The NCSP reduction and PSP offset, enacted in 1983 and 1977 respectively, were intended to equalize social security benefit formulas for railroad retirees and their spouses with similar earnings histories, regardless of whether social security taxes were paid on those earnings. The NCSP reduction reduced the individual’s primary insurance amount (PIA), which is calculated based on the individual’s lifetime earnings and determines the monthly Tier I component amount. The PSP offset reduced the Tier I component for spouses by two-thirds of the gross public pension amount payable to the spouse.
The Social Security Fairness Act, signed into law on January 5, 2025, ended NCSP and PSP statutory reductions for railroad retirees and their spouses who are receiving public pensions from work not covered by social security. If you are currently entitled to, or will be entitled to a NCSP or PSP payment (or lump-sum payment that is more than just a refund of your own contribution to the fund), there will not be an offset in your annuity effective January 1, 2024.