After nearly a forty-year struggle, Congress has acted to remove offsets that reduced disability and retirement pay for government employees and teachers by passing The Social Security Fairness Act which eliminates the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) Starting on January 1, 2025. This change may result in increased SSA Benefits for some individuals and may also create eligibility for payments for others.
How It Works
For most employees, Social Security Administration (SSA) tax withholding is straightforward. Employers typically withhold a set amount from each paycheck. However, some public sector employees and teachers have the option to contribute to an alternative retirement system. In some cases, this is in addition to SSA contributions, while in others, it opposes the SSA system.
The amount of money collected from SSA through disability or retirement is based on the contributions made to the system. The formula to calculate payments is based on roughly 30 years of earning history (or less if there are not 30 years of contributions), adjusted for inflation to determine the average monthly income. SSA then replaces 90% of the average income up to a certain earning limit, 33% of the income in the next earning bracket, and 15% of the income above that second bracket. All these calculations are totaled to arrive at the maximum payment amount. This amount may be reduced if one accesses retirement early under a separate penalty process.
For many years, Congress held that public sector employees appeared artificially poor because they paid into an alternate retirement system rather than SSA. The belief was that a larger portion of their contributions to SSA retirement fell under the 90% replacement standard. In other words, the SSA payment calculator is weighted to benefit lower-wage earners, and public sector employees received this benefit due to their contributions to an alternative system, not because they were low earners. Congress’s solution was to reduce the first income replacement bracket from 90% to as low as 40%. This change resulted in a significant reduction in SSA benefits for retirement and disability for some, especially if public sector employees spent most of their working years contributing to retirement plans outside the SSA system.
Check out my recent video on KOLR 10’s ‘Unscripted’ where I explain these changes.
Who Is Eligible For Increased SSA Benefits?
This law increases Social Security benefits for certain types of workers, including some:
- Teachers, Firefighters, or Police officers
- Federal Employees covered by the Civil Service Retirement System
- Employees whose work had been covered by a foreign social security system
- Widow or Widowers of Public Sector Employees
It’s often overlooked that many public sector employees are underpaid for the work they do. For instance, local police officers and firefighters often do not receive adequate compensation for the risks they face. Likewise, teachers are frequently underpaid for their crucial contributions. Reducing their SSA payments makes it even more challenging to recruit these essential employees. Additionally, it seems only fair that individuals should be able to fully access the funds from the SSA account they have contributed to.
Similarly, SSA felt that widows and widowers of public sector employees with pensions could over-benefit from SSA. The concern was that they would be able to access both the government pension, which is based on contributions outside SSA, and receive a benefit from SSA. In essence, they could gain the full benefit of contributing to SSA while not contributing to it. Congress’s fix involved reducing the SSA payment by as much as two-thirds of the government pension amount. For many widows and widowers, this reduction greatly diminished or even eliminated their SSA payments.
Game Plan
SSA is making budget adjustments for active recipients of SSA payments who are subject to these reductions. While this change takes effect on January 1, 2025, SSA estimates that completing these budget adjustments will take until June 2025. If you have been informed that filing for SSA retirement would not benefit you, or if you were told your payment would be reduced to zero, you need to contact SSA and file a new application. It is important not to leave any money unclaimed if it can be added to your household budget.
_________________________________________________________________________________________________
Written by Roy, a dedicated Disability Representative, has been advocating for individuals seeking disability-based programs since 2003. With his background working for the government, Roy brings a deep commitment to improving assistance programs for those in need.
⏰ Schedule an appointment from anywhere in the US! 📱
Let’s Connect!
✅ Facebook: Add Me!
✅ Instagram: Join the Fun
✅ Twitter: Follow
✅ YouTube: Subscribe Here
The Disability Process 101:
- Programs available
- How to apply or appeal
- How disability is determined
- Tips for how to build a strong case
Contact Us:
📞 417-812-6698
Ur Disability Rep
1304 E. Kingsley St.
Springfield, MO 65804
