The Social Security Fairness Act was signed into law on January 5, 2025. In this article we’ll break down the changes, eligibility, and potential challenges that lie ahead.
What is The Social Security Fairness Act?
The Social Security Fairness Act requires the Social Security Administration (SSA) to adjust benefits for people who were previously affected by the Windfall Elimination Provision and Government Pension Offset. Both provisions reduced Social Security benefits for those who also received a non-covered pension. A non-covered pension is a pension paid by an employer that does not withhold Social Security taxes from your salary.
The new legislation eliminated both longstanding provisions:
- Windfall Elimination Provision (WEP) – This provision reduced Social Security benefits for a person who also received a non-covered pension. The formula associated with this provision prevented workers from receiving higher Social Security benefits. By 2022, WEP impacted just over 2 million beneficiaries.
- Government Pension Offset (GPO) – This provision reduced Social Security for spousal or survivor benefits by two-thirds for people who received non-covered pensions.
With the repeal of WEP and GPO, the Social Security Fairness Act will allow approximately 3.2 million public sector employees (teachers, firefighters, police officers, state and local government employees and more) an increase in their Social Security benefits.
Benefits will be applied retroactively to January 2024. This means that WEP and GPO provisions will no longer affect benefits payable for January 2024 onwards.
Eligibility
While the Social Security Fairness Act brings significant changes, it’s important to note that most state and local employees (approximately 72% according to SSA) already pay Social Security taxes and earn Social Security benefits. These individuals will not see a change in their benefits due to the new law. The benefit increases will primarily affect those impacted by WEP and GPO.
Do I Need to Take Action?
- For individuals currently receiving benefits subject to WEP or GPO, no action is required, SSA will automatically recalculate and update benefit amounts as appropriate.
- If you have never applied for retirement, spouse’s, or surviving spouse’s benefits because of WEP or GPO, contact SSA via their website (www.ssa.gov/apply) or call 1-800-772-1213 to determine the best course of action for your individual circumstances.
Potential Challenges Ahead
- Processing Backlog: The SSA faces a significant task in adjusting benefits for over 3 million individuals.
- Data Accuracy and Complex Calculations: Accurately identifying eligible individuals and calculating adjustments, both retroactively and prospectively, is crucial. This requires precise data management and system capabilities.
- Resource Constraints: Existing staff shortages and budget limitations may delay timely processing.
- Scams: Given the financial implications, scams targeting beneficiaries are likely. It’s critical to emphasize that the SSA will never require payment for assistance, benefit initiation, or benefit disbursement.
Implementing the Social Security Fairness Act will take time, but the elimination of decades-old provisions is a major step forward in increasing benefits for millions of public sector workers.
This content is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult with qualified professionals for personalized advice regarding your specific situation. Data is based on publicly available information on the Social Security Administration’s website (www.ssa.gov) as of the date of publication and is subject to change.