Fairness Act

On January 5, 2025, just before he left office, President Biden signed into law the Social Security Fairness Act. This was a bi partisan bill with the house voting 327-75 and the senate 76-20. Prior to this time people who received both a government pension and social security had their benefits reduced but that is no longer the case. The bill was made effective back to Jan 2024. It will cost $20 billion per year for the 3 million effected or $6,700 each. This is one step toward reducing the income gap. Two groups will be most affected. Teachers in states like Illinois who did not participate in social security and federal government employees hired before 1987. Since 1987 all government employees no longer participated in Civil Service, which was a defined benefit plan, and were required to join The Federal Employees Retirement Plan, a 401K type plan. The new law affects two parts. The windfall elimination provision (WEP) and the government pension offset (GPO) Example. Jane worked 30 years under civil service and was not covered by social security. She also worked ten years in the private sector covered by SS. Her civil service pension is $3,000 per month and she is eligible for $900 from SS. Under current law the WEP would reduce her SS from $900 to $500 and no spousal benefit because of the GPO. Under the new law she gets the full $900 from SS and becomes eligible for a spousal benefit of $2,000. Total SS she receives is $2,900. This will increase her SS benefit by $2,400 ($2,900 minus $500). The spousal benefit is the 75% of her husband’s SS which in this example was $3,000 per month