Earlier this month, President Joe Biden signed the Social Security Fairness Act into law, a significant legislative move that will enhance Social Security benefits for current and former public employees. This new legislation addresses previous reductions in benefits due to non-covered pensions, affecting millions of individuals who have dedicated their careers to public service roles. The increased payments will complement the recently announced 2.5% Cost of Living Adjustment (COLA) for 2025, benefiting recipients of Social Security, Social Security Disability, and Supplemental Security Income. In this article, we delve into the implications of the Social Security Fairness Act and explore its impact on beneficiaries.

The Social Security Fairness Act, passed by the House in November and signed into law on January 5th, aims to rectify longstanding inequities faced by public servants such as teachers, firefighters, postal workers, and police officers. For decades, these workers experienced reduced Social Security benefits because of two specific provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules penalized individuals who received pensions from employers not covered by Social Security taxes. The act repeals both WEP and GPO, ensuring fairer benefit distributions.

The Congressional Budget Office forecasts that eliminating WEP will boost average benefits by $360 for approximately 2.1 million beneficiaries. By December 2033, this increase is expected to rise to an average of $460 for 1.8 million recipients. Similarly, removing GPO will lead to substantial increases in monthly payments. Spouses are projected to receive around $700 more per month starting in December 2025, with surviving spouses seeing an increase of about $1,190. By December 2033, these figures could reach $860 and $1,520 respectively.

Only about 4% of all Social Security beneficiaries are affected by WEP and GPO, but the changes can significantly improve household finances for those impacted. The act applies retroactively to benefits payable after December 2023, meaning qualifying individuals will receive back payments. However, the CBO anticipates a decrease in Supplemental Nutrition Assistance Program payments for dual program participants due to higher Social Security benefits.

The Social Security Administration is currently working on implementing the Social Security Fairness Act. Beneficiaries previously affected by WEP or GPO should ensure their mailing addresses and direct deposit information are up-to-date through their online accounts, phone calls, or local offices. As more details emerge, the SSA website will provide further guidance. This legislation marks a pivotal moment for public sector workers, offering them greater financial security in retirement.