THE SOCIAL SECURITY FAIRNESS ACT

The Social Security Fairness Act, signed into law in January 2025, repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), restoring full Social Security benefits for public sector employees and their spouses. This repeal eliminates longstanding reductions in benefits for workers with government pensions and opens up new eligibility for spousal and survivor benefits. Affected individuals are encouraged to contact the SSA to explore restored benefits, retroactive payments, and the implications for their financial planning.
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This landmark legislation addresses decades of financial inequity experienced by public sector employees and their families, marking a significant victory for fairness and advocacy efforts led by groups such as teachers' unions and public employee associations.

When originally implemented, the Windfall Elimination Provision adjusted the Social Security benefits for individuals who received pension benefits from jobs not covered by Social Security. This group consists mainly of teachers and certain government workers whose jobs did not withhold Social Security funds from their paychecks or require their employers to make matching employer Social Security contributions. Instead, those funds were directed to the pension plans for those workers.

The benefit calculation for Social Security is typically computed using a formula that applies different percentages to a person’s Average Indexed Monthly Earnings (AIME). For most people, the formula is:

• 90% of the first portion of AIME
• 32% of the next portion
• 15% of the remaining portion

For those affected by WEP, the first percentage was reduced from 90% to as low as 40%, depending on the number of years they paid into Social Security.

Example 1: For an individual with an AIME of $1,000, the standard benefit calculation would be 90% of the first $1,000, resulting in $900. Under WEP, this could be reduced to 40%, resulting in a $400 per month benefit.
The Government Pension Offset was established to avoid so-called “double dipping” where the employee received both a government pension and Social Security benefits. The GPO reduced Social Security spousal or survivor benefits by two-thirds of the amount of the individual’s government pension.

Example 2: If someone received a monthly government pension of $3,000, their Social Security spousal or survivor benefit would be reduced by $2,000 (two-thirds of $3,000). The reduction could be significant, sometimes reducing the Social Security benefit to zero, depending on the size of the government pension.

Example 3: If an individual receives a government pension of $2,400 per month, their Social Security spousal benefit of $1,200 would be reduced by two-thirds of the pension amount ($1,600), resulting in a reduced benefit of $0.

The effects of these provisions also impacted the spouses of the affected workers, denying or reducing the spousal benefits offered by the Social Security system. With repeal, spouses who previously had been denied benefits due to GPO can now receive full spousal benefits. Widows and widowers may also be eligible for survivor benefits that previously had been reduced or eliminated.
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The Social Security Fairness Act not only restores benefits to those directly impacted by WEP and GPO but also holds the potential for retroactive payments. While the specifics of retroactive payments are still being clarified, affected individuals should inquire about how far back these payments may go and any potential limitations.

BROADER IMPLICATIONS ON FINANCIAL PLANNING

The repeal of WEP and GPO has significant implications for financial planning. Individuals who now qualify for restored benefits should account for the additional income in their retirement planning. This might include:

• Adjusting tax planning to accommodate higher income levels.
• Re-evaluating withdrawal strategies from retirement accounts such as IRAs or 401(k)s.
• Considering the impact of restored Social Security benefits on overall estate planning.

STEPS TO TAKE

With the passage of the Social Security Fairness Act, it is important that affected individuals contact the Social Security Administration (SSA) to see if they now qualify for benefits or if their spouse may be entitled to additional benefits.

Here are some steps you can take:

1. Gather Relevant Documents: Collect details of your government pension, previous Social Security statements, and any relevant employment records.
2. Contact the SSA: Use the toll-free number to call the SSA or go online to schedule an appointment at a local office.
3. Inquire About Eligibility: During the appointment or phone call, ask about your eligibility for restored benefits, the application process, and any retroactive payments you may be entitled to.
4. Stay Informed: Keep an eye out for updates from the SSA or other reputable sources to ensure you take full advantage of the changes.

CLOSING THOUGHTS

​The repeal of these provisions is a historic step in ensuring fairness for public sector employees and their families. According to advocacy groups, millions of retirees across the nation stand to benefit from the changes. If you or someone you know might be affected, take the time to explore your potential benefits and secure what you’ve earned.
By understanding the implications of the Social Security Fairness Act, you can take proactive steps to ensure you and your loved ones receive the benefits you deserve.