President Joe Biden recently signed the Social Security Fairness Act, marking a significant bipartisan legislation that will lead to an increase in Social Security benefits for public sector workers including teachers, firefighters, and police officers who also receive pension income.
The new law brings about the repeal of two long-standing provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which have been in place for over four decades, impacting millions of public employees and their spouses and survivors.
Driving the news: The WEP currently reduces Social Security benefits for individuals who receive pension or disability benefits from employment where Social Security payroll taxes were not withheld.
- As of December 2023, it affected around 2 million Social Security beneficiaries. The GPO, on the other hand, reduces benefits for spouses, widows, and widowers who also receive income from their own government pensions, affecting nearly 750,000 beneficiaries as of December 2023.
The big picture: With the signing of the bill, President Biden expressed that the new law will extend Social Security benefits for millions of public employees and their spouses and survivors, resulting in an estimated average increase of $360 per month, which he emphasized as a significant boost for middle-class households.
- More than 2.5 million Americans are expected to receive a lump-sum payment to compensate for the shortfall in benefits they should have received in 2024.
- The impact of the Social Security Fairness Act will be on benefits payable after December 2023. There are yet to be specific details on the implementation of the benefit increase, according to the Social Security Administration.
