President Biden signs the Social Security Fairness Act on Sunday during an event in the East Room of the White House.
Kent Nishimura/Getty Images North America
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Kent Nishimura/Getty Images North America
A new bill signed by President Biden will increase Social Security benefits for nearly three million current and former public employees.
The law, called the Social Security Fairness Act, repeals two provisions that provided limited benefits to recipients of other pensions.
This means that workers who previously received reduced wages, including those who were teachers, firefighters and police officers, among other public sector jobs, will soon receive the full amount of benefits. In total, it is estimated that these changes will affect approximately 2.8 million beneficiaries.
“The bill I’m signing today is based on a simple proposition. Americans who have worked hard their entire lives to earn an honest living should be able to retire with economic security and dignity,” Biden said Sunday during a signing ceremony at the White House. .
The legislation rolls back the windfall elimination provision and government pension offset that was enacted more than 40 years ago.
The windfall elimination provision reduced benefits for public sector employees who received pensions not covered by Social Security payroll taxes. Government pension offset reduced Social Security benefits for spouses or widows of those who also received public pensions not covered by Social Security.
Both provisions were intended to prevent beneficiaries who receive state or local pensions from being able to “double up” on retirement benefits. But unions representing public service workers say the provisions actually penalize them unfairly.
“After 40 years of being treated like second-class citizens, a wrong has finally been righted and millions of retirees can afford to retire with dignity – and with the Social Security benefits they earned and they paid into,” Edward Kelly, president of the International Association of Firefighters, said in a statement.
Some recipients might see hundreds more each month
Beneficiaries who were affected by the windfall elimination provision can expect their monthly benefits to increase by an average of $360 between now and December, according to an estimate from the Congressional Budget Office.
Also by December, some spouses affected by government pension offsets are expected to receive an average increase of $700 and surviving spouses receiving a widow or widower’s benefit an average of $1,190, according to the CBO.
These benefits would also increase over time, based on Social Security cost-of-living adjustments. The changes would also apply to benefits starting in January 2024, meaning some recipients will also receive backdated payments.
In a statement Monday, the Social Security Administration said it is currently evaluating how to implement the newly signed measure. The agency said recipients do not need to take any immediate action other than making sure their mailing address and direct deposit information is up to date.
The changes come at a critical time for Social Security
In addition to ensuring that public employees receive the full amount of their benefits, Social Security is grappling with another looming problem: insolvency.
A government report from Social Security trustees released last May warned that the retirement program’s trust fund would be depleted by November 2033, leading to an automatic benefit reduction of 21%.
The Social Security Fairness Act will affect about 4 percent of all Social Security beneficiaries and cost nearly $196 billion over a decade.
The CBO estimated in November that repealing the windfall elimination provision and government pension offset would reduce the time before the program becomes insolvent by about six months.
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