On Sunday (January 5th), President Biden is set to sign a law aimed at increasing the social security benefits received by current and former public servants in the United States. It is estimated that nearly 3 million individuals who have served as teachers, firefighters, police officers, and other public service positions will benefit from this legislation.
The “Social Security Fairness Act” eliminates two provisions: the Windfall Elimination Provision and the Government Pension Offset. These provisions currently limit social security benefits for individuals who receive pensions from other sources, such as state or local government retirement plans.
According to the Congressional Research Service, as of December 2023, approximately 746,000 individuals had their social security benefits reduced due to the Government Pension Offset, equivalent to 1% of all social security beneficiaries. Additionally, about 2.1 million people were impacted by the Windfall Elimination Provision, representing 3% of all social security beneficiaries.
The Congressional Budget Office estimated in September of last year that eliminating the Windfall Elimination Provision would result in an average increase of $360 per month for affected beneficiaries by December 2025.
Ending the Government Pension Offset will lead to an average monthly benefit increase of $700 for 380,000 surviving spouses by December 2025. For 390,000 individuals who have received benefits as surviving spouses, the average monthly social security benefits will increase by $1,190.
These amounts will increase with the regular cost-of-living adjustments in social security.
The newly signed law stipulates that these changes will take effect starting from January 2024, requiring the Social Security Administration to provide retroactive payments.
Furthermore, the law mandates that the Social Security Commissioner “adjust the basic insurance amounts in accordance with the changes in the law.” It is currently unclear how this will be implemented or if affected individuals will need to take any action.
The related proposal was advocated by former Ohio Senator Sherrod Brown. Lee Sanders, President of the American Federation of State, County, and Municipal Employees, expressed his gratitude towards him.
Sanders stated, “More than 2 million public service workers can finally receive the social security benefits they earned throughout their careers. Many will now be able to enjoy retirement after a lifetime of service.”
Becky Pringle, President of the National Education Association, described this legislation as “a historic victory that will improve the lives of educators, first responders, postal workers, and other dedicated community public servants.”
The future of social security has become a significant political issue in the United States, becoming a major point of contention in the 2024 elections. Currently, there are 72.5 million individuals receiving social security benefits, including retirees, individuals with disabilities, and children.
The policy changes in the new law will bring additional administrative work to the Social Security Administration, whose staff numbers have declined to the lowest levels in decades. The agency is currently under a hiring freeze, with less than 56,700 employees, the lowest in over 50 years, despite serving more individuals than ever before.
These new changes will also add financial pressure to this department. The annual Social Security and Medicare Trustees Report released in May indicated that starting in 2035, the program’s trust fund will not be able to pay full benefits. The new law will expedite the bankruptcy date of the program by approximately half a year.
(**This article has referenced reports from the Associated Press)