Update: President Biden signed the bill into law on January 5, 2025.
Legislation that would repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) passed the Senate last night and now goes to the president for signing. News reports indicate that President Biden is expected to sign it into law.
The Social Security Fairness Act (H.R. 82) was introduced last year by Congressman Garret Graves (R-LA).
The aspect of the bill of most interest to federal employees is that it repeals the WEP and GPO. The WEP affects individuals who receive pensions from jobs not covered by Social Security, while the GPO reduces spousal and survivor benefits for those who also collect government pensions.
Senate Majority Leader Chuck Schumer (D-NY) said in a statement about the bill:
It [the Social Security Fairness Act] would ensure Americans are not erroneously denied their well-earned social security benefits simply because they chose at some point to work in their careers in public service.
This would ensure Americans are not erroneously denied their well-earned social security benefits simply because they chose careers in public service.
I’m talking about public servants like firefighters, teachers, postal workers, police, and so many other jobs like that.
What Was the Purpose of the WEP and GPO?
It is helpful to understand the original rationale for why the WEP and GPO were initially passed into law.
Government Pension Offset (GPO)
The GPO was passed in 1983 and designed to ensure individuals receiving government pensions from work not covered by Social Security (such as federal workers under the CSRS) did not receive spousal or survivor benefits exceeding what they would receive if they had earned a Social Security benefit through covered employment.
The GPO reduces spousal or survivor benefits by two-thirds of the government pension amount. The effect of this on the Social Security benefit to which you would be entitled on the earnings record of another person may be substantial.
Windfall Elimination Provision (WEP)
The Windfall Elimination Provision (WEP) reduces the Social Security income of local, state and federal retired employees who worked in jobs covered by Social Security (i.e. private sector jobs) and who also get a government annuity from their non-Social Security covered government employment. For example, federal retirees under the Civil Service Retirement System (CSRS) could potentially be impacted by the WEP.
The Congressional Research Service (CRS) describes it this way:
The windfall elimination provision (WEP) is a modified benefit formula that reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to the Social Security payroll tax. Its purpose is to remove an unintended advantage or “windfall” that these workers would otherwise receive as a result of the interaction between the regular Social Security benefit formula and the workers’ relatively short careers in Social Security-covered employment.
This Social Security calculator may help some readers determine the WEP’s financial impact on retirement income.
Arguments Against Repeal
While arguments against the repeal of the GPO and WEP are often lost in lobbying efforts, there are several.
The first concern is the cost. Critics contend that eliminating the GPO and WEP increases the financial burden on the Social Security system, potentially damaging its long-term strength.
According to the Congressional Budget Office (CBO), the cost of eliminating the WEP and GPO would be $196 billion over the next 10 years. This would put increased financial strain on a system that is already in a perilous financial position.
The second concern is expressed as issues of equity and fairness. Opponents argue that GPO and WEP were implemented to ensure fairness in benefit distribution, including those at lower income levels. Eliminating these provisions could result in a less equitable distribution of benefits for those with lower income levels.
Third is the potential impact on other social programs by putting a financial burden on the Social Security System. These are concerns about the broader impact of H.R. 82 on other social programs, as changes to Social Security policies can have cascading effects on related programs and government finances.
Senator Rand Paul (R-KY) had sponsored an amendment to the bill that would have offset the cost of the expanded benefits in the bill by gradually raising the retirement age from 67 to 70 over 12 years, however, it was defeated when the bill was passed in the Senate.
Paul said, “If we give new people more money, we have to take it from somewhere. We have to either borrow it or print it, but it has to come from somewhere. You can’t just push the bankruptcy of Social Security and say, ‘Well, yeah, it will go bankrupt in about nine years but maybe I won’t be here.’ Shouldn’t we care about the future of Social Security?”
Effects of the WEP and GPO
The WEP and GPO are two provisions of the Social Security law affecting Social Security benefits for some CSRS retirees. The WEP can apply to CSRS Offset and FERS Transferee retirees as well. It is estimated that these provisions affect about 3 million people.
These two provisions were introduced in the 1980s to strengthen the Social Security system. Unions and public employee advocates in Congress have worked to repeal or revise them since the bills were passed.
The GPO does not apply to CSRS Offset and FERS Transferees once they have worked under CSRS Offset or FERS for five years.
Like many other retirement rules and regulations, the Windfall Elimination Provision and the Government Pension Offset are confusing. Consider the titles of these programs:
- The Windfall Elimination Provision does not eliminate a Social Security benefit to which you are entitled on your own earnings record. It will usually drastically reduce the benefit.
- The Government Pension Offset’s offset of any Social Security benefit to which you would be entitled on the earnings record of another may eliminate this benefit.
These provisions can impact FERS and CSRS employees to some extent. They apply to anyone who has earned pension benefits based on work not covered by Social Security. This includes CSRS Offset employees and FERS employees who transferred from CSRS after having five years of civilian service (enough to entitle them to a CSRS retirement benefit).
