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Attention Public Pension Recipients!

Retirement Planning

Are you a public sector retiree who felt the pinch of reduced Social Security benefits due to the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO)? If so, there's some welcome news! The Social Security Fairness Act was enacted into law on January 5, 2025, and it eliminates both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). This significant development could mean an increase in your Social Security benefits. 

Understanding the WEP and GPO

Let's begin with a quick recap of what the WEP and GPO were. These provisions were in place to adjust Social Security benefits for individuals who also receive pensions from employment where they didn't pay Social Security taxes (often referred to as "non-covered positions"). This often includes pensioners receiving PERs, STRs, FERs or county benefits. The WEP primarily affected retirement or disability benefits earned on your own record, while the GPO affected spouse's or survivor's benefits. While the WEP was bad, — reducing one's benefits by up to $587 per month — the GPO was even worse. The GPO often prevented pensioners from receiving any spousal or survivor social security benefits. It took 2/3rds of one's pension and applied a dollar-for-dollar offset to potential benefits.  The Social Security Fairness Act aims to rectify this. 

Who was impacted?

On January 5, 2025, President Biden signed the Social Security Fairness Act (HR 82) into law. This act removes the reduction in Social Security benefits for those receiving pensions from employment where Social Security taxes were not withheld. 

This change will primarily affect CalPERS or CalSTRS retirees and others who:

  • Have a pension and primarily worked in non-covered positions for public agencies.
  • Worked in safety classifications for the State of California, such as peace officers, firefighters, state patrol, and state safety personnel.
  • Were teachers, firefighters, and police officers in many states.
  • Were federal employees covered by the Civil Service Retirement System (CSRS).
  • Had work covered by a foreign social security system.
  • Are railroad retirees, their spouses, and survivors who were subject to the "non-covered service pension (NCSP) reduction" (WEP equivalent) or the "public service pension (PSP) offset" (GPO equivalent).

It's important to remember that if you have always paid into a pension and Social Security, you may not see any impact on your Social Security benefits. The Social Security Administration (SSA) estimates that around 72% of state and local public employees already work in Social Security-covered employment and will not be affected by this Act.

What happens now and what actions should you consider?

The repeal of WEP and GPO is effective for benefits payable for January 2024 and later. Here’s what you should know about the timeline and actions you might need to take:

  • Retroactive Benefits: The SSA began paying retroactive benefits in late February 2025, with one-time payments expected to be deposited by the end of March 2025. These payments will cover the increase in your benefit back to January 2024.
  • New Monthly Benefit Amounts: Most affected beneficiaries will start receiving their new, increased monthly benefit amount in April 2025 (for their March 2025 benefit).
  • Notification from SSA: Anyone whose monthly benefit is adjusted, or who will receive a retroactive payment, will receive a mailed notice from Social Security explaining the change. You might receive two notices: one when WEP or GPO is removed from your record and another when your monthly benefit amount is adjusted.
  • No Action Needed (for most): If the SSA already has your correct mailing address and direct deposit information, you generally do not need to take immediate action if you receive benefits reduced by WEP or GPO. However, you can verify your information through your "my Social Security account."
  • Important!! If you Never Applied OR are changing to a Survivor Benefit: If you never applied for retirement, spouse's, or surviving spouse's benefits due to the WEP or GPO, you need to file a new application! The SSA has streamlined a phone application process for this group; call 1-800-772-1213 and say "Fairness Act". You can also apply online for retirement or spouse's benefits. Survivor benefit applications must be completed by phone or at your local Social Security office. Survivor applications must be accompanied by supporting documentation (your marriage certificate and the deceased spouse's death certificate). 

Important Reminders

  • No Impact on CalPERS Pensions: The Act does not impact your CalPERS pension or any other public pension benefits. It only affects your Social Security benefits.
  • Medicare Premiums: If you pay your Medicare premium directly, continue to do so until you receive notice from the SSA. Once your Social Security benefits start or increase, premiums will generally be deducted from your monthly payment. If you use Medicare Easy Pay or online bill payment, you may need to take action to stop those payments once the Social Security deduction begins.
  • Beware of Scams: The SSA warns against scams related to the repeal. The SSA will never ask you to pay for assistance to start, increase, or retroactively pay your benefits. Hang up on any suspicious callers and report them to the SSA's Office of the Inspector General.

The repeal of WEP and GPO marks a new chapter for many public retirees, offering the potential for increased financial security in retirement. Stay informed and take any necessary steps to ensure you receive the benefits you are now entitled to. Your KWB team is well-informed of these changes and can help advise on your situation. Reach us at (909) 307-8220 for additional assistance.

~ Michael Razzouk (Social Security Nerd)

The information provided in this blog reflects the Social Security Fairness Act as of January 5, 2025, and may be subject to change. Details on retroactive payments are based on current Social Security Administration policies, which may also change. KWB Wealth is not responsible for any delays or adjustments in these payments. This content is for general informational purposes only and does not account for individual financial situations. Please consult a financial adviser or Social Security professional for personalized advice.