Social Security Fairness Act benefits millions of retirees, but payment delays disappoint
Millions of retirees and their spouses were delighted after former President Joe Biden signed the Social Security Fairness Act. The new law aims to increase the Social Security amount of more than 3.2 million retirees and their spouses. Under this, two controversial provisions have been abolished, which were previously reducing the pension of many people.
But for those who were expecting this increased amount immediately, there has been an unexpected setback – payments will be delayed.
What is the Social Security Fairness Act?
The Social Security system is quite complex, with many rules to decide who will get benefits and how much amount will be given. This new law eliminates two major rules that previously had a negative impact on the pensions of many retirees:
1. Windfall Elimination Provision (WEP) removed:
- Previously, the Social Security pension of people who were part of a pension plan where Social Security taxes were not deducted from their wages was reduced.
- This rule mainly affected government employees, teachers, and some federal employees.
- In 2022, more than 2 million people were affected by the WEP.
2. Government Pension Offset (GPO) removed:
- This rule applied to people who were eligible to receive their spouse’s Social Security pension but were also receiving another government pension.
- This rule caused many people’s spouse pension to be either greatly reduced or eliminated altogether.
- In 2022, about 7.34 lakh people were affected by this GPO rule.
- Now that WEP and GPO have been repealed, millions of retirees will get a big boost to their pensions.
How much will retirees get?
This law could prove to be very beneficial for affected retirees.
- Those whose pensions were previously reduced due to WEP and GPO rules could now get up to $1,000 more per month.
- The average Social Security pension in December of 2024 was $1,926 per month, which means that many people’s pensions could now increase by up to 50%.
- A 2.5% COLA (dearness allowance) increase has already been received for 2025, which means that this, combined with the new change, could lead to a huge increase in the total income of retirees.
But despite this relief, a big problem is that the increased pension will not be available immediately.
Why are retirees getting delayed payments?
When this new law was passed, retirees hoped that they would soon start receiving this increased pension. But the Social Security Administration (SSA) said that there would be a delay in payments.
Main reasons for delay:
- No additional budget received: The law was passed, but the SSA did not get additional funding to implement it.
- Pensions of more than 3.2 million people will have to be recalculated: The SSA will have to recalculate the new pension amount of each beneficiary and also update old payments.
- Lack of staff: The SSA is facing a huge staff shortage from November 2023. New employees are not being recruited, slowing down the process.
Result:
The SSA has said that many retirees may have to wait 1 year or more for their increased pension.
What should retirees do?
If you are one of those whose pension was previously reduced due to WEP or GPO, the new law will benefit you, but in the meantime you need to take some important steps:
- Be patient: SSA has confirmed that payments will be considered applicable from the beginning of 2024, so you will also get retroactive (backdated) payments.
- Budget properly: Since it is not clear when the money will come, do not make big financial decisions in the hope of an increased pension.
Double-check your eligibility:
If you did not apply for your spouse’s pension (spousal benefits) earlier because you did not get benefits due to GPO, you may now be eligible under the new rules.
- Keep an eye on SSA updates: Keep getting new information by visiting the SSA website or contacting the Social Security helpline.
How can retirees increase their pension further?
There are many ways to get more benefits from Social Security, such as:
- Delayed benefits: If you don’t claim your pension for a few years, you may receive a higher rate of pension later.
- Use spousal benefits correctly: In many cases, using a spousal pension correctly can maximize benefits.
- Keep a clean work record: If you’ve worked for many years in your career, make sure all your earnings are recorded correctly in the SSA’s records.
Explore other investment options:
- High-interest savings accounts
- Money market funds
- Stocks and dividend investments
With the right decisions, some people can increase their annual pension by as much as $22,924.
Important questions and answers (FAQs)
What is the Social Security Fairness Act?
This law eliminates the WEP and GPO provisions, which will increase the pensions of more than 3.2 million retirees.
Who will benefit from this law?
Most government employees, teachers and federal employees will benefit from this.
How much will people’s pensions increase?
Some people will get up to $1,000 per month