For decades, legislation has been introduced with each new Congress calling for the repeal of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). Finally, in the closing days of 2024, the U.S. Senate has passed the Social Security Fairness Act aimed at repealing these two provisions and the bill is on its way to being signed into law by President Biden.
For 50 years, the WEP and GPO have reduced benefits for public-sector workers who receive a pension from a government job that’s not covered by Social Security, but who also worked long enough in the private sector to qualify for Social Security. Originally intended to prevent public-sector workers from collecting both Social Security and a local, state, or federal government pension, in practice these provisions proved to be unfair to widows and widowers who often depend on spousal Social Security benefits in retirement.
The Bi-Partisan Social Security Fairness Act
On Saturday, December 21, 2024, the U.S. Senate passed the bi-partisan Social Security Fairness Act that will increase Social Security benefits for nearly 3 million federal, state, and local public sector workers, including firemen, policemen and teachers. In the roll call vote, 76 senators voted in favor of the bill, and 20 senators voted against it. In November, the House of Representatives also passed the bill with a bi-partisan majority. On its way to be signed into law by President Biden, the Social Security Fairness Act is being hailed as the most bi-partisan legislation passed during this session of Congress.
“In fact, the two-thirds reduction often resulted in wiping out the Social Security spousal benefit completely.”
The Windfall Elimination Provision (WEP)
The WEP reduced benefits for retirees who worked in both a government position not covered by Social Security and a private-sector job covered by Social Security. The WEP altered the formula used to calculate Social Security benefits for these retirees which resulted in a significantly lower monthly benefit.
The Government Pension Offset (GPO)
The GPO was designed to reduce Social Security for surviving spouses who also worked in a public-sector position. For example, a retired civil servant receiving a federal pension would have their spousal benefit reduced by two-thirds of their pension amount. In fact, the two-thirds reduction often resulted in wiping out the Social Security spousal benefit completely.
The new legislation will affect federal workers who retired, or who will retire, under the Civil Servant Retirement System (CSRS). However, the next steps have not been announced. If you’re a CSRS participant planning on retiring soon, connect with an FRC® trained advisor who can keep you updated on the latest information.
