President Biden is poised to sign the Social Security Fairness Act into law, a move that will significantly impact nearly 3 million current and former public employees receiving pensions. This legislation addresses a long-standing disparity, rectifying the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which have historically reduced Social Security benefits for those receiving other retirement payments, such as state or local government pensions.
The WEP and GPO disproportionately affected teachers, firefighters, police officers, and other public servants. According to the Congressional Research Service, in December 2023, approximately 745,679 beneficiaries (about 1% of all recipients) experienced benefit reductions due to the GPO, while 2.1 million (about 3%) were affected by the WEP. The Congressional Budget Office projects that eliminating the WEP will increase average monthly payments by $360 by December 2025, while eliminating the GPO will boost average monthly benefits by $700 for 380,000 spousal beneficiaries and $1,190 for 390,000 surviving spousal beneficiaries. These amounts will further increase annually with cost-of-living adjustments. Backdated payments from January 2024 will be issued, although the exact implementation details remain unclear.
The impact on beneficiaries is significant. Edward Kelly, president of the International Association of Fire Fighters, described the change as rectifying a “40-year wrong,” particularly beneficial for surviving spouses. Lee Saunders, president of the American Federation of State, County and Municipal Employees, and Becky Pringle, president of the National Education Association, similarly celebrated the law as a historic victory for public servants. While some Republicans supported the bill, citing the unfairness of the existing system, others voiced concerns about its long-term fiscal implications, arguing it further strains the already precarious Social Security Trust Funds.
The bill’s passage, however, comes at a time when the Social Security Administration is grappling with its lowest staffing levels in decades. The agency, currently under a hiring freeze, faces the added burden of processing backdated payments and managing the increased administrative workload associated with the law’s implementation. The Social Security and Medicare trustees’ report warned of impending insolvency in 2035, a date the new law is projected to accelerate by approximately six months. This underscores the ongoing debate surrounding the future of Social Security and its long-term financial sustainability, a crucial issue that played a prominent role in the recent 2024 election.