New Law Ends Decades of Social Security Cuts
New Law Ends Decades of Social Security Cuts
Are you one of the millions of Americans eligible for hundreds or thousands of dollars more each year from Social Security? On January 5, 2025, President Biden signed the Social Security Fairness Act (H.R. 82), which repeals two policies that have been in place for decades: the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). This new law will fix longstanding issues of how Social Security calculates benefits today. This post explains who will benefit and when to expect the back pay to start.
Who Benefits?
According to the Congressional Budget Office (CBO), an estimated 2.1 million Americans are affected by this new law, approximately 3% of beneficiaries. Public servants like teachers, police officers, and federal employees who earned pensions from work not covered by Social Security may have received lower-than-expected benefits. If the SSA reduced your benefits because of the WEP, you'll now see that reduction removed. The same goes for the GPO, which affected spousal and survivor benefits. If your spouse's benefit exceeds your earned benefit, this change ensures you'll receive the higher amount without penalties.
The changes are retroactive to January 2024. That means in addition to higher monthly benefits moving forward, eligible beneficiaries will receive back pay as a lump sum payment for any missed increases starting from last year.
How Much?
Prior to the repeal of the WEP and GPO, the Social Security Administration provided a benefit calculator to estimate the reduction amount. For example, if your pension amount was $600, your Social Security amount would be reduced by $300 per month, translating into a potential benefit of an additional $3,600 annually! For larger pension payments, the maximum WEP reduction was $613 per payment in 2025. For spousal and survivor benefits, the GPO reduction amount was worse. The government will cut your Social Security benefits by up to two-thirds based on your monthly pension amount, with no cap for larger pension amounts. So, if the pension was $600, the reduction was up to $400. You would not receive a benefit if the reduction was more than your monthly Social Security benefit amount. So spouses and survivors who were previously ineligible for benefits due to the GPO may now receive a benefit. The CBO expects the new law will increase benefits by an average of $360 per month.
When Will the Change Happen?
The Social Security Administration (SSA) is responsible for implementing these changes, and because this affects millions of people, it's not something that can happen overnight. SSA administrators must update their systems and processes to reflect the new rules, which could take time. However, lawmakers are stepping in to put pressure on the SSA to make sure they act quickly. Representatives Jason Smith, Chairman of the Committee on Ways and Means, and Ron Estes, Chairman of the Subcommittee on Social Security Committee on Ways and Means, sent a letter to Acting Commissioner Carolyn Colvin, requesting the SSA's plan to implement the Social Security Fairness Act by January 17, 2025. Their letter also seeks details about steps eligible beneficiaries must take to receive their proper benefit payments.
Next Steps
Patience is key. The SSA needs time to calculate amounts accurately and process the payments. While you wait, you can do a few things to prepare. First, make sure your contact information, like your mailing address and direct deposit details, are up to date in your Social Security account to ensure you don't miss any critical updates or payments. If you have not yet applied for benefits and think you might be eligible, contact your local Social Security office if you have questions.
Sources:
https://www.congress.gov/118/bills/hr82/BILLS-118hr82enr.pdf
https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
https://www.ssa.gov/prepare/government-and-foreign-pensions
https://waysandmeans.house.gov/2025/01/10/smith-estes-demand-the-social-security-administrations-plan-to-ensure-timely-relief-in-implementing-repeal-of-the-wep-and-gpo/
https://waysandmeans.house.gov/wp-content/uploads/2025/01/Letter-to-ACOSS-re-Social-Security-Fairness-Act-1.10.25.pdf