The long-awaited Social Security Fairness Act is making its way through the Senate, and it could be passed before the end of the year, helping millions of Americans reliant on Social Security to increase their pensions.
A bipartisan effort, the bill made it through the House of Representatives without major opposition and aims to repeal two measures which have unfairly reduced Social Security benefits for those who received both private pensions and public benefits. The provisions are the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
How do the WEP and the GPO affect Social Security beneficiaries?
The WEP is a formula used to adjust Social Security worker benefits for people who receive "non-covered pensions" and qualify for Social Security benefits based on other Social Security – covered earnings. A non-covered pension is paid by an employer who does not withhold Social Security taxes from your salary, typically found with state and local governments or non-U.S. employers. On the other hand, the GPO adjusts Social Security spousal or widow(er) benefits for individuals who receive non-covered pensions.
To give you some perspective on the impact of these provisions, let's look at some statistics. According to the Social Security Administration, the WEP affected 3.1 percent of all beneficiaries (2.01 million beneficiaries out of 65.99 million total beneficiaries) in 2022. Meanwhile, the GPO applied to approximately 12.6 percent of the 5.84 million spousal or widow(er) beneficiaries, translating to about 734,601 beneficiaries. Those impacted by the GPO had average monthly non-covered pensions of $2,690, which was about $865 higher than the average Social Security retired worker benefit of $1,825.
Interestingly, around 70 percent of beneficiaries affected by the GPO found their entire spousal or widow(er) benefit offset. They received average monthly non-covered pensions of $3,502. For those whose benefits saw partial offsets, the average non-covered pension was $999.
Why is the repeal of the provisions such good news?
This is good news for many workers, especially when you think about the studies showing 53% of workers plan to rely on Social Security to cover their expenses upon retiring. On top of this, 73% are worried the benefits might not be available when they’re eligible. By eliminating the WEP and GPO, those who’ve paid their dues and contributed to the system can finally access the full range of benefits they’re entitled to, rather than getting reduced amounts due to receiving two forms of payment.
A group of bipartisan senators, including Sherrod Brown and Susan Collins, alongside Representatives Abigail Spanberger and Garret Graves, penned an open letter to the Senate, stressing the significance of this bill. They stated, "For the first time in history you have the opportunity to bring this bill across the finish line. We urge you, on behalf of the nearly 2.5 million retirees impacted by WEP and GPO across all states, to bring the Social Security Fairness Act (H.R.82) before the U.S. Senate for a vote."
The potential passage of this bill could significantly alter the lives of countless retirees, particularly blue-collar workers like teachers and firefighters, who often see their benefits dwindled when receiving pensions from jobs not covered by the retirement program.
Looking at the timeline, the bill must be passed before December 31, when the second session of Congress wraps up. If it fails to make it for a vote or gets turned down, it will have to be reintroduced, redrafted, and sent back to the House once Congress reconvenes next year. If it does pass, estimates suggest the cost of providing the increased benefits could reach about $190 billion over the next decade. This poses another dilemma, considering the already evident shortfall of funds within the Social Security program, which may necessitate Congressional action sooner than anticipated.