The US Senate recently passed the Social Security Fairness Act in a bipartisan vote that took place early on Saturday. The new bill is expected to provide increased Social Security benefits to nearly 3 million federal, state, and local public sector workers, including teachers, police officers, and firefighters.
The vote saw 76 senators supporting the bill, while 20 senators opposed it. If President Joe Biden signs it into law, the changes will apply to all benefits that are payable after December 2023.
The Social Security Fairness Act, which had already received strong bipartisan approval in the House of Representatives in November, eliminates two policies that have historically reduced Social Security benefits for workers in public service jobs.
These workers are typically those who are eligible for government pensions from jobs where they did not pay into Social Security. However, they may have contributed to Social Security through other jobs, or their spouses might have.
One of the provisions being removed is the Windfall Elimination Provision (WEP). The WEP reduces the benefits for retired or disabled workers who have less than 30 years of significant earnings from jobs covered by Social Security.
These workers may still receive pensions from jobs that Social Security didn’t cover. According to the Congressional Budget Office (CBO), this provision unfairly impacts many public sector employees.
The second provision being eliminated is the Government Pension Offset (GPO). This provision reduces the spousal or surviving spouse benefits for people who receive pensions from noncovered jobs. This is especially concerning for those who might have worked in a government job but were married to someone who paid into Social Security.
Generally, Americans are eligible for retirement benefits after paying into Social Security for at least 10 years. They can also receive spousal or survivor benefits if their spouse has paid into the system. The Congressional Research Service estimates that two main groups of Social Security beneficiaries are affected by the WEP and GPO.
These groups are about 28% of state and local government employees covered by alternative retirement systems and most permanent civilian federal employees who were hired before January 1, 1984.
The bill was co-sponsored by outgoing Democratic Senator Sherrod Brown of Ohio and Republican Senator Susan Collins of Maine. Both have argued that the current formulas used to calculate Social Security benefits for public sector workers with pensions are unfair, particularly because these workers are penalized for choosing jobs that serve their communities.
Senator Collins shared the story of a retired teacher in Bangor, Maine, who returned to work at 72 after her husband, who had paid into Social Security for 40 years, passed away. Her survivor benefits were cut by two-thirds due to the GPO provision, leaving her without the financial security to stay retired. She had to find work to support herself. Senator Collins emphasized that this bill would finally address such unfair provisions.
After the final vote, Senator Collins remarked that in 2003, she had held the first-ever Senate hearing on the WEP and GPO. She expressed satisfaction that these unfair policies would finally be removed from the Social Security system.
While supporters celebrate the bill’s passage, critics argue that the legislation is not funded and could speed up Social Security’s insolvency. According to the CBO, the bill will cost nearly $200 billion over the next 10 years.
Currently, the Social Security trust fund is expected to run out of money by 2033 or by 2035 when combined with the disability trust fund. At that point, Social Security will only be able to pay out 83% of promised benefits unless Congress intervenes with reforms.
The Committee for a Responsible Federal Budget estimates that this new legislation could bring the insolvency date forward by about six months.
Some critics believe that while the WEP should be reformed, it should not be eliminated. They argue that it is a reasonable mechanism to prevent overgenerous benefits from being paid to certain workers who might otherwise gain from the standard Social Security benefit formula.
The passage of the Social Security Fairness Act marks a significant moment for public sector workers, who have long felt the impact of these two provisions. While the bill’s supporters argue that it’s an essential move toward fairness for those who have dedicated their careers to public service, the debate over its long-term financial impact on Social Security is likely to continue.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.