Over 2 Million People to Get Increased Social Security Benefits Under New Law
What is the Social Security Fairness Act?
Social Security benefits are generally funded through payroll taxes, which most workers pay throughout their careers. However, many government workers, such as teachers and police officers, have separate pension plans and are exempt from contributing to Social Security taxes on their government income. Workers hired before 1984 were part of a different retirement plan altogether.
The Social Security Fairness Act eliminates two provisions—Windfall Elimination ProvisionA rule that reduces Social Security benefits for individuals... More and the Government Pension Offset—that previously reduced benefits for public-sector workers. These provisions were created to prevent individuals from receiving both pension payments and Social Security benefits at the same time. The new law removes these provisions, allowing many public-sector workers to receive an increase in Social Security benefits.
Windfall Elimination Provision (WEP)
The Windfall Elimination ProvisionA rule that reduces Social Security benefits for individuals... More (WEP) is a rule that can reduce Social Security benefits for individuals who have worked in both jobs where they paid into Social Security and jobs where they didn’t, such as government positions with a pension.
The WEP affects those who receive a pension from work not covered by Social Security, like certain public sector jobs (e.g., teachers, police officers, or state employees). While the WEP aims to prevent double-dipping by adjusting benefits for individuals who’ve had substantial earnings outside the Social Security system, it often results in a significant reduction in the benefits that individuals are entitled to receive. The Social Security Fairness Act seeks to eliminate this provision, allowing many workers to receive a higher monthly benefit.
Government Pension Offset (GPO)
The Government Pension Offset (GPO) is a rule that affects individuals who are eligible for both a government pension and Social Security spousal or survivor benefits. The GPO reduces the Social Security benefits you can receive as a spouse or widow(er) if you also receive a pension from a job where you didn’t pay into Social Security, such as a government job. The offset can reduce your spousal or survivor benefits by two-thirds of the amount of your government pension.
The Social Security Fairness Act aims to repeal this provision, helping to ensure that public-sector workers who’ve paid into Social Security through other jobs can receive full spousal or survivor benefits without the offset.
Who Will Benefit from the Bill?
The Social Security Fairness Act is set to impact over 2 million Social Security recipients and future retirees. The law particularly affects individuals who worked in the public sector but also paid Social Security taxes through other jobs at some point in their careers.
The Windfall Elimination ProvisionA rule that reduces Social Security benefits for individuals... More impacts retirees and workers with disabilities by reducing their Social Security benefits based on their pension income. By eliminating this provision, many individuals will see an increase of around $360 in their monthly Social Security checks starting in 2025.
The Government Pension Offset affects the benefits a surviving spouse can receive, reducing their Social Security payments if their partner had a government pension. With the removal of this provision, surviving spouses will be eligible for more Social Security benefits.
Why This Matters
Supporters of the bill argue that public-sector workers who contribute to Social Security deserve to receive increases in Social Security benefits in retirement, just like any other worker. The new law ensures that these individuals will no longer face unfair penalties for having a pension and paying Social Security taxes through other employment.
However, the Social Security Fairness Act comes with a significant cost. The Congressional Budget Office estimates that the law will add $196 billion in expenses over the next 10 years. While the bill will help many retirees, it will also put additional pressure on the Social Security trust fund, shortening its projected lifespan by six months.
Example: Teacher with a Pension and Social Security Benefits
Old Law (Before the Social Security Fairness Act)
- Teacher’s Pension: $3,000 per month (public-sector pension)
- Social Security Spousal Benefit (if eligible): $1,500 per month
- Impact of the Government Pension Offset (GPO): Under the old law, the teacher’s spousal Social Security benefits would be reduced by two-thirds of the teacher’s pension.
- Two-thirds of Pension: $3,000 * 2/3 = $2,000.
- Social Security Spousal Benefit Reduction: $1,500 – $2,000 = $0.
So, under the old law, the teacher would not receive any Social Security spousal benefits because the GPO reduces their spousal benefit by an amount greater than the benefit they were eligible for.
New Law (After the Social Security Fairness Act)
- Teacher’s Pension: $3,000 per month (public-sector pension)
- Social Security Spousal Benefit (if eligible): $1,500 per month
- Impact of the Social Security Fairness Act: The Social Security Fairness Act eliminates the Government Pension Offset (GPO), so the teacher will receive their full Social Security spousal benefit without any reduction.
- Social Security Spousal Benefit: $1,500 (full amount).
- Pension Impact: No impact on Social Security spousal benefit.
Under the new law, the teacher will receive the full $1,500 in Social Security spousal benefits, in addition to their $3,000 pension.
Moving Forward
Despite uncertainty over the bill’s passage just a few weeks ago, strong bipartisan support and advocacy from unions led to its approval. The Social Security Fairness Act is expected to make a meaningful difference for retirees who rely on Social Security, giving them the increase in Social Security benefits they deserve.
