Social Security Fairness Act Signed into Law to Benefit Public Sector Workers
The Social Security Fairness Act eliminates WEP and GPO, providing increased benefits for nearly three million public sector workers and ensuring fair calculation of Social Security benefits.
The Social Security Fairness Act (SSFA), recently signed into law by former president Joe Biden, eliminates rules that reduce Social Security benefits for those who also receive income from public pensions.
Now that it is law, nearly three million teachers, firefighters, police officers, and other public sector workers receiving pension income will see increases in their Social Security benefits, according to CNBC.
What Is the Social Security Fairness Act?
"The Social Security Fairness Act fully repeals the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)," stated Devin Carroll, CFP and owner of Carroll Advisory Group, in an email. "Historically, these provisions have affected individuals who receive a pension from work where they did not pay into Social Security." These provisions have been in place since 1983.
According to Carroll, WEP reduces benefits based on an individual's work record, while GPO reduces spousal or survivor benefits that an individual would otherwise be entitled to receive.
For instance, consider a teacher with a pension from their teaching job—which is not subject to Social Security taxes—who also has a qualifying second job for Social Security benefits. Under WEP, Social Security benefits are calculated in a way that yields a lower benefit amount than standard formulas would provide.
GPO functions similarly to WEP but affects Social Security spousal and survivor benefits of someone with a pension from a job not covered by Social Security.
"With this repeal, all benefits will now be calculated using the same formulas and rules," Carroll explained.
While there have been previous proposals to address these provisions, they were never passed. "Unlike past proposals that sought to replace WEP with an alternative calculation formula, this legislation eliminates it entirely," said Carroll. "Moreover, most previous proposals did not address GPO, but the Social Security Fairness Act removes both provisions."
Now that the bill has been signed into law, adjusted payments will be retroactive to January 2025, according to the financial advisor. "However, it is still unclear whether retroactive payments will be issued as a lump sum or distributed over time," he added.
