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Home»Finance News»Social Security Fairness Act brings retirement changes for some pensioners
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Social Security Fairness Act brings retirement changes for some pensioners

January 7, 2025No Comments4 Mins Read
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Social Security Fairness Act brings retirement changes for some pensioners
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President Joe Biden after he signed the Social Security Fairness Act at the White House on Jan. 5 in Washington, D.C. 

Kent Nishimura | Getty Images News | Getty Images

President Joe Biden on Sunday signed the Social Security Fairness Act into law, clearing the way for nearly 3 million public workers including teachers, firefighters and police to see an increase to their Social Security benefits.

Now, two provisions that reduced Social Security benefits for certain public workers who receive pensions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — have been eliminated.

The WEP and GPO were put in place more than four decades ago. When the provisions were created, the goal was to ensure that workers who earn public pensions from employment where they did not pay into Social Security, but who also qualify for Social Security benefits through other work, receive the same payout as workers who pay into Social Security for their entire careers.

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The WEP was enacted in 1983 and reduces Social Security benefits for some workers who also receive pension or disability benefits from work where Social Security payroll taxes were not withheld.

The GPO was enacted in 1977 and reduces Social Security benefits for certain spouses, widows and widowers who also receive income from their own government pensions.

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How much Social Security benefits may increase

The new law affects benefits payable after December 2023.

More than 2.5 million Americans will receive a lump-sum payment of thousands of dollars to make up for the shortfall in benefits they should have received in 2024, Biden said on Sunday.

Eliminating the WEP will increase monthly Social Security benefits for 2.1 million beneficiaries by $360, on average, as of December 2025, the Congressional Budget Office has estimated.

Eliminating the GPO will increase monthly benefits by an average of $700 for 380,000 spouses and by an average of $1,190 for 390,000 surviving spouses as of December 2025, according to CBO.

“The Social Security Administration is determining the timelines for implementing this new law,” a Social Security spokesperson told CNBC on Monday. “We will provide more information on our website as it becomes available.”

For now, beneficiaries should make sure the Social Security Administration has their current mailing address and direct deposit information on file, according to the agency. That information can be updated online or by calling or visiting a Social Security office.

WEP, GPO often came as unpleasant surprise

The WEP and GPO benefit reductions often came as an unpleasant surprise to affected beneficiaries during the retirement planning process because the provisions were often not well publicized, said Abrin Berkemeyer, a certified financial planner and senior financial advisor at Goodman Financial in Houston.

“It should be a windfall for quite a lot of folks,” Berkemeyer said of the change.

For some beneficiaries affected by the change, the extra income will be life-changing, according to CFP Barbara O’Neill, owner and CEO of Money Talk, a provider of financial planning seminars and publications.

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O’Neill, a former Rutgers University professor, has been personally affected by the WEP.

Once she started to claim her pension, she notified the Social Security Administration. At that point, her monthly benefits were reduced, but it took about five months for the change to be processed, prompting the agency to claw back the benefits she was overpaid during those months.

Now that the WEP and GPO provisions have been eliminated, that takes away a common source of overpayments, where beneficiaries owe money to the Social Security Administration after receiving more money than they were due. The provisions have prompted overpayment issues due to a lack of available data on pensions from noncovered employment, according to the Congressional Research Service.

Generally, the elimination of the WEP and GPO will make retirement planning simpler, experts say.

The extra money the change provides to beneficiaries puts less pressure on them to generate income from other assets they may have, said Michael Carbone, a CFP and partner at Eppolito, Carbone & Co. in Chelmsford, Mass.

What’s more, it also eliminates the need for the complex calculations the provisions required in order to gauge benefit income, said CFP Andrew Herzog, associate wealth manager at The Watchman Group in Plano, Texas.

“That certainly makes things easier,” Herzog said. “It gives people a sigh of relief.”

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