The Social Security Fairness Act of 2024 signed earlier this month is poised to bring long-awaited relief to nearly 3 million retired public service employees in the US, who faced reduced or eliminated Social Security benefits under the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) rules.
These provisions, enacted decades ago, had significantly impacted retirees such as teachers, firefighters, and police officers.
Then US President Joe Biden, in a signing ceremony at the White House, had described the legislation as a critical step toward ensuring that hardworking Americans can retire with dignity. “This law restores fairness to our Social Security system, providing much-needed economic relief to millions of retirees,” Biden stated, according to CBS News.
Impact of the law
The WEP, established in 1983, reduced benefits for individuals who worked in both Social Security-covered and non-covered jobs.
Meanwhile, the GPO, introduced in 1977, cut spousal or survivor benefits for retirees receiving government pensions. Both provisions often led to unexpected financial strain during retirement, particularly for those transitioning from private-sector to public-sector roles.
Kathryn McCall, a financial adviser with CAPTRUST, highlighted how the repeal benefits such individuals. “Those who worked part of their careers in the private sector and later took up public sector jobs will now receive fair compensation without pension penalties,” McCall explained, as reported by KCRA.
According to the Congressional Budget Office (CBO), the elimination of these provisions will result in:
- An average increase of $360 in monthly benefits for 2.1 million retirees by December 2025.
- An average monthly boost of $700 for 380,000 spouses and $1,190 for 390,000 surviving spouses.
Beneficiaries will also receive lump-sum payments retroactive to January 2024, covering shortfalls for the past year, CNBC reported.
Implementation and concerns
While the law’s benefits are clear, its financial implications have sparked debate. Critics warn that the repeal could add approximately $200 billion to the federal deficit over the next decade and hasten Social Security’s insolvency by six months. Despite these concerns, the law has been hailed as a win for equity in retirement benefits.
The Social Security Administration is currently reviewing procedures to implement the changes, with enhanced monthly payments expected to begin by late 2025. Beneficiaries are not required to take any immediate action but should ensure their contact and payment details are up-to-date with the SSA.
A decades-long fight
The push to repeal WEP and GPO spanned decades, with bipartisan efforts gaining momentum only in recent years. Edward Kelly, president of the International Association of Fire Fighters, called the repeal a restoration of a broken promise. “Retired firefighters and emergency workers will now receive the full Social Security benefits they earned,” Kelly said, as qouted by CBS News.
As the new law takes effect, retirees and policymakers alike are reflecting on its significance. Financial planner Barbara O’Neill, personally affected by WEP, was qouted by CNBC saying, “The change simplifies retirement planning and provides financial stability to countless retirees”.
