NEW ORLEANS - On December 21, 2024, the Senate passed H.R. 82, the Social Security Fairness Act of 2023, without amendment with 76 Senators from both parties in support, but the Act has yet to be signed into law by the President.
The Act would remove restrictions that eliminated or limited the Social Security benefits that teachers, police, firefighters, and other public workers paid through the payroll tax during their working years. It would also eliminate the government pension offset, which reduces Social Security benefits for spouses, widows, and widowers who receive government pensions of their own.
Since the 1980s, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) have reduced earned benefit amounts for people who received other benefits such as state or local government pensions. For example, it reduced earned benefit amounts for public workers like teachers who may have taken a second job to supplement their income.
According to the Congressional Research Service, as of late 2023, the WEP and GPO impacted around 2.5 million Social Security beneficiaries, or 4% of the total beneficiary pool, including around 94,000 employees in Louisiana.
According to the Congressional Budget Office, the WEP "reduces benefits for retired or disabled workers who have fewer than 30 years of significant earnings from employment covered by Social Security if they also receive pensions on the basis of noncovered employment." These workers have their benefits reduced if they also receive pensions from other jobs that aren't covered by social security.
Opponents of the Social Security Fairness Act of 2023 argued that the WEP and GPO address overpayments to people who split their careers between jobs covered by Social Security and other work covered by Defined Benefit (DB) pension plans in which all eligible employees receive a “vested” benefit after working a certain number of years. But at just 4% of the total beneficiary pool, the impact is not large. According to the Congressional Budget Office, the changes will hasten the insolvency of the Social Security trust funds by about six months.
Opponents also argued that removal of the WEP and GPO would accelerate the depletion of the Social Security trust funds and increase the federal deficit, but the transactions of the Social Security program itself are officially "off-budget". Changes in federal budgeting rules govern how the Social Security program is accounted for in the federal budget, not how it is financed.
Social Security has its own dedicated funding stream.
Social Security’s benefit formula is progressive which means that workers with low average lifetime earnings get a higher benefit amount compared with their earnings than people who are earn more. Under the WEP, certain workers are assessed as having received less income than they did. This means their unadjusted benefit is larger than if they had worked their entire careers in jobs covered by Social Security. This is where the concept of a “windfall” comes from. The Social Security Fairness Act of 2023 will not penalize workers for earned benefits outside the Social Security fund and will make retirement a little easier for public sector workers.
