On January 5, 2025, President Joe Biden signed the Social Security Fairness Act into law during a ceremony in the East Room of the White House. This new bipartisan legislation eliminates two long-standing rules, the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP), which have been in place for over 40 years.
This law is particularly significant for public sector employees in states like Ohio, as well as federal and postal workers hired before 1984. Many of these workers are part of pension systems not covered by Social Security.
What Changes with the Social Security Fairness Act?
The Windfall Elimination Provision (WEP) previously reduced Social Security benefits for individuals who earned a public pension and were also eligible for Social Security. The law applied a restrictive formula that lowered their Social Security payout. With the repeal of WEP, eligible recipients will now receive higher Social Security benefits.
The Government Pension Offset (GPO) affected individuals receiving a public pension based on their own work while also being eligible for Social Security spousal or survivor benefits. Under the old rule, two-thirds of their public pension amount was deducted from their Social Security spousal benefit, leaving many ineligible for any payments. With GPO no longer in effect, spousal and survivor benefits will no longer be offset by public pensions.
How This Affects Real-Life Cases
To better understand the impact of this law, here are a few examples:
- Jack, 72:
Jack receives a public pension of over $4,000 per month and $400 in Social Security benefits based on his own work. With the repeal of WEP, Jack’s Social Security benefits will more than double. He doesn’t need to take any action, as the Social Security Administration (SSA) will automatically recalculate his benefits and pay him retroactively from January 2024. However, this process may take a few months. - Mary Ellen, 84:
Mary Ellen earns a $5,000 monthly pension from her work. Her late husband’s Social Security benefit would have been $3,000 per month. Under the new law, she will now receive the full $3,000 as a survivor benefit, retroactive to January 2024. Mary Ellen should contact the SSA to schedule an appointment and file a claim for her survivor benefits. - Joe, 77:
Joe earns a public pension exceeding $4,000 per month and currently gets $300 from Social Security. After the WEP repeal, his Social Security benefit will more than double. Additionally, since his wife earns $2,800 monthly in Social Security benefits, Joe is now eligible for a spousal benefit equal to half of her amount. This means he will receive an extra $1,400 per month minus his own Social Security benefit. Joe should contact the SSA to file for spousal benefits.
What You Should Do
If you receive a public pension and have a connection to Social Security benefits (through your work or a spouse’s work), it’s important to review your eligibility under this new law.
Here’s what you can do:
- Wait for Automatic Adjustments: If you are eligible for increased benefits due to WEP repeal, the SSA will recalculate and adjust your benefits automatically.
- Contact SSA for Spousal/Survivor Benefits: If you may qualify for spousal or survivor benefits, schedule an appointment with the SSA to file a claim.
Keep in Mind
While these changes bring financial relief, Social Security benefits are taxable under IRS rules. This additional income could affect Medicare premiums for Part B and Part D. It’s crucial to plan accordingly.
For the most accurate and updated information, visit the Social Security Administration website at www.ssa.gov or call their hotline at 1-800-772-1213 (available Monday through Friday, 8 a.m. to 7 p.m.). The SSA is likely to experience high call volumes, so it’s best to call early in the morning or later in the week.
Final Thoughts
The Social Security Fairness Act is a game-changer for thousands of retirees, particularly those in public service roles. By eliminating the WEP and GPO, the law ensures a fairer distribution of Social Security benefits. While navigating these changes may take time, the potential financial benefits make it worth the effort.
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