Many of you have likely heard rumblings about changes that were made to Social Security in the final days of the Biden Administration. The Social Security Fairness Act, signed into law on January 5, 2025, eliminates two provisions—the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)—that previously disqualified millions of Americans from receiving Social Security benefits.
The WEP was introduced in 1983 as a way of reducing Social Security benefits for individuals who receive pensions from employment where they did not pay Social Security taxes. The GPO affected Social Security spousal or survivor benefits. Under this rule, if a person worked in a government job that didn’t deduct Social Security taxes from their paycheck and later qualified for Social Security benefits through a spouse, their benefits were often reduced significantly.
Vocal supporters of the law included the National Education Association, American Federation of Teachers, Fraternal Order of Police, National Active and Retired Federal Employees Association, and National Association of Retired Firefighters. They argued that these provisions unfairly penalized hardworking Americans who have contributed to both public pension systems and Social Security.
Critics of the law argued that Social Security is already on the fast track to insolvency, and adding these new beneficiaries will only exacerbate the challenges facing Social Security. According to the non-partisan Congressional Budget Office, this law will cost billions over the next decade, at a time when the national debt is already at an all-time high.
I’m sure many of you who have paid into some sort of public pension are wondering how this new law will affect you. According to the CBO, those affected by the elimination of the WEP will likely see increases in their monthly Social Security benefits of an average of $360, Those benefiting from the repeal of the GPO will see their benefits go up by around $700 per month on average.
If you are one of those people impacted by this new law, don’t start spending the money just yet. According to the Social Security Administration, due to a hiring freeze put into place this past November, as well as budgetary constraints, they say they do not have the resources available to implement this new law without “negatively affecting daily customer service” and could take up to a year to go into effect.
As is often the case when new legislation like this is passed, there are more questions than answers. In the coming months I anticipate more clarity to be given as to exactly how this law will be implemented and how it will impact you. The Social Security Administration has confirmed that it will proactively be sending out communications to those receiving benefits and advises that you ensure your personal contact information is accurate by logging into ssa.gov. Those receiving benefits already will not have to reapply for these increases but for those who have never applied, you can call the SSA at 1(800) 772-1213 and you can be connected to a dedicated team to see if you qualify for additional benefits.
Of course, we at Stewardship Capital will also be keeping a close eye on the implementation of this law. I anticipate further content to be written by us in the coming months as we learn more about how this important law may affect you.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)