Here’s What it Means for You

The Senate this week passed S. 597 The Social Security Fairness Act, closing out the year with a move that will open the door to increased benefits payments for millions of retired Americans.

The bill, which still has to be signed into law by President Biden, eliminates the Windfall Elimination Provision (WEP) as well as the Government Pension Offset (GPO), two rules that had previously reduced Social Security benefits for those who spent all or most of their careers in public service and received other retirement benefits, such as a pension from a state or local government.1

“Social Security is a bedrock of our middle class. It’s retirement security that Americans pay into and earn over a lifetime of work – and count on to be there for them when they retire,” said Senator Sherrod Brown (D-OH) who cosponsored the bill in the Senate alongside Senator Susan Collins (R-ME). “Social Security should be available to everyone, including local police officers, sheriffs, deputies, firefighters, teachers – and their families.”3

The Senate vote on Friday followed passage of a related bill by the House of Representatives, H.R. 82, in November.2

Who is impacted?

Previously, if you’ve been a public sector employee during your career, your Social Security and retirement planning would look different than those who’ve spent their working years exclusively in the private sector. Private sector employees have a percentage of their paycheck go toward Social Security with the expectation of receiving those Social Security benefits later in life. But, if you have worked in a public sector job your retirement package may not work quite the same way.

Congress passed the WEP to prevent workers who receive non-covered pensions from receiving higher Social Security benefits as if they were long-time, private sector earners, and the GPO to ensure that spousal benefits of those with covered or non-covered lifetime earnings would be roughly equal.

The Windfall Elimination Provision applies to most teachers and public sector employees who receive both:

●     A pension from a job where they did not contribute to Social Security, and

●     Social Security benefits based on fewer than 30 years of substantial earnings in covered employment or self-employment.

In short, it limits the Social Security benefits you can claim if you worked in both the public and private sectors over the course of your career.4

The Government Pension Offset, on the other hand, reduces Social Security benefits for spouses, widows, and widowers who also receive government pensions of their own. Meant to reduce “double dipping,” the GPO allows the government to reduce your spousal benefits by two-thirds the value of your pension.5

What’s changing?

Both WEP and GPO are going away, with the rule anticipated to be effective for benefits payable after December 2024.

The elimination of the WEP means that your earnings history will no longer be discounted and you will earn full credit for your public sector work. Previously, public sector earnings were reduced for anyone who spent less than 30 years in the private sector when calculating Social Security benefits.

By eliminating the GPO, Social Security recipients who previously saw their spousal benefits reduced in order to account for their public sector pension will now receive a full spousal benefit.

In a joint statement following the passage of H.R. 82 in November, cosponsors Rep. Garret Graves (R-LA-06) and Rep. Abigail Spanberger (D-VA-07) said: “By passing the Social Security Fairness Act, a bipartisan majority of the U.S. House of Representatives showed up for the millions of Americans — police officers, teachers, firefighters, and other local and state public servants — who worked a second job to make ends meet or began a second career to support their families after retiring from public service. A bipartisan majority of the U.S. House voted to provide a secure retirement to the hundreds of thousands of spouses, widows, and widowers who are denied their spouses’ Social Security benefits simply because they chose careers of service.”

The bill now heads to the president’s desk to be signed into law.

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SOURCES

  1. “S.597 - Social Security Fairness Act.” Congress.com, March 1, 2023, https://www.congress.gov/bill/118th-congress/senate-bill/597. Accessed 19 December 2024.
  2. “H.R.82 - Social Security Fairness Act of 2023.” Congress.com, January 9, 2024. https://www.congress.gov/bill/118th-congress/house-bill/82. Accessed 19 December 2024.
  3. “House Overwhelmingly Passes Senator Collins’ Social Security Fairness Act.” Collins.senate.gov, November 14, 2024. https://www.collins.senate.gov/newsroom/house-overwhelmingly-passes-senator-collins-social-security-fairness-act. Accessed 19 December 2024.
  4. "Windfall Elimination Provision.” SSA.gov, Social Security Administration, January 2024, www.ssa.gov/pubs/EN-05-10045.pdf. Accessed 19 December 2024.
  5. “Government Pension Offset.” SSA.gov, Social Security Administration, May 2019, www.ssa.gov/pubs/EN-05-10007.pdf. Accessed 19 December 2024.