In All Fairness, Is the SSFA Just an Act?
- 021325
- 2 minutes
Last month, then-president Joe Biden signed the Social Security Fairness Act (SSFA) into law. This new legislation changes the way Social Security benefits are calculated for some individuals, most notably some — but not all — public sector employees.
The SSFA repeals two provisions that previously reduced Social Security benefits for certain retired or disabled workers and their spouses: the Social Security Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). These were intended to prevent Social Security beneficiaries from getting more than their fair share because of specific work history scenarios. Retirees (and their spouses) with less than 30 years of employment in which they paid into the social security system who also received a pension from a job in which they didn’t pay into social security (most often a government position) were subject to lower Social Security benefits under the WEP and GPO. Since non-covered pensions and Social Security benefits are intended to be either/or retirement provisions, there was concern that those receiving both would be unfairly advantaged.
However, many felt the GPO and WEP did more harm than good. After being in place for over 40 years, the SSFA received bipartisan support to roll back these benefit restrictions. The new law applies to benefits paid starting in January of 2024, which means affected recipients may be entitled to retroactive payments in addition to higher benefits going forward. Yet, relatively speaking, only a small portion of Social Security beneficiaries will be affected by the SSFA’s changes.
Most of those previously affected by the WEP and GPO — and who will benefit from the SSFA — are public workers. However, not all public workers are included. In fact, most aren’t. The previous mandates only applied to Social Security beneficiaries who also receive a pension from work not covered by Social Security. Within Ohio, it's estimated that the SSFA will directly impact just over 230,000, with an average boost of $360 each month in benefits.
But for the roughly 3 million nationwide who are affected, it may be more than a year before everyone sees the adjustments and payouts they’re due. And in some cases, recipients may still need to apply. For example, a recipient may have never applied for benefits if the GPO reduced or even eliminated Social Security benefits because of a spouse’s non-covered pension. The Social Security Administration warns that the date of an application may affect when benefits begin, so filing sooner can help to ensure a higher benefit amount.
While the Social Security Fairness Act is good news for some public sector employees, Social Security benefits for most will remain the same. If you’re unsure whether you’re affected or want to understand better what these changes mean for your retirement plan, give us a shout. Our experts are always happy to share knowledge and better equip our clients to make solid decisions about their financial journey.
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