President Biden signed the Social Security Fairness Act into law today. The aspect of the bill of most interest to federal employees is that it repeals the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).
The Social Security Fairness Act (H.R. 82) was introduced last year by Congressman Garret Graves (R-LA). It passed the House in November 2024 and the Senate approximately one month later in December.
What is the Windfall Elimination Provision?
The WEP reduces Social Security benefits for retired local, state, and federal government employees who worked in Social Security-covered employment and receive a government annuity from non-covered employment. It applies to retired federal employees who began before 1984 under the Civil Service Retirement System (CSRS), who don’t pay the 6.2% payroll tax and don’t earn Social Security benefits from their federal work. It doesn’t apply to Federal Employees Retirement System (FERS) employees who pay the tax and earn benefits.
What is the Government Pension Offset?
The GPO was designed to ensure individuals receiving government pensions from work not covered by Social Security (such as federal workers under 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.
How Many People Are Affected by the WEP and GPO?
More people are affected by the WEP than the GPO.
According to the Congressional Research Service (CRS), approximately 3% of all Social Security recipients are impacted by the WEP as of December 2023 which equates to roughly 2.1 million people.
CRS also estimates that about 1% of Social Security recipients are impacted by the GPO as of December 2023. That is about 745,679 people. CRS adds, “Of those directly affected by the GPO, 51% were spouses and 49% were widow(er)s. About 68% of all GPO-affected beneficiaries had their benefits fully offset, and about 32% had their benefits partially offset.”
How Is the New Law Likely to Affect Monthly Social Security Payments?
For any eligible individuals impacted by the WEP, the Congressional Budget Office (CBO) estimates that eliminating the WEP would increase monthly payments by an average of $360 by December 2025. It estimates this would increase to $460 on average by December 2033.
For eligible individuals impacted by the GPO, CBO estimates that by December 2025, monthly benefits would increase by an average of $700 for 380,000 spouses and by an average of $1,190 for 330,000 surviving spouses. By December 2033, it estimates the figures would reach $860 and $1,520, respectively.
One way to get an idea of how the Social Security Fairness Act may impact your payments is to use the WEP and GPO pension calculator on the Social Security Administration (SSA) website.
SSA has developed a chart showing the maximum monthly amount that Social Security benefits can be reduced because of the WEP if a person has less than 30 years of substantial earnings.
SSA also has additional information about the GPO and how it can impact payments.
How Will the Social Security Fairness Act Be Implemented?
Details on that are hard to come by right now. The Social Security Administration (SSA) is the agency that will primarily be tasked with implementation.
As of the time of this writing, SSA notes that the new law will eliminate the reduction of Social Security benefits while entitled to public pensions from work not covered by Social Security and that it is currently evaluating how to implement the bill and will provide more information when it is available.
What is known is that some payments will be made retroactively, per the text of the legislation. According to remarks he made at the bill signing, President Biden said this will be a lump sum payment. Eligible individuals who previously only received partial benefits will get a full payment retroactive to January 2024. When and how that will be done is to be determined by SSA.
Impacted individuals who previously filed for Social Security benefits do not need to take any action according to SSA. They just have to verify that SSA has their current mailing address and direct deposit information if it has recently changed which can be done online.
For individuals receiving a public pension who are interested in filing for benefits, they can file online at ssa.gov or schedule an appointment.
How Will This Impact Me Specifically?
We have received a number of questions about whether the new law will impact individuals given their particular circumstances. Unfortunately, I am not able to answer those.
Consulting with a tax expert and/or retirement benefits expert about the details of your situation would be your best course of action to find out more. The Social Security Administration may be issuing more information as well as it implements the law and begins the process of planning and making payments.
FedSmith will continue to provide new information to our readers as it becomes available.
