Breaking News: WEP and GPO About to Be Eliminated
In the wee hours of the morning on Saturday December 21, the Senate passed the Social Security Fairness Act by a vote of 76 to 20. The legislation had already passed by a vote of 327 to 75 in the House. All that remains for the bill to become law is for President Biden to sign it. Since he is on record for saying that he supports the bill and is prepared to sign it, there is every expectation that will happen, and soon.
The legislation eliminates two provisions that have tortured millions of public service employees and their families for decades. The Windfall Elimination Provision (WEP) reduced Social Security benefits for people who receive pensions from “noncovered” employment, meaning earnings that were not subjected to Social Security taxes. The Government Pension Offset (GPO) was even more punishing, dramatically reducing or even eliminating survivor benefits that might otherwise have been available to spouses and children. Groups most affected by WEP and GPO were police, firefighters, and public school teachers for whom contributions were made into special pension programs instead of Social Security. Also affected were some people who became entitled to pensions based on work in foreign countries as well as Social Security benefits based on U.S. earnings. Now it appears certain that both of those provisions will soon be history.
The effective date of the legislation will be retroactive to January 1, 2024. The changes, though welcomed by those directly affected, will be of little solace to people who were deprived of tens of thousands of benefit dollars over decades, including many who may have died before this legislation becomes effective.
You can expect a splash of news coverage over the next few days, before the topic gets moved off the front pages by other items of interest. You can also expect that it will take the Social Security Administration weeks and maybe months to ramp up their capacity to deal with the changes and make adjustments in benefits. The good news is that when the extra dollars begin to flow into beneficiaries’ bank accounts, they should be be paid in full retroactively.