On January 5, President Joe Biden signed the Social Security Fairness Act, repealing the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) for Social Security benefits. These conditions reduced (if not eliminated) the ability to receive Social Security retirement benefits for many public sector employees such as teachers, employees of local and state municipalities who did not pay Social Security taxes. Below are some points to consider in determining who the GPO/WEP offset applies to and what to expect next.
Who Might the GPO and WEP Conditions Apply To?
On a high level, the WEP and GPO conditions apply to retirees and their spouses who receive pension payments from a non-Social-Security-covered employer. Typically, this includes:
- Teachers
- Employees of Local and State Municipalities
- Employees of Foreign Employers
- Spouses, Widows or Widowers of those who receive pensions not covered by Social Security taxes
How Might This Impact My Retirement Benefits?
Positively. Under the WEP and GPO conditions, Social Security benefits were reduced to account for Social Security taxes not being factored into retirement benefits. With these provisions being repealed, those previously not eligible for Social Security benefits will be eligible in addition to receiving their pension payments. Additionally, since the bill was introduced in January 2024, the changes are retroactive, providing payments back to that date.
When Can I Expect the Benefits?
Stay tuned. Since this law is newly minted, the Social Security Administration is still trying to figure out how to implement these changes. They hope to have the changes implemented later in 2025 and will provide more details over the next couple of months.
Will This Impact Benefits to Those Not Subject to the GPO and WEP Conditions?
No. If you are currently receiving Social Security benefits, your retirement benefits will continue as expected. This is the case for those approaching retirement as well.
Does This Have a Negative Impact on the Long-Term Social Security Solvency?
While current and near retirement benefits shouldn’t be impacted, this change will have a negative impact on the already strained finances for the Social Security Trust Fund. However, as in the past, there will likely be changes to Social Security benefits for younger generations that have time to adjust their plans for retirement. For further reading on the State of Social Security benefits, please see our previous blog: The State of Social Security Benefits
What Should I Do Next?
Call us. While waiting for benefits to kick in, we can evaluate how this will impact your financial plan. We can help evaluate the current WEP/GPO offset, amount of Social Security benefits to expect and timing for receiving benefits.
Sources:
The State of Social Security Benefits
Biden Signs Social Security Law in a Boost for Government Retirees – Barron’s
Windfall Elimination Provision
Program Explainer: Windfall Elimination Provision