPO, conversely, applied to spousal or survivor Social Security benefits. This offset reduced the spousal or widow(er) benefit by two-thirds of the monthly non-covered pension. If, for instance, a non-covered pension was $900 per month, the Social Security spousal or survivor benefit would have been reduced by $600 (two-thirds of $900). In some cases, if the offset amount was greater than the Social Security benefit, the benefit could have been reduced to zero. These provisions are no longer in effect.

Massachusetts Public Service Pensions

For many individuals who worked in public service in Massachusetts, the now-repealed Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) were particularly relevant. Massachusetts is considered a “non-Social Security” state for many public employees. This means that employees of the Commonwealth of Massachusetts and its political subdivisions, including state employees, certain municipal workers, and public school teachers, typically did not pay Social Security taxes through their public employment. Instead, they contributed to separate state or local public retirement systems, such as the Massachusetts State Employees’ Retirement System (MSERS) or the Massachusetts Teachers’ Retirement System (MTRS).

Because these public service pensions were from non-covered employment, individuals who also had Social Security-covered earnings from other jobs, or who were eligible for spousal or survivor benefits, were subject to the WEP or GPO. For example, a Massachusetts public school teacher who also worked a summer job in the private sector and paid Social Security taxes would have seen their own Social Security benefits reduced by the WEP. Similarly, a spouse of a Massachusetts public employee, if eligible for Social Security spousal benefits, would have faced reductions due to the GPO if the public employee also received a non-covered pension. With the repeal of WEP and GPO in early 2025, these public service individuals in Massachusetts who qualify for Social Security benefits will now receive their full entitled amounts without these former reductions.