Do You Get Social Security If You Have a Pension?

When planning for retirement, a common question arises regarding the interaction between pension benefits and Social Security. This article clarifies the distinction between pensions from employment where Social Security taxes were not paid and those from employment where they were. Understanding how each type affects Social Security benefits is important for effective financial planning.

Pensions from Non-Covered Employment

Pensions earned from non-covered employment refer to retirement benefits from jobs where Social Security taxes were not withheld from your paychecks. This primarily includes certain federal, state, or local government positions, such as some teachers, police officers, or firefighters, and occasionally some foreign employment. In these roles, employees contribute to an alternative retirement system instead of Social Security.

Historically, two provisions significantly impacted Social Security benefits for individuals receiving pensions from non-covered employment. The Windfall Elimination Provision (WEP) was designed to prevent an unintended advantage for individuals who had relatively short careers in Social Security-covered employment but also received a substantial pension from non-covered work. This provision affected an individual’s own Social Security retirement or disability benefits, modifying the benefit formula to reduce the primary insurance amount (PIA).

The Government Pension Offset (GPO) was another provision that aimed to ensure fairness by preventing a “double benefit” for individuals receiving a pension from non-covered employment. This offset specifically reduced Social Security spousal or survivor benefits. Under the GPO, spousal or survivor Social Security benefits were reduced by two-thirds of the monthly non-covered government pension amount.

However, a significant change occurred with the signing of the Social Security Fairness Act on January 5, 2025. This landmark legislation officially eliminated both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). This means that for Social Security benefits payable from January 2024 onward, these reductions no longer apply. Consequently, millions of retirees who were previously affected by these provisions will see an increase in their Social Security payments and will receive retroactive reimbursements for benefits dating back to January 2024.

Pensions from Covered Employment

In contrast to non-covered employment, covered employment refers to any work where Social Security taxes, also known as Federal Insurance Contributions Act (FICA) taxes, were paid on earnings. Most jobs in the United States, including those in the private sector and many government positions, fall under this category. When you see deductions for “OASDI” or “FICA” on your paycheck, those are your contributions to Social Security and Medicare.

Pensions and retirement savings plans from covered employment do not affect your Social Security benefits. This includes common retirement vehicles such as private sector defined benefit pensions, 401(k)s, 403(b)s, traditional Individual Retirement Accounts (IRAs), and Roth IRAs. The earnings that contribute to these plans have already been subject to Social Security taxes. Therefore, the income you receive from these sources is considered separate from your Social Security benefits.

Your Social Security retirement benefits are calculated based on your earnings history over your working life in covered employment. The Social Security Administration (SSA) uses your highest 35 years of indexed earnings to determine your primary insurance amount (PIA). Having additional retirement income from pensions or other savings plans where you paid Social Security taxes does not diminish or offset your earned Social Security benefits.

This means you can receive both your full Social Security benefits and your pension from covered employment without any reduction to your Social Security. The two benefit streams are designed to complement each other, providing a comprehensive retirement income. The key distinction lies in whether Social Security taxes were paid on the earnings that funded your pension.