President signs Social Security Fairness Act

Congress passed the Social Security Fairness Act in late 2024, and the president signed it into law in early January. The law repealed two provisions from the 1983 Social Security reforms: the government pension offset and the windfall elimination provision. This repeal will retroactively increase Social Security benefits for people who qualify for or receive pensions from state and local governments or other employers not covered by Social Security. In 1983, analysts found that workers who spent part of their careers in private-sector jobs covered by Social Security and part in non-covered jobs were receiving inflated Social Security benefits. Benefits were calculated assuming an individual worked their entire career in jobs covered by Social Security. However, some employers, like state and local governments and nonprofit organizations, could opt out of Social Security if they provided their employees with retirement benefits. For workers who split their careers between covered and non-covered jobs, their Social Security benefits did not account for pensions from non-covered jobs. As a result, these workers received higher Social Security benefits than intended. Congress introduced the government pension offset and windfall elimination provision to address this issue.

Presidential action affects Social Security benefits

Last year, Congress decided to repeal these provisions and retroactively increase the benefits for those impacted. This change will cause the Social Security trust fund to deplete faster than previously estimated and increase the annual amount of benefits paid by the system. Affected workers will receive higher benefits, and some who have already been receiving benefits will get lump-sum payments reflecting retroactive increases. The Social Security Administration (SSA) said it could take more than a year to adjust current benefit payments and pay the retroactive benefits. The adjustments are complex and require a case-by-case analysis, with much of the work being done manually. The new law did not provide additional funding for staffing or the increased benefit payments. About three million people are estimated to be affected by these changes. The SSA has updated its webpage with a question-and-answer format to provide details on the transition. Individuals who are or believe they might be affected by the new law should visit the webpage for information on steps they should take and updates. Regular visits to the webpage are recommended to receive the latest information. Image Credits: Photo by René DeAnda on Unsplash