Social Security Fairness Act: What You Need to Know

Social Security Fairness Act: What You Need to Know

On January 5th, President Biden signed the Social Security Fairness Act into law. This momentous piece of legislation eliminates the provisions that have previously reduced Social Security benefits for those who receive a public pension. This law will impact millions of Americans, and the Social Security Administration is still determining how it will implement the changes. We will provide updates as we receive more details, but we also wanted to share what we know so far.

What Provisions Are Eliminated?

The Windfall Elimination Provision (WEP) reduced or eliminated Social Security benefits for workers who receive a “non-covered pension” but would also qualify for some Social Security benefit based on their own work history. A non-covered pension is a pension paid by an employer that did not withhold Social Security taxes. The WEP has historically affected many public-sector workers such as teachers, police officers, firefighters, and other public servants who also held a private-sector job at some point. As a result, the WEP eliminated the “windfall” for workers who qualify for both benefits.

The Government Pension Offset (GPO) reduced or eliminated spousal or survivor Social Security benefits for those who receive a “non-covered pension.” According to the Social Security Administration, “The intent of the Government Pension Offset provision is to ensure that, when determining the amount of spousal benefits, government employees who do not pay Social Security taxes are treated in a manner similar to those who work in the private sector and pay Social Security taxes.”

Next Steps

If your own Social Security benefit or the benefit you would receive as a spouse or survivor has been reduced due to your public pension, you will likely be affected by these changes. Although it is still not clear when benefits will be adjusted, we do know that the legislation is retroactive to January 2024. This means that, in addition to an increased monthly benefit, the Social Security Administration will likely provide a lump sum payment to those impacted.

According to the Social Security Administration, if you previously filed for Social Security benefits that were partially or totally offset by the WEP or GPO, the only action you need to take is to verify that your current mailing address and direct deposit information are on file. This information can be verified or updated here: www.ssa.gov/myaccount.

If you did not previously file for Social Security benefits when you were eligible because your own benefit or the benefit you would receive as a spouse would have been completely offset by your public pension, you will need to file to begin receiving a benefit. If this applies to you, we invite you to contact your advisory team to discuss the best filing strategy based on your financial situation.

Please reach out to us with any questions you have. The Social Security Administration will also provide updates, which you can view here: https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html

Advisory services offered through Destiny Capital Corporation, an Investment Adviser registered with the U.S. Securities & Exchange Commission.

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