This bill, signed into law by President Joe Biden on January 5, 2025, marked a significant shift in the landscape for Social Security benefits, particularly for public sector retirees. This act essentially does away with two long time provisions: WEP and GPO, long-time provisions which have hitherto reduced the benefits for those who receive pensions from work not covered under Social Security. While the Act increases benefits to more than 3 million retirees, its implementation had its share of problems that caused delays in the payment of increased amounts.
Know the Repealed Provisions
- Windfall Elimination Provision (WEP): The WEP was enacted in 1983 to ensure that individuals who worked both covered employment (with Social Security taxes) and noncovered employment were not paid benefits that were substantially higher than their earnings. What happened was that the benefit formula was recalculated downward rather significantly, typically resulting in a lower Social Security benefit for an individual receiving a pension from work not covered, such as pensions from certain state and local governments. In 2022 alone, over 2 million people were impacted.
- Government Pension Offset (GPO): GPO reduced the spousal or survivor Social Security benefits to those who are also receiving a government pension out of non-covered employment. For example, GPO reduced that amount by two-thirds of the government pension that they were getting, which would result in drastic reductions or full elimination of spousal benefits for many people. As of 2022, about 734,000 beneficiaries were being affected by GPO.
Effect of the Social Security Fairness Act
The repeal of WEP and GPO is anticipated to bring enormous relief in the financial sense for those retirees that are going to be impacted. According to SSA, some recipients are expected to have increases up to $1,000 per month or even more in Social Security payments. As the average retirement benefit stands at $1,926 monthly for December 2024, it will bring enormous income in many cases.
For example, a teacher who retires and is now receiving some state pension related to non-covered employment that was previously subject to the WEP may, as a result of this change, receive his or her full Social Security benefit. Similarly, a surviving spouse denied spousal benefits for previous GPO overapplications may now receive those spousal benefits in full.
Implementation Issues
Despite all the great changes, implementation of the law to the new legislation was, in many instances, challenging and had caused delayed benefits adjustment due to the following reasons:
- Not having sufficient finances. The SSA had not provided funds to process readjusted benefits as included in the Social Security Fairness Act. Because of the inadequate supply of these facilities, more time has taken the agency in adjusting the new rate of compensation.
- Complex Recalculations: The SSA must recalculate the benefits of over 3 million retirees and implement the changes from January 2024. It is a complex process, and the disbursements need to be correct; hence, this adds complexity to the implementation date.
- Staffing Shortages: The SSA had hiring freezes and reduced personnel since November 2023, adding to the delays in processing the benefit adjustments.
This will mean that many retirees will wait for more than a year to have the benefits included in their payments. The SSA is well aware of this and is working to better the situation but gives the beneficiaries an idea that it is going to take some time.
Assistance to Affected Retirees
The action recommended for those with the repealed WEP and GPO:
- Keep Your Records Current Ensure that the SSA has your up-to-date address for mailing checks and your bank information in case they wish to continue direct deposit to your account. Many of these updates may be done using the SSA’s my Social Security account.
- Be Patient: These increases are pending, but processing will take months. The SSA has confirmed the payments will be retroactive from January 2024, meaning eligible recipients will receive the correct amount owed upon completion of those adjustments.
- Budget conservatively: With the timing of the higher payments uncertain, avoid making big financial decisions based on the expected benefits increase.
- Review Eligibility: You may also want to review your eligibility-if you never applied for spousal or survivor benefits because of the GPO-under the new law. Applying immediately could mean receiving the benefits you’re now entitled when you apply.
- Keep Abreast of the Latest: Stay informed with the latest news on the process through the official communications of the SSA. The SSA has dedicated a page for the Social Security Fairness Act, which will provide continuous updates.
Conclusion
The Social Security Fairness Act is a significant historical shift in the direction toward fair treatment of public sector retirees within the Social Security system. The road to an increase will seem long due to bureaucratic bottlenecks delaying the release of these benefits, but the financial provision will mean much to millions of recipients when it finally comes. Affected individuals are cautioned to stay abreast, lower expectations, and take personal steps to adjust their finances in preparation as the SSA continues to strive for full implementation.