Social Security rules like the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) markedly reduce Social Security benefits for nearly three million US retirees receiving pension income. Under WEP, individuals receiving retirement or disability pension income from public employers that don’t withhold Social Security taxes from their salaries will see their Social Security benefits slashed. Almost two million Social Security recipients are affected by this law.
Furthermore, the GPO law, affecting around 800,000 retirees, offsets spousal benefits against pension income for those receiving pensions from a federal, state, or local government entity but haven’t paid Social Security taxes. GPO can reduce Social Security benefits for spouses and surviving spouses to zero. For instance, if you receive $3,000 in monthly pension income from your work and are eligible for a $2,100 surviving spouse’s benefit, the Social Security Administration will deduct two-thirds of your government pension ($2,000) from your spouse’s Social Security benefit to offer your $100 monthly. The final payout could reach zero if the offset amount from your pension exceeds the Social Security benefit you are expected to receive. These rules can cause affected public workers to make difficult retirement choices like delaying retirement to avoid missing out on Social Security survivor benefits.
Lawmakers Receive Backing To Eliminate These Benefits Reduction Rules
Representative Abigail Spanberger, serving Virginia’s congressional district, along with Congressman Garret Graves of Louisiana and people representing police, teachers, and other government employees, held a press conference recently outside the Capital building to highlight 206 signatures they have received on a discharge petition aimed at eliminating rules like WEP and GPO. The signatures increased to 218 soon after, sufficient for House lawmakers in Washington to force a vote on the bipartisan bill, the Social Security Fairness Act, that would repeal rules that reduce Social Security benefits for certain pensioners.
“We have taken on, on a bipartisan basis, something that’s just completely unjust, that has been going on for over four decades,” Graves said. “This is a situation where you have some of the most important occupations, some of the most important contributors to our community, that are being discriminated against.”
The Cost of Eliminating WEP, GPO Could Near $196 Billion
According to a Congressional Budget Office (CBO) cost estimate report, repealing WEP rules would increase monthly benefits for over two million Social Security recipients by an average of $360 in December 2025. Meanwhile, eradicating GPO rules is expected to hike monthly checks by an average of $700 for 380,000 spouses and $1,190 for 390,000 surviving spouses in December 2025. CBO forecasts that if the new bipartisan bill is passed into law by early fiscal year 2025, it would increase benefits payable for January 2024 and later. The report further estimated that repealing the rules and paying more considerable Social Security benefits to people subjected to WEP and GPO laws would increase budgetary spending by almost $195.65 billion between 2024 and 2034. The additional costs could directly impact the Social Security trust fund, which is expected to be depleted in 2025 when only 83% of benefits will be payable.
While several experts believe the new bill may pass the House and reach the Senate, where it has 62 co-sponsors, some think repealing WEP and GPO laws might not be the best solution. Many are also concerned that eliminating these laws would mean a more generous income replacement formula for workers with both public and private work versus those who contribute to Social Security throughout their working years.
