In a significant change for public employees across Colorado, including those at Colorado State University (CSU) and Poudre School District in Fort Collins, the recently passed Social Security Fairness Act promises to boost their retirement incomes. The law, signed on January 6, 2025, aims to rectify issues that had been reducing Social Security benefits for employees who receive pensions from state or local governments.
What is the Social Security Fairness Act?
The Social Security Fairness Act repeals two key provisions in federal law that had been in place for over 40 years: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These provisions had long reduced or even eliminated Social Security benefits for public employees who did not contribute to Social Security while working for state or local governments but had earned Social Security credits from other employment.
Most public employees, including teachers, police officers, firefighters, and other state or local workers, are not covered by Social Security for their public sector jobs. As a result, they didn’t pay into Social Security during their time in public service. However, some of these employees had jobs in the private sector before working in government, where they contributed to Social Security. Under the old rules, these employees saw reductions in their Social Security benefits, including benefits for their spouses or widows.
With the repeal of the WEP and GPO, these employees will no longer face penalties, allowing them to receive full Social Security benefits, including spousal and survivor benefits, based on their work history.
Who Will Benefit from the Law?
The Social Security Fairness Act will impact a large number of public employees in Colorado, particularly those covered by the Public Employees Retirement Association (PERA). PERA manages retirement benefits for employees of over 400 government agencies and public entities in the state.
This includes workers at public universities and school districts, such as CSU and the Poudre School District in Fort Collins. These two organizations alone employ over 10,000 people, many of whom will now benefit from the repeal of the WEP and GPO provisions. Other affected groups include state troopers, judges, and employees of local governments like towns, cities, and counties across Colorado.
The law also applies to federal employees covered by the Civil Service Retirement System (CSRS), bringing relief to thousands of workers nationwide.
When Will Adjustments to Social Security Payments Happen?
The Social Security Administration (SSA) has not provided specific dates for when the changes will be fully implemented, but the adjustments are retroactive to January 1, 2024. The SSA has confirmed that it is working on a plan to adjust payments without disrupting its regular operations.
At the moment, the SSA has stated that it cannot offer an estimated timeframe for when individual benefits will be adjusted, but it will continue to update the public as it moves forward. In the meantime, individuals who are affected by the law change can expect retroactive lump sum payments to make up for any reduced benefits from January 2024 onwards.
How Much Will Social Security Benefits Increase?
The increase in Social Security benefits will vary depending on an individual’s income, pension amount, and the type of benefit they are receiving. Some individuals may see only a small increase in their monthly benefits, while others could be eligible for over $1,000 more each month.
On average, however, former President Joe Biden, who signed the bill into law, stated that most recipients would see an increase of approximately $360 per month. These benefits will come in the form of retroactive lump sum payments to cover any reduced benefits going back to January 2024.
Do I Need to Contact the Social Security Administration?
The SSA has advised that most individuals will not need to take any action to receive the benefits increase. As long as the SSA has up-to-date contact information for you, such as your current mailing address or direct deposit details, you should automatically receive the adjustments. However, if you have not yet applied for spousal or survivor benefits, you may need to file an application.
To apply for spouses’ benefits, you can visit the SSA website or call (800) 772-1213 for guidance on how to apply for survivor benefits.
What Are the Costs of These Changes?
The changes brought about by the Social Security Fairness Act are expected to cost approximately $196 billion over the next 10 years, according to the Congressional Budget Office. While supporters of the law argue that it will correct an unjust system that penalized workers for their service in government jobs, critics warn that it could lead to a less equitable system. Some opponents are concerned that the changes could hasten the depletion of the Social Security trust fund by altering how benefits are calculated for different workers.
Conclusion
The Social Security Fairness Act is a win for public employees in Colorado and across the United States, offering them a fairer system for receiving Social Security benefits. With the repeal of the WEP and GPO, many workers who had seen their Social Security benefits reduced or eliminated will now see a boost in their monthly retirement income. This change will provide much-needed relief to retirees and future retirees who have worked hard in public service.
For those affected, it’s essential to stay informed about any updates from the SSA, and for those who have not yet applied for certain benefits, it’s worth taking the necessary steps to ensure eligibility.
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