Learn About the Social Security Fairness Act

What Is the Social Security Fairness Act?

The Social Security Fairness Act is a proposed federal law that would change how certain people receive Social Security benefits. This guide provides information about what the law proposes to do, who it may affect, and how it relates to current Social Security rules.

The law addresses two specific provisions in current Social Security law: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules reduce or eliminate Social Security benefits for certain people who also receive other types of pensions. The Social Security Fairness Act proposes to repeal both of these rules entirely, meaning they would no longer apply to anyone.

As of 2024, the Social Security Fairness Act has been introduced in Congress multiple times but has not yet been passed into law. Understanding what the law proposes requires looking at what these two rules currently do and who they affect today. The rules exist because of concerns about how benefits are calculated when a person has worked in both positions covered by Social Security and positions not covered by Social Security—such as certain government jobs.

Federal employees, state employees, teachers, and police officers in some states have pensions that are not part of the Social Security system. Some of these workers also paid into Social Security through other jobs. The current rules reduce their Social Security benefits based on the non-Social Security pensions they receive. This guide explains how these rules work and what changes the Social Security Fairness Act proposes to make.

Practical Takeaway: The Social Security Fairness Act is a proposal to remove two rules that currently reduce benefits for certain workers with both Social Security coverage and other government pensions. This guide provides information to help you understand what these rules are and who they may affect.

Understanding the Windfall Elimination Provision (WEP)

The Windfall Elimination Provision is a rule created in 1983 that reduces Social Security benefits for workers who receive pensions from jobs where they did not pay Social Security taxes. This rule affects people who spent most of their career in jobs not covered by Social Security, then worked in jobs that were covered by Social Security.

Here's how the WEP works: Social Security calculates benefits using a formula that gives higher percentage returns on lower income levels. This formula was designed to provide a safety net for low-income workers. However, when someone has a pension from work not covered by Social Security, the Social Security Administration considers their overall income picture differently. The WEP adjusts the benefit formula so that people with pensions from non-covered work receive a smaller percentage return on their Social Security-covered earnings.

The impact of WEP varies depending on how much of a person's career was spent in covered versus non-covered work. The maximum reduction is currently about 50% of the non-covered government pension, but it cannot reduce a worker's benefit by more than half of what they would have otherwise received. For example, if someone would have received $1,000 per month in Social Security benefits, the WEP might reduce that to $700 per month if they also receive a government pension.

According to the Social Security Administration, approximately 735,000 people have their benefits affected by WEP. These workers are primarily:

• Teachers who worked in states where teachers do not pay Social Security taxes
• Federal employees hired before 1984 who are covered under the Civil Service Retirement System
• State and local government employees not covered by Social Security
• Police officers and firefighters in certain states

The Social Security Fairness Act proposes to eliminate WEP entirely. If this occurred, people with both Social Security-covered work and non-covered pensions would receive their full calculated Social Security benefit, without any reduction.

Practical Takeaway: The WEP currently reduces Social Security benefits for about 735,000 workers who have pensions from jobs not covered by Social Security. Understanding whether this rule affects your benefit calculation requires knowing which parts of your career were in covered versus non-covered employment.

Understanding the Government Pension Offset (GPO)

The Government Pension Offset is another rule that reduces Social Security benefits for certain people. Unlike WEP, which affects workers' own benefits, GPO affects spousal and survivor benefits. The rule was also created in 1983 to address concerns about benefit calculations when multiple types of pensions are involved.

The GPO affects people who receive pensions from government employment not covered by Social Security and who are also entitled to spousal benefits or survivor benefits based on someone else's Social Security record. These include widow's benefits, widower's benefits, and spousal benefits received at retirement age.

Here's how GPO works in practice: Suppose a teacher's spouse worked in the private sector and paid into Social Security. When the spouse retires, the teacher might be entitled to a spousal benefit in addition to their government pension. However, GPO reduces the spousal benefit by two-thirds of the government pension amount. In many cases, this reduction eliminates the spousal benefit entirely.

For example, if someone receives a government pension of $2,000 per month and would otherwise receive a $1,000 spousal benefit, the GPO would reduce the spousal benefit by two-thirds of $2,000 (which is about $1,333). Since this exceeds the $1,000 benefit, the person would receive no spousal benefit at all.

The impact of GPO is substantial. According to 2023 data, approximately 760,000 people have their benefits affected by GPO. These are often individuals in these situations:

• Teachers with spouses who worked in private sector jobs covered by Social Security
• Government employees with spouses who have Social Security records
• Surviving spouses of government employees receiving widow or widower benefits
• State and local employees with family members who paid into Social Security

GPO can particularly affect people who expected to receive family benefits along with their pension, only to find that their spousal or survivor benefits are reduced to zero. The Social Security Fairness Act proposes to repeal GPO so that people would receive their full spousal or survivor benefits regardless of government pensions they receive.

Practical Takeaway: The GPO currently affects about 760,000 people by reducing their spousal or survivor benefits based on government pensions. If you receive a non-Social Security government pension and your spouse or deceased spouse worked in a job covered by Social Security, this rule may affect what family benefits you receive.

Who Is Affected by These Rules

The Windfall Elimination Provision and Government Pension Offset affect workers in specific occupations and employment situations. Understanding who these rules impact helps clarify why the Social Security Fairness Act has attracted support from various groups.

Public school teachers make up a large portion of those affected. In many states, teachers do not pay Social Security taxes. Instead, they pay into state pension systems. A teacher who spent 30 years in a classroom and did not pay Social Security taxes might have also worked part-time retail jobs or summer positions where Social Security taxes were withheld. If the teacher later receives a state pension and also qualifies for Social Security from that other work, WEP would reduce their Social Security benefit. Similarly, if their spouse worked in a job covered by Social Security, GPO might eliminate or severely reduce spousal benefits.

Federal employees present another large group. Employees hired by the federal government before 1984 participate in the Civil Service Retirement System (CSRS) rather than Social Security. Many of these workers have career service records spanning decades, and some may have also worked in positions covered by Social Security. When they retire, they receive a federal pension and potentially reduced Social Security benefits due to WEP.

State and local government workers also experience these impacts. Police officers, firefighters, and other public employees in certain states do not pay Social Security taxes. These workers sometimes have additional employment in covered work, or they may have spouses with Social Security records. When they retire with government pensions, WEP and GPO apply.

The effects vary significantly by age and gender. Data shows that GPO disproportionately affects women, who are more likely to receive spousal or survivor benefits. Women born before 1954 are particularly affected because they were more likely to have had careers interrupted by family responsibilities, making them