Retirement Reform Alert: Senate Removes WEP and GPO Hurdles as of Today

Many of today’s workers plan to retire. However, not everyone who enters retirement has the same circumstances as you. Some people were affected by a clause that would limit their earnings, putting them at a disadvantage compared to the rest of Social Security recipients.

This has changed, and they can regain a portion of the money they should have gotten since January 2024. 

What were the windfall elimination provision and government pension offset retirement provisions?

When you begin to consider retirement, the first step is to call the Social Security Administration (SSA) to assess your specific situation and begin calculating your monthly payout. To do so, the SSA adjusts all of your contributions for inflation before calculating the AIME (Average Indexed Monthly Index) using your 35 highest-earning years.

Following that, the SSA will compute your Primary Insurance Amount (PIA), which will determine your monthly payout. The foundation of this final stage is a progressive algorithm that gives higher percentages to the first thousand dollars of your AIME and lowers it as it increases. This is known as the progressive formula. Specifically, the percentages used are:

AIME Amount	% Considered
Up to $1,115	90%
Over $1,115 and up to $6,721	32%
Above $6,721	15%

However, not all SSA beneficiaries receive their entire retirement benefits directly from the SSA;

Some, such as police officers, firefighters, teachers, Civil Service Retirement Service (CSRS) employees, foreign workers, and even railroad workers, will receive their pensions from both the SSA and a private pension scheme. As a result of this unique circumstance, they will receive a portion of their retirement benefits from private schemes and the remainder from the SSA.

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Because the methodology is progressive, they would have an unfair advantage because their contributions to the retirement insurance scheme would always be less than their actual income. As a result, two provisions were implemented:

• Windfall Elimination Provision (WEP): It was implemented in 1986 and reduced the first tier of the benefits formula from 90% to 40% if you have 20 or fewer years of contributions to the SSA, and it increases gradually to 90% if you have contributed from 21 to 29 years.
• Government Pension Offset (GPO): it was implemented in 1982 and it targets the spouse or dependents of a deceased worker who was part of the SSA and a private scheme. It worked by reducing the Survivor Benefits by two-thirds of the part that is not covered by the government pension.

What is the role of the Social Security Fairness Act for Retirement?

Since 2001, there have been several attempts to pass a law known as the Social Security Fairness Act, which would remove those two restrictions. However, it took until January 2023, when Representative Garret Graves introduced it, for it to gain support again. The goal of the Social Security Fairness Act is straightforward: to make the Social Security system more equitable to public employees.

When will you expect to get your retirement payment adjustments?

In November 2024, the House of Representatives passed the bill 327 to 75. Later, on December 21, it cleared the Senate. Therefore, all that remains is for President Biden to sign it into law. It is estimated that it will affect 1% of retirees in the case of the Government Pension Offset and 3% of the WEP.

For now, the SSA has indicated that if you are one of those whose payments have been reduced, you must ensure that your direct deposit information and current postal address are correct on the “My Social Security” part of the official SSA website.

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