Social Security Fairness Act Signed into Law

The Social Security Fairness Act passed the House and Senate late last year, and was signed into law by President Biden on January 5, 2025. It will benefit almost three million public sector employees, retirees, spouses and surviving spouses. The changes are effective for benefits payable after December 2023, with higher payments starting sometime later this year.

The new legislation repeals the Windfall Elimination Provision (WEP) and Government Pension Offset  (GPO). For over 40 years, the provisions have reduced or eliminated Social Security benefits for those who receive a non-covered pension.  Noncovered workers include state and local government employees whose employer was not required to withhold Social Security taxes such as teachers, firefighters, police officers.

Until now, the WEP reduced Social Security payments for those who received a non-covered pension and qualified for Social Security benefits due to holding Social Security-covered job.  Workers that paid into Social Security for less than 30 years could have up to half of their monthly pension subtracted from their social security payment. The GPO impacted Social Security payments for the spouses and surviving spouses of individuals who receive a government pension. If two-thirds of the pension’s value was higher than the value of the Social Security payment, the GPO fully eliminated the benefit.

How will Benefits be Impacted?

The Congressional Budget Office (CBO), the Committee for a Responsible Federal Budget, estimates that eliminating WEP will increase Social Security payments by an average of $360 per month for around 2.1 million people. Eliminating GPO will increase monthly benefits by $700 for spouses, and $1,190 for surviving spouses, benefiting around 750,000 people. The monthly payments will also be subject to annual cost-of-living adjustments.

Estimates from the CBO anticipate the cost of the additional benefits will be $196 billion over the next decade.  The additional spending will move up Social Security’s insolvency date by about 6 months, from 2035 to 2034.  After that benefits will be cut for everyone by about 21%.

The Social Security Administration is expected to publish details on how the law will be implement, though they have not given a timeline. The payments to impacted individuals are expected to be paid retroactively and will likely begin sometime in 2025, though it could bleed into 2026.