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The Key Takeaways
- After the Social Security Fairness Act was approved by both the Senate and the House of Representatives with unanimous support, the President signed it into law Sunday.
- The new law eliminates two provisions—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)—that reduced Social Security benefits for public sector workers who receive pensions.
- This law increases the deficit over ten years by $190 billion and accelerates the Social Security Trust Fund depletion by six months.
Social Security Fairness Act signed by Joe Biden, President On Sunday, it is possible that Social Security benefits could be increased for over 2 million workers in the public sector.
"The bill I'm signing today is about a simple proposition—Americans who have worked hard all their lives to earn an honest living should be able to retire with economic security and dignity," Biden said at the signing ceremony. "The law that existed denied millions of Americans access to the full Social Security benefits they earn by thousands of dollars a year. That denial of benefits also applied to surviving spouses of public service employees."
The new law repeals two old provisions—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)—that reduced Social Security benefits for public sector workers who receive pensions.
Bill was introduced to the House 2023. On December 21, the Senate passed it with bipartisan approval in a vote of 76-20.
What is the New Law?
The now rescinded provisions affected the amount of Social Security benefits that workers earned if they received retirement or disability pensions from jobs where they didn’t pay Social Security taxes.
Enacted in 1983 to bolster Social Security's finances, the WEP limited retirement and disability benefits for workers who are eligible for Social Security benefits but receive pensions from jobs that don't withhold Social Security taxes. The formula used to calculate benefits for these workers will be changed by repealing WEP.
"A lot of people who were affected by the WEP end up getting to retirement and get this kind of nasty surprise that their Social Security benefit is substantially lower than they thought," said Emerson Sprick, an economist at the Bipartisan Policy Center.
GPO reduced Social Security benefits to spouses and survivors of those receiving their government pensions via jobs without Social Security taxes. The GPO would reduce a person’s monthly spouse benefit by 2/3 of the pension value. Those who retire would no longer have to pay for their spouse’s benefits. GPO is estimated to reduce benefits for 1% of recipients.
Since Jan. 2, Social Security Administrations (SSA) have stated that beneficiaries currently affected do not need take action. Instead, they encourage people to "verify that we have your current mailing address and direct deposit information if it has recently changed."
New Law may increase the deficit and eat into Social Security Trust Fund
The critics of this law claim that the trust fund for Social Security will be depleted faster and the deficit would increase by $196 billion.
"Repealing the WEP and GPO, without offsetting the additional costs, is incredibly fiscally irresponsible," Sprick said. "It has major fiscal and fairness effects."
According to a Congressional Budget Office report, the new law will accelerate the depletion of the trust funds, already due to dry up in 2034.
"To right a wrong for a small percentage of people that should get fairly treated, they are going to take $200 billion over 10 years to pay for this," said U.S. On December 18, Senator Thom Tillis, R-NC said that the United States would need to spend $200 billion over 10 years in order to correct a wrong.
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