Social Security Fairness Act Aims to Boost Payments for Millions
What would the measure do?
The Social Security Fairness Act would repeal two provisions that limit Social Security benefits for certain recipients based on retirement payments they receive from other sources. The Windfall Elimination Provision modifies the usual benefit formula for retirees or disabled workers who are entitled to pension payments based on earnings from jobs that were not covered by Social Security. The Government Pension Offset limits Social Security spousal benefits and widow’s or widower’s benefits for retired federal, state, or local government workers who opted out of Social Security taxes.
Who is affected?
Social Security is commonly understood as a universal system, but federal law has carved out exceptions. Generally, there are a few job categories that can be exempted and trigger benefit offsets:
- Civilian federal employees hired before 1984
- State and local government employees who participate in their jurisdictions’ retirement systems that allow them to opt out of Social Security
- Railroad workers who are covered under a separate federal insurance program
- Some clergy who can opt out
The Congressional Research Service estimates that in December 2023, there were 745,679 people, about 1% of all Social Security beneficiaries, who had their benefits reduced by the Government Pension Offset. About 2.1 million people, or about 3% of all beneficiaries, were affected by the Windfall Elimination Provision.
When would changes go into effect?
The current proposal calls for changes to payments for January 2024 and beyond. If Congress sticks to that timeline, that means the Social Security Administration would owe back-dated payments.
How much money is involved?
The Congressional Budget Office estimates that eliminating the Windfall Elimination Provision would boost monthly payments to the affected beneficiaries by an average of $360 by December 2025. Ending the Government Pension Offset would increase monthly benefits in December 2025 by an average of $700 for 380,000 recipients getting benefits based on living spouses.
Would a beneficiary have to take action to get increased benefits?
It depends. The proposals moving on Capitol Hill are straightforward, but it’s not immediately clear how easily the Social Security Administration could adjust payments for a few million people. Recipients with complicated formulas can sometimes see errors in their payments when they have been automatically recalculated. Backdated payments can be especially problematic.
Conclusion
The Social Security Fairness Act aims to boost payments for millions of people who are affected by the Windfall Elimination Provision and the Government Pension Offset. The bill has bipartisan support and has cleared its first hurdle in the Senate. If passed, the changes would go into effect in January 2024 and beyond, with back-dated payments owed to affected beneficiaries.
FAQs
Q: Who is affected by the Windfall Elimination Provision and the Government Pension Offset?
A: People who are entitled to pension payments based on earnings from jobs that were not covered by Social Security, including civil service retirement, state and local government retirement, and railroad retirement.
Q: How many people are affected by these provisions?
A: The Congressional Research Service estimates that in December 2023, there were 745,679 people, about 1% of all Social Security beneficiaries, who had their benefits reduced by the Government Pension Offset. About 2.1 million people, or about 3% of all beneficiaries, were affected by the Windfall Elimination Provision.
Q: How much money is involved in the changes?
A: The Congressional Budget Office estimates that eliminating the Windfall Elimination Provision would boost monthly payments to the affected beneficiaries by an average of $360 by December 2025. Ending the Government Pension Offset would increase monthly benefits in December 2025 by an average of $700 for 380,000 recipients getting benefits based on living spouses.
Q: Would a beneficiary have to take action to get increased benefits?
A: It depends. The proposals moving on Capitol Hill are straightforward, but it’s not immediately clear how easily the Social Security Administration could adjust payments for a few million people.
