2024 ended with some major changes  – one of which was the passing of the Social Security Fairness Act. This bipartisan bill was designed to repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), two rules that can significantly reduce Social Security benefits for individuals who have worked in non-Social Security-covered employment.

These provisions disproportionately affected public sector employees, such as teachers, firefighters, and police officers, who received pensions from employment not covered by Social Security.

• Windfall Elimination Provision (WEP): Reduces Social Security benefits for individuals who worked in both Social Security-covered and non-covered jobs.
• Government Pension Offset (GPO): Reduces spousal or survivor Social Security benefits for those who receive a government pension from non-Social Security-covered employment.

How Do the WEP and GPO Impact Retirees?

The WEP and GPO created possible significant financial challenges for retirees who have dedicated years to public service roles. For example, under the WEP, a teacher who worked part-time in Social Security-covered jobs may see their benefits reduced even after paying into the system for years.

Similarly, the GPO can drastically reduce spousal or survivor benefits for retirees like firefighters, whose benefits may be reduced by two-thirds of their government pension, potentially leaving them with little to no Social Security income. It also affects non-working spouses who are typically entitled to half of their working spouse’s Social Security retirement benefit. However, if that same spouse has worked as a public employee in a job that did not pay into Social Security, they may find some or even all of that spousal benefit eliminated due to the Government Pension Offset (GPO). The GPO reduces spousal or survivor benefits by two-thirds of the teacher’s pension, meaning that if the pension is high enough, it could completely wipe out any Social Security benefits they might have otherwise received.

These reductions often come as an unexpected shock, particularly for individuals who were unaware of how these provisions would impact their retirement plans (and how they could affect their Medicare premiums).

When Will This Happen?

That’s a good question. At the time of this writing, the SSA is already having issues rolling this out. According to Think Advisor:

The Social Security Administration said that under its current budget, it could take more than a year to adjust benefits and pay all retroactive benefits under the Social Security Fairness Act, and explained how many recipients would actually be covered under the new law.

“Processing these changes is very complex and SSA’s analysis shows that much of the work must be done manually, on an individual case-by-case basis,” SSA said.

What Should You Do?

If you’re unsure whether the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO) affects you, start by reviewing your employment and Social Security contribution history. Check whether you worked in jobs that didn’t pay into Social Security and if you’re entitled to a pension from those positions. You can also contact the Social Security Administration (SSA) to request a Personal Earnings and Benefit Estimate Statement or use their WEP/GPO calculator tools on the SSA website to estimate how these provisions might apply to your situation.

To stay up to date on changes:

• Follow legislative updates and advocacy groups that focus on Social Security reforms, such as the National Education Association (NEA) or the American Federation of Government Employees (AFGE).
• Sign up for newsletters from trusted organizations or visit the official SSA website for the latest information.
• Keeping in touch with your representatives in Congress and expressing your concerns about the WEP and GPO can ensure you stay engaged and informed as potential changes, such as the Social Security Fairness Act, move forward.

Also, talk to your financial advisor about how this might impact your retirement plans. We’re always available to help you make adjustments so that you can make educated decisions about your finances.

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