President Joe Biden signed a new law on Sunday that will increase Social Security payments for millions of people in the United States. This law is specifically designed for individuals who have served or are currently working in public service roles, such as teachers, police officers, firefighters, and other government employees. More than 3 million people who rely on their pensions will benefit from this new policy.
The law, known as the “Social Security Fairness Act,” corrects a decades-old disparity. However, implementing this change will put additional strain on the Social Security Trust Fund, which is already facing financial challenges.
What Provisions Have Been Removed?
This law eliminates two key provisions:
- Windfall Elimination Provision (WEP): This rule reduced Social Security benefits for those receiving pensions from other sources, such as state or local government retirement programs.
- Government Pension Offset (GPO): This rule reduced Social Security benefits for individuals receiving government pensions, especially affecting widows and widowers.
With these rules eliminated, public service retirees will now receive their full Social Security benefits without any deductions.
What Did Biden Say?
During the signing ceremony, President Biden stated:
“The bill I’m signing today is based on a simple principle—Americans who have worked hard all their lives deserve to retire with financial security and dignity. That is the whole purpose of the Social Security system.”
He called this move “a big deal” and emphasized that it was a fair decision for hardworking public employees.
How Many People Will Be Affected?
According to the Congressional Research Service:
- 745,679 individuals previously had their benefits reduced due to the GPO rule.
- Over 2.1 million people were affected by the WEP provision.
With these changes, these individuals will now receive their full Social Security payments.
How Much More Will Beneficiaries Receive?
According to the Congressional Budget Office (CBO):
- Eliminating WEP will increase monthly Social Security payments by an average of $360 per person by December 2025.
- Ending GPO will increase benefits by an average of $700 per month for 380,000 individuals who receive payments based on a living spouse.
- Surviving spouses (widows/widowers) will receive an average increase of $1,190 per month for 390,000 beneficiaries.
These amounts will continue to increase with annual cost-of-living adjustments (COLA).
Will Beneficiaries Receive Backdated Payments?
These changes will be effective from January 2024, meaning those who were previously affected may be entitled to backdated payments. However, it is not yet clear how the Social Security Administration (SSA) will handle this or whether beneficiaries will need to take any action.
Reaction from Workers and Unions
- International Association of Fire Fighters (IAFF) President Edward Kelly called it “a correction of a 40-year-old mistake” and said it would provide justice for firefighters and their families.
- Lee Saunders, President of the American Federation of State, County, and Municipal Employees (AFSCME), said that this change will finally allow over 2 million public service workers to access their full Social Security benefits.
- Becky Pringle, President of the National Education Association (NEA), described this law as a “historic victory” for teachers, first responders, postal workers, and other government employees.
Opposition and Concerns
Although this bill received bipartisan support, some Republican lawmakers opposed it. Senator Thom Tillis criticized it as an “unsustainable solution”, warning that it would worsen the financial strain on the Social Security Trust Fund.
Is Social Security Facing a Crisis?
According to the 2024 Social Security and Medicare Trustees Report, the Social Security Trust Fund could run out of money by 2035. The new law will accelerate this crisis by about six months.
Biden’s Stance on Social Security Reform
Earlier in his presidency, Biden also signed the “Butch Lewis Act”, which protected the retirement pensions of 2 million union workers. Now, with this new law, millions of government employees will receive the benefits they were originally entitled to. However, long-term financial stability remains a key concern for the Social Security system.
Conclusion
This new law ensures higher Social Security benefits for teachers, police officers, firefighters, and other government employees. However, it also raises concerns about the financial sustainability of the Social Security Trust Fund in the coming years.
Who would be benefiting from the Social Security Fairness Act?
This legislation mostly benefits those public service workers such as teachers, police officers, firefighters, post office workers, and most government employees. It eliminates clauses that had curbed their social security benefits in cases wherein they were also entitled to government pensions.
What does this law do to social security payments?
By December 2025, beneficiaries affected by the Windfall Elimination Provision (WEP) will receive an average increase of $360 each month; those affected by the Government Pension Offset (GPO) will receive an average monthly increase of about $700 for living spouses and about $1,190 for surviving spouses (widows/widowers).
Retroactively will these benefits mean back pay for retirees?
This law applies to Social Security payments on and after January 2024. However, even if the Social Security Administration is expected to effect such payments, it is still uncertain if individuals will receive back payments of benefits that they had lost in the past.
Will this change affect the financial health of Social Security?
Erasing WEP and GPO will lead to hikes in Social Security spending. Experts have estimated that this change might accelerate the insolvency of the Social Security Trust Fund by about six months-that is, full benefits may not be payable starting in 2035 unless further reforms are made.