The Social Security Fairness Act, HR 82 is a bill that was recently signed into law that repeals several decades-old provisions and aims to increase Social Security payments for nearly 3 million former and current public employees who also have other pensions.
Who does this impact?
The beneficiaries include firefighters, police officers, teachers, and other public-sector positions.
What are the provisions and how do they affect public-sector workers?
According to congress.gov, the bill eliminates the Windfall Elimination Program, which in some cases can lower Social Security benefits for individuals who also receive a pension or disability from an employer that didn’t withhold Social Security taxes.
The bill also eliminates the Government Pension Offset, which in some cases can lower Social Security benefits for spouses, widows, and widowers who simultaneously received a government pension.
What is the foundation for the changes?
Most jobs are covered by Social Security. However, many workers spent their lives in state and local government jobs that Social Security doesn’t cover, so they have been eligible for a pension in place of it. While Social Security doesn’t cover their government jobs, some workers may have held other jobs in the past or alongside their current jobs that do allow them to pay into Social Security and be eligible for those benefits.
The provisions were originally meant to prevent certain beneficiaries from receiving higher Social Security benefits than earned. Critics of the provisions claimed they led to unfair reductions for some people. Therefore, the provisions were eliminated after many years of political red tape.
How can you apply for benefits?
If you previously filed for Social Security benefits and they are partially or completely offset, you don’t have to take any action aside from verifying that the SSA has your current mailing address and direct deposit information. This can be done online through the “my Social Security account” here: www.ssa.gov/myaccount
If you are receiving a public pension and are interested in filing for benefits, you can file online at ssa.gov/apply or schedule an appointment to speak with a representative.
When can people expect the increased payouts?
The increased payouts will begin this year. Also, more than 2 million Americans will receive a lump sum payment of potentially thousands of dollars to cover the shortfall in the benefits they should have received in 2024.
Discuss any questions or concerns with a financial professional
Higher payments each month don’t necessarily mean that you now have more money to spend frivolously. The extra money in your bank account could be used toward working to pay down debt, invested for financial independence in retirement, or managing generational wealth or charitable giving wishes. Consider scheduling an appointment with a financial professional to discuss options you can pursue that may benefit you in the short- and long-term and align with your financial goals.
Important Disclosures:
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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Sources:
Biden signs Social Security bill that raises benefits for some public workers : NPR
Social Security Fairness Act signed into law by Biden: What to know
If Social Security not fixed, retirees face automatic cut in 2033 : NPR
