Any "Public Service Pension" (PSP) payable to you may have an effect on the amount of your spouse annuity Tier 1 component or your divorced spouse annuity. A PSP is retirement pay you receive for public service employment. This may either be monthly payments or a lump-sum payment. It may be administered by a government agency or a private insurance company.
If you are currently entitled to, or will be entitled to, a PSP (or lump-sum payment that is more than just a refund of your own contribution to the pension fund), there may be an offset in your annuity.
Public service means service performed for the Federal Government of the United States, a State government, or any political subdivision of a State, such as a city, county, town, township, village, school or sanitation district. The definition of State includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
Exceptions to PSP Offset
If you believe that you qualify for an exception from the PSP offset, please ask your RRB field office. In general, the PSP offset will not apply to your tier I if your:
- public service employer was an interstate instrumentality i.e. rare cases in which two or more states are organized as a corporation to perform a governmental function (they are not considered public service employers for reduction purposes); or,
- public service employer was a government of a foreign country (such as Canada); or,
- government pension payments are social security, railroad retirement, veterans' affairs, military service, worker's compensation or black lung benefits. (However, social security benefits will cause a reduction to tier I and railroad retirement benefits will cause a reduction);
- pension payments are based on the earnings of another person; or,
- Federal employment was covered under the Federal Employees Retirement System (FERS) and FICA taxes were deducted from the last 60 months of your Federal employment. (Note that a person covered under the Federal Civil Service Retirement System (CSRS), who has a payroll deduction for Medicare (Hospital Insurance) only tax, does not qualify for exemption from the PSP offset); or,
- state or local government employment was covered under the Social Security Act and:
- Federal Insurance Compensation Act (FICA) taxes were being deducted on your last day of employment, and either you filed for your spouse annuity before April 2004 or your last day of state or local government employment was before July 1, 2004; or
- FICA taxes were deducted from the last 60 consecutive months of your employment and you file for your spouse annuity after March 2004 and your last day of state or local government employment is after June 2004.
Note: If your last day of state or local government employment is before March 2, 2009, there is a provision for reducing the requirement of FICA taxes deducted for 60 consecutive months by giving you credit for months before March 2004 for which you paid FICA taxes.