Millions of people across the United States could soon see an increase in their Social Security payments, thanks to a new bill set to be voted on by the Senate. The Social Security Fairness Act, which has already passed in the House, aims to eliminate long-standing rules that reduce benefits for those who are eligible for pensions from other jobs. This new legislation could impact nearly 3 million Americans, many of whom work or have worked in state, local, or federal government positions, including teachers, police officers, and firefighters.

What Is the Social Security Fairness Act?

The Social Security Fairness Act proposes the repeal of two provisions that have long been a source of frustration for certain retirees. These provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), reduce Social Security benefits for people who receive pension payments from jobs that were not covered by Social Security.

The WEP adjusts the standard Social Security benefit calculation for people who have worked in jobs where they didn’t pay Social Security taxes but still qualify for a pension. The GPO similarly reduces Social Security spousal or survivor benefits for people who worked in jobs where they didn’t pay Social Security taxes but instead paid into another public retirement program.

These provisions primarily affect public sector employees, including teachers, firefighters, police officers, and state and local government workers, who often have their Social Security benefits reduced due to their other pensions.

Why Is This Legislation Important?

Currently, millions of Americans who are eligible for Social Security benefits find that their monthly payments are significantly reduced because of the WEP and GPO. For example, someone who worked as a public health nurse and received a pension from a state retirement system that doesn’t participate in Social Security could see their Social Security survivor benefits cut by a substantial amount.

The new legislation would eliminate these reductions, ensuring that individuals who paid into Social Security throughout their careers would receive full benefits, even if they also qualify for a pension from a government job.

Who Will Be Affected?

The changes in the Social Security Fairness Act would impact several groups of people, particularly those working in public sector jobs. As of December 2023, about 745,000 people were affected by the GPO, and around 2.1 million people were impacted by the WEP.

The largest group of individuals who stand to benefit from this bill are state and local government workers who have worked for years without paying into Social Security. These workers could see a significant boost in their Social Security benefits when they retire, as they will no longer face reductions based on their pensions.

Additionally, retirees who are eligible for both Social Security and pensions could also see an increase in their benefits, as the bill will ensure they receive the full amount they’re entitled to, regardless of any other pension payments.

How Will This Change Impact Your Benefits?

If the legislation passes, changes to Social Security benefits will likely take effect in January 2024. This means that the Social Security Administration (SSA) would begin issuing backdated payments to those affected by the WEP and GPO.

The Congressional Budget Office (CBO) estimates that removing the WEP could increase monthly payments for affected individuals by an average of $360 by December 2025. For those impacted by the GPO, the average increase could be as much as $700 for 380,000 recipients and $1,190 for 390,000 surviving spouses. These increases will continue to grow with Social Security’s regular cost-of-living adjustments.

However, these changes will come with a price. The CBO estimates that the legislation could increase Social Security’s net spending by approximately $198 billion from 2024 to 2034. The elimination of these provisions would also result in some savings for other government programs, like the Supplemental Nutrition Assistance Program (SNAP), as some recipients’ higher Social Security benefits could reduce their need for food assistance.

Will You Need to Do Anything to Get the Increased Benefits?

For most beneficiaries, the Social Security Administration will automatically adjust their monthly payments to reflect the changes in the law. Since the SSA already has records of workers’ earnings, it should be able to calculate and issue new payments without requiring individuals to take any action.

However, there may be some exceptions. For example, beneficiaries who are eligible for new spousal benefits due to the changes could need to apply specifically for those payments. The SSA estimates that about 70,000 new beneficiaries could be added by the end of 2033.

While the SSA is expected to adjust payments automatically, there could be delays or errors as they process the changes. The SSA is currently underfunded, which could cause backlogs as they work to manage the increase in cases.

What’s Next for the Bill?

The Social Security Fairness Act has already gained widespread support in Congress, passing the House with a strong vote of 327-75. The bill is now awaiting a final vote in the Senate. If passed, it will be sent to President Joe Biden for approval.

Supporters of the bill argue that these changes are a matter of fairness for those who have worked hard in public sector jobs and should not be penalized by losing part of their Social Security benefits. Critics, mostly from the conservative side, worry about the long-term costs of the bill and its potential impact on the Social Security Trust Fund, which is already projected to face financial challenges in the coming years.

For now, the bill is in its final stages, and millions of Americans are watching closely to see how it will impact their Social Security benefits in the near future.

For more information on how these changes might affect your Social Security benefits, visit the Social Security Administration’s website at ssa.gov or contact their toll-free hotline at 1-800-772-1213.