The Senate voted early Saturday morning to repeal two laws that prevent many public employees from receiving Social Security, a move that is expected to weigh on the overall solvency of the Social Security system.
The 76-20 vote on the Social Security Fairness Act eliminated two provisions of current law: the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO.
Most Read from MarketWatch
ADVERTISEMENT
The WEP, enacted in 1983, adjusts how much in Social Security benefits a public worker can get if they receive a pension, while GPO, enacted in 1977, affects the Social Security benefits a spouse or widow who receives pensions would get.
The change benefits public-sector workers such as teachers, police officers, firefighters. As of November 2024, more than two million Americans had their Social Security benefits reduced by the WEP. Similarly, more than 650,000 people were affected by the GPO, according to the Social Security Administration.
“For too long, the government has taken away Social Security benefits from millions of retired federal, state and local government employees who worked as teachers, police, firefighters, postal workers and general employees — benefits they earned when they worked other jobs,” Richard Fiesta, executive director of the Alliance for Retired Americans, said before the final Senate vote. “The WEP and GPO disproportionately affect lower-income workers and women.”
The Social Security Fairness Act was approved in November by the House of Representatives on a bipartisan vote of 327-75. Following Senate approval, it now goes to President Biden for signing.
ADVERTISEMENT
The Social Security Fairness Act had a lot of critics among both conservative and liberal think tanks and research firms due to the cost, which would accelerate the Social Security system’s insolvency by six months, according to the Congressional Budget Office. The trust funds that back Social Security already will face insolvency in 2035 and would only be able to pay out 83% of its promised benefits at that time. The passage of the bill will further cut those benefits.
Eliminating the WEP and GPO would cost Social Security $196 billion over a decade, according to a report from the Heritage Foundation, a conservative think tank. The repeal would lead to an additional $25,000 of lifetime benefit cuts for a typical couple retiring in 2033, according to the Committee for a Responsible Federal Government.
Read: Opinion: The Social Security Fairness Act is a bad idea
The issue has been long simmering in Washington. U.S. Sen. Susan Collins (R-Maine) held the first Senate hearing on this policy in 2003 as Chair of the Senate Government Affairs Committee. She, along with the late U.S. Sen. Dianne Feinstein (D-Calif.), first introduced the Social Security Fairness Act in 2005.
Read: Opinion: The Social Security Fairness Act is incredibly irresponsible
ADVERTISEMENT
Eliminating the WEP would boost monthly payments to the affected beneficiaries by an average of $360 by December 2025, according to the Congressional Budget Office. Meanwhile, scrapping the GPO would increase monthly benefits by an average of $700 for recipients getting benefits based on living spouses, or an average of $1,190 for those surviving spouses getting a widow or widower benefit, the CBO estimated.
Collins said the Social Security Fairness Act will benefit people like Catherine Sjogren of Bangor, Maine, who had to reenter the workforce at age 72 after retiring from teaching for many decades.
“Her husband, a Navy veteran, paid into Social Security for 40 years. When he passed away, the GPO reduced Catherine’s widow benefits by two-thirds. She did not have the financial security any longer to remain retired, and the GPO penalty left her with few choices but to return to work,” Collins said in a statement.
“Our dedicated public servants, such as our teachers who help prepare our children for future success, or our police officers and firefighters who help keep our communities safe, should receive the full Social Security benefits that they have earned,” Collins said.