Public-sector employees nationwide received an early gift from the US House and Senate just a few days before Christmas, 2024. Two policies related to Social Security benefits were repealed via the Social Security Fairness Act (SSFA), which was passed by both houses of Congress on December 21, 2024, and signed into law by President Biden on January 5, 2025. The bill had strong bipartisan support in both chambers, passing in the House 327–75 and in the Senate 76–20.
The repealed policies- the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)- could increase annual benefits for millions of affected workers and their families, including many firefighters, police officers, teachers, and postal workers as well as all current and former employees in the State of Alaska retirement systems. The mechanics of how the Social Security Administration (SSA) will implement the changes is still uncertain, with the SSA suggesting they are “evaluating the law and how to implement it”, with a promise to provide more information on their website as soon as possible.
There is always uncertainty when a law passes late in an administration, but the ease with which this law passed in both chambers of Congress may suggest that it is here to stay. So, what does it mean?
Windfall Elimination Provision (WEP)
The WEP, enacted in 1983, reduced the monthly benefit (called the Primary Insurance Amount, or PIA) for earners also eligible for a public pension in systems that did not pay into Social Security during their time in public service. The SSA provides a summary of the WEP, including the now-repealed benefit reduction formula, here.
While we could write a separate blog related to how the WEP works, that appears to be unnecessary at this point. The bottom line is that the previous reduction in Social Security benefits based on the WEP formula and certain state pensions are no longer relevant. For some, this could increase their expected Social Security benefits dramatically. This is expected to be true for both current Social Security recipients and future filers.
Government Pension Offset (GPO)
While the WEP impacted expected Social Security benefits during the retired employee’s lifetime, the GPO impacted spousal and survivor benefits. Enacted in 1977, the GPO reduced spousal and survivor benefits for public service employees by 66% of their pension amount. This left most spouses and survivors with little or no access to the benefits of a spouse who may have worked in the private sector and received substantial monthly Social Security checks.
With the repeal of the GPO, surviving spouses may see a big increase in benefits received over their lifetime. Typically, within the Social Security system, a surviving spouse will get the larger of the two benefits, regardless of who that benefit belonged to, with the smaller benefit dropping off at the first death. Under the GPO, survivor benefits from a high-earning spouse were often reduced drastically or eliminated entirely. The recent repeal will make public sector pension recipients eligible for the full spousal and survivor benefits, both during the life of the retired employee and after the death of one of the spouses.
The exact timing and particulars of how the SSFA will be enacted are yet to be determined at this early stage. Implementation of this law will occur under a different Administration, so it’s unclear what obstacles may arise, , but The Planning Center is closely monitoring developments. To learn more about how this significant change in the law could benefit you or your family, let’s get together in 2025 to discuss it.
