With the recent House approval of the Social Security Fairness Act, millions of Americans could soon see an increase in their Social Security benefits.
The bill, which passed in the House with a strong bipartisan vote of 325 to 75, aims to eliminate two long-standing provisions — the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) — that have historically reduced benefits for retirees with public pensions.
For decades, the WEP and GPO have affected millions of retirees, including public service workers such as teachers, police officers, firefighters, and their spouses.
These provisions limited or, in some cases, even eliminated Social Security benefits for individuals receiving government pensions. With the Fairness Act now on its way to the Senate, those impacted by these provisions could start receiving their full Social Security benefits upon retirement.
Understanding WEP and GPO
The Windfall Elimination Provision (WEP) affects individuals who receive a “non-covered pension,” meaning they worked in a job where Social Security taxes were not withheld. If a retiree has fewer than 30 years of Social Security-covered earnings, WEP can reduce their Social Security benefits, often significantly.
The Government Pension Offset (GPO), on the other hand, affects spouses, widows, and widowers who are eligible for Social Security benefits but also receive a pension from a government job. Under GPO, benefits can be reduced by about two-thirds of their non-Social Security pension amount, which has limited the support many surviving spouses receive.
A Major Step for Retirees
With the passage of this bill, former public service employees and their families could finally have access to the full Social Security benefits they deserve.
Representative John Larson, a Connecticut Democrat, championed the bill, stating that its goal is to enhance Social Security benefits for all retirees rather than cut them. “Now is the time for us to act and to vote,” he said prior to the House decision.
What’s Next for the Fairness Act?
The Social Security Fairness Act now heads to the Senate, where it appears to have substantial support. If the Senate passes the bill, and President Joe Biden signs it into law, it would apply to Social Security benefits administered in December 2023 and beyond, bringing relief to approximately three million affected individuals.
However, there are concerns about the financial impact of the Fairness Act. Analysts have estimated that repealing WEP and GPO could cost around $196 billion over the next decade, potentially impacting the Social Security Trust Fund’s solvency, which is already projected to face depletion issues by 2035.
Some lawmakers, like Representative Jodey Arrington, a Texas Republican, have voiced concerns about accelerating the trust fund’s insolvency. He stressed that Congress should consider all retirees, including future generations, when making changes to the Social Security program.
A Positive Step with More to Come
Although the Social Security Fairness Act has passed the House, it still needs prioritization in the Senate. Alex Beene, a financial literacy instructor at the University of Tennessee, highlighted this as a crucial next step.
“The passing of this bill in the House is an encouraging sign that these recipients will finally get access to the full benefits they should receive,” Beene remarked, adding that the widespread support the bill has garnered makes him hopeful for a smooth passage through the Senate.
If successful, the Social Security Fairness Act will be a major milestone for public sector retirees, restoring benefits that have been limited for decades and reinforcing Congress’s commitment to fair and full retirement benefits.