I did not think that it would ever happen! After years of lobbying the “Social Security Fairness Act” was passed at the end of December, eliminating the Windfall Elimination Provision (“WEP”) and the Government Pension offset (“GPO”), marking a significant change in Social Security benefits for those with government pensions.
Many state and local government workers, including many teachers and police officers, did not pay Social Security tax, and instead contributed to state run pension programs. Since these workers did not pay into the Social Security program, the WEP and GPO, originally passed in 1977 and 1983, were designed to reduce the Social Security benefits eligible for these workers to address any perceived unfairness.
However, in practice the WEP and GPO were difficult to manage, and many (mostly the impacted government workers) argued that these provisions were punitive. Sometimes ‘fairness’ is in the eye of the beholder. For example, the GPO reduced the spousal and survivor benefits for government workers, reducing benefits that they would have been eligible to receive had they never worked at all.
The Social Security Fairness Act repeals the WEP and GPO entirely. Moreover, the effective date of the repeal is January 1, 2024, which means that those impacted will receive back payments for the adjusted amount. What will be the impact? Obviously, this will vary by person, but here are a couple of examples. The maximum reduction for the WEP was $613 per month, so those impacted by the WEP could see an increase of up to this amount. The GPO reduced spousal and survivor benefits by two-thirds of the non-covered pension benefit amount. So, a teacher receiving a $3,000 monthly CalSTRS pension would have spousal or survivor benefits reduced by $2,000. Therefore, under previous law a spousal benefit of, for example, $1,500 would have been completely eliminated. Under the new law a spousal benefit was $1,500 would now be available up to the full benefit.
At this point, the Social Security Administration has not provided any information on the timing of these checks or process for implementation. We do not know if the Social Security Administration will proactively change the benefit or require recipients to submit paperwork. We will keep you updated as we learn more and will be reaching out to our clients who we know are impacted.
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