A bipartisan group of lawmakers is working on a new plan to increase Social Security checks for certain Americans. This plan, however, has nothing to do with the Cost of Living Adjustment (COLA) but aims to address two regulations that reduce Social Security benefits for some pension-eligible workers.
Representatives Abigail Spanberger (D-Virginia) and Garret Graves (R-Louisiana) have filed a discharge petition this week, pushing for a vote on the Social Security Fairness Act, which could provide much-needed financial relief for retirees.
The proposal has gained bipartisan support and could force a vote if it gathers 218 signatures, potentially leading to a significant overhaul of Social Security rules that impact millions of government employees and retirees.
Rules
At the heart of the proposal are two controversial regulations: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules reduce Social Security checks for certain pensioners, including teachers, police officers, firefighters, and postal workers, even though they’ve paid into the Social Security system.
These reductions affect workers whose employers did not withhold Social Security taxes from their paychecks. Many government employees work for agencies or organizations that do not pay Social Security taxes, making them vulnerable to WEP and GPO penalties. For those who worked for both “covered” and “non-covered” employers, these rules can significantly reduce their Social Security benefits.
Impact on Retirees
Under the current rules, over 2 million workers have their Social Security checks reduced due to the Windfall Elimination Provision (WEP). The WEP lowers the benefits of retirees who receive a pension from a job that did not contribute to Social Security. This provision is meant to avoid “windfall” situations where someone who worked in a job that didn’t pay into Social Security ends up receiving benefits.
The Government Pension Offset (GPO), on the other hand, impacts spousal or survivor benefits. This rule reduces Social Security checks for spouses or widows receiving a pension from a job not covered by Social Security. The GPO affects around 745,000 Americans, most of them wives and widows.
For many retirees, these reductions come as a surprise and can drastically impact their retirement plans. Some retirees are forced to work longer or delay their retirement altogether due to the lower benefits they receive.
Cost of Change
The proposal to eliminate the WEP and GPO does not come without financial challenges. According to the Congressional Budget Office (CBO), repealing these rules would cost an estimated $196 billion over the next ten years. This would add to the financial strain on the Social Security Administration (SSA), which is already projected to experience financial shortfalls by the mid-2030s.
Critics argue that repealing WEP and GPO could unfairly benefit individuals who did not pay into the system as much as other retirees. Additionally, the cost of repealing these rules could lead to reduced benefits for other Social Security recipients in the future. However, proponents argue that the current rules unfairly penalize workers who have contributed to the system in other ways.
Bipartisan Support
Despite concerns over the cost and fairness of eliminating the WEP and GPO, the proposal has garnered bipartisan support. Lawmakers from both sides of the aisle recognize the financial difficulties that these regulations impose on retirees, particularly government workers. The discharge petition introduced by Representatives Spanberger and Graves is a significant step toward addressing these issues, and many experts believe the proposal has a good chance of passing.
Experts like Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, have noted that eliminating these rules would provide substantial relief for affected retirees. By restoring full Social Security benefits to these individuals, the government could help them maintain financial stability during their retirement years.
For now, the future of the Social Security Fairness Act remains uncertain, but its progress highlights the importance of reevaluating how Social Security benefits are distributed, particularly for pension-eligible workers.
There’s still a long way to go before any final decisions are made, but if the act passes, it could mean a brighter financial future for millions of retirees who have long struggled under the weight of reduced benefits.
FAQs
How does WEP affect Social Security checks?
WEP reduces benefits for retirees with non-covered pensions.
What is the GPO in Social Security?
The GPO reduces spousal or widow’s Social Security benefits.
How many people are impacted by WEP and GPO?
Over 2.7 million retirees are affected by these provisions.
Will eliminating WEP and GPO increase Social Security costs?
Yes, repealing both would cost $196 billion over ten years.
Can the Social Security Fairness Act pass?
With bipartisan support, there’s a strong chance it could pass.
