Social Security Fairness Act Will Help Public Sector Retirees

In a victory for many retired firefighters, police officers, teachers and others who have seen lower Social Security checks because of their state and local pensions, Congress passed the Social Security Fairness Act on December 21, 2024. President Biden is expected to sign the Act into law any day now.

The Social Security Fairness Act eliminates the Government Pension Offset (GPO), created in 1977, and the so-called Windfall Elimination Provision (WEP), created in 1983. The GPO reduced Social Security benefits of surviving spouses of government workers who received a state or local pension from a job that did not also pay into Social Security. The WEP reduced the Social Security benefits of retirees themselves who earned a government pension from a job that did not also pay into Social Security, and who worked one or more jobs that did pay into Social Security.

The “logic” behind both the GPO and WEP is that Social Security is a system that replaces a bigger percentage of an employee’s pre-retirement income the lower his or her Social Security wages are. Because Social Security wages are lower for a retiree (and thus his or her survivor) whose primary job was a government position that did not pay into Social Security, such a retiree arguably got more of benefit from the Social Security system than an employee who worked only in jobs that participated in Social Security for his or her entire working life.

Of course, there is a cost to the Social Security Fairness Act, since benefits will go up for affected retirees and survivors. The Congressional Budget Office estimates that the Social Security Fairness Act will accelerate the insolvency of the Social Security system in 2035 by about six months. That means that when Social Security has only the money paid in Social Security taxes each year to pay benefits that same year, then Social Security benefits likely will fall across the board by about 25%.

The clock is ticking for a fix for the Social Security system, such as the one Congress passed in the early 1980s that bought the system about 50 years’ worth of survival. At least until then, however, artificially lower Social Security benefits are a thing of the past for retired first responders, educators, and others whose government jobs did not pay into Social Security.

If you have any questions about the Social Security Fairness Act or other laws affecting public sector employees, please contact the labor and benefits attorneys at Willig, Williams & Davidson.