For decades, millions of public employees in the United States have had to swallow the bitter pill of a reduction in their Social Security benefit by two policy adjuncts: the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO. Finally, a new ray of hope has come along as Congress filed a bipartisan bill called the Social Security Fairness Act, or SSFA. If passed, this bill may finally eliminate these provisions and significantly raise the Social Security benefits for these workers.
Understanding WEP and GPO
Two laws that for many years have been considered to be notoriously injurious to people who work in the public sector-teachers, police officers, firefighters, and postal workers-are the WEP and GPO. The WEP reduces the Social Security benefits of those who are receiving a pension from a job that did not subject them to paying Social Security taxes, which is often true with many jobs in government. The GPO, on the other hand, reduces the spouse or survivor benefits of those receiving a pension from an employer that does not pay into Social Security.
These provisions were initially implemented to prevent what was perceived as an unintended advantage for workers with pensions from non-covered jobs. Many believe, though, that they unfairly penalize individuals who have contributed to the Social Security system through other work.
The Social Security Fairness Act
If passed, the SSFA would repeal both the WEP and the GPO, thus giving workers currently affected a significant boost to their Social Security benefits. The bill is gaining bipartisan support, having garnered enough votes to force a full House vote in coming weeks.
SSFA advocates argue the law is unfair since it penalizes individuals who have made credit in another job to reap Social Security benefits from working in a government position. Proponents of the bill suggest hard working Americans, no matter where they have worked, deserve their Social Security benefits without penalty.
Possible effect on recipients
SSFA would have a profound impact on millions of Americans if enacted into law. For the month of December 2023, Social Security Administration estimates were that about 2.1 million people applied under the WEP, where the overwhelming majority were retired-worker beneficiaries. Meanwhile, GPO reduced benefits for 745,967 Social Security beneficiaries during the same period.
For those impacted by WEP, the benefits reduction can be as much as half of the pension amount. The GPO is even more severe, in that two-thirds of the pension amount may lead to the spouse or survivor benefits reduction. Abolishing both of these provisions could significantly alleviate many thousands of retirees and their families who desperately need this money.
Possible issues and options
Even as it is gathering momentum, the potential roadblocks to become law facing SSFA are still there. According to some analysts, a revision in WEP and GPO, rather than an all-out repeal, may be able to make it through. A prorated formula-one that would make Social Security benefits directly proportional to income received from jobs whose income paid into the system-is one such proposal.
Meanwhile, proponents maintain it would minimally dent the solvency of Social Security while still offering some much-needed aid to the workers affected by this reform. Still, others say what is really going to be fair and helpful is the complete repeal of WEP and GPO.
