On Jan. 5th, President Biden signed the Social Security Fairness Act into law, repealing the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). The historic bipartisan legislation will significantly benefit eligible public sector retirees — such as firefighters, teachers, and nurses. It will also benefit many spouses and surviving spouses.
What Is the Social Security Fairness Act?
The Social Security Fairness Act restores full benefits to eligible retirees regardless of their pensions by repealing the WEP and GPO provisions. These provisions reduced Social Security to workers with both pensions from jobs not covered by Social Security and qualifying Social Security-covered career histories. The provisions were long argued to penalize public sector workers and their families.
Who’s Affected?
WEP: Eligible retirees who:
– Receive a pension from a government or other non-Social Security-covered job (such as teachers, nurses, police, firefighters, etc.)
– AND also had a qualifying career history contributing to Social Security
GPO: Spouses and surviving spouses who receive pensions from a government or other non-Social Security-covered job
Will My Social Security Benefits Increase?
– The law will significantly expand Social Security to millions of retirees. Additionally, affected retirees will receive a retroactive lump sum starting from the beginning of 2024.
When Will the Law Be Implemented?
– The Social Security Administration (SSA) has not yet finalized how to implement the law.
– The date when back pay and newly calculated Social Security payments will be distributed is pending (as of Jan. 2025), as the Social Security Administration (SSA) determines how to implement the new law.
What Were the Windfall Elimination Provision and Government Pension Offset?
The WEP and GPO provisions, implemented more than 40 years ago, intended to prevent retirees receiving pensions from earning a disproportionate amount of Social Security benefits:
- The Windfall Elimination Provision adjusted the formula for calculating Social Security for retirees who worked in both public sector positions, where they earned a pension but did not pay into Social Security, and Social Security-covered jobs, in which they did contribute. Without adjustment, these retirees could still qualify as low-income and earn a higher benefit than intended.
- The Government Pension Offset similarly reduced spousal and survivor benefits by two-thirds of a pension from non-Social Security-covered employment. The idea was that a pension offset the need for a spouse to be financially dependent on their spouse’s Social Security income.
What Should Retirees do now that the WEP/GPO Repeal is law?
If you are receiving Social Security benefits or have already applied for benefits, you do not need to take any action. If your benefits are currently being reduced because of WEP or GPO, you may be entitled to retroactive benefits, since the repeal takes effect retroactively as of January 1, 2024.
The GPO reduced or eliminated Social Security spouses’ or surviving spouses’ benefits, so some spouses may have never applied for benefits. If you are unsure whether you ever applied for spouses’ or surviving spouses’ benefits, you may need to file an application. The date of your application might affect when your benefits begin, so filing sooner might help you get a higher benefit amount.
You can file online at www.ssa.gov, or you can call 1-800-772-1213 Monday through Friday 8:00 a.m. to 7:00 p.m. to learn other ways to apply.
How Do New Laws Affect Retirement Planning?We continue to monitor legislation and policies that will affect your financial future and are committed to keeping you informed as changes occur. If you have questions about the repeal or other changes and how they may impact your retirement or overall financial plan, please contact our team and we’ll be happy to discuss it with you.