At the beginning of the year, the Social Security Fairness Act had been signed into law by former President Joe Biden and as a result, millions of beneficiaries had their full benefits restored to them. By coming into effect, the Social Security Fairness Act effectively brought an end to both the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Under these two provisions, more than 3 million public sector employees had their benefits reduced even if they had paid into Social Security payroll taxes from other non-public sector employment.
The Social Security Administration (SSA) began issuing Social Security Fairness Act payments in February and as of July, all impacted cases have successfully been processed. Here is all you need to know.
The Social Security Fairness Act
Under the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), public sector workers, including teachers, firefighters, certain federal employees, and police officers, had their benefits reduced because their employers had provided them with pensions. As a result, these employees were not required to pay into Social Security payroll taxes and subsequently, their benefits had been reduced.
Under the Social Security Fairness Act, however, both the WEP and the GPO were repealed and as a result, the cohort who previously had their benefits reduced, were now entitled to receive their full benefits. In addition to this, the over 3 million public sector workers also qualified for a once off retroactive payment dating back to January 2024.
The agency was able to streamline the processing of the majority of cases through the use of automation, whilst the remaining, more complex cases had to be adjusted manually. In the midst of this process, Frank Bisignano was officially appointed as Commissioner of the SSA and as such, overseeing the SSFA cases was one of his first tasks. At the time, Bisignano also shared that having all SSFA cases processed by July 1st was his new goal.
The former Biden Administration estimated that the processing of all of these cases would take a year at the very least to be completed, whilst the Social Security Administration (SSA) previously shared that it aims to have this task completed by early November of this year. It turns out that both of these estimates were rather generous since a July 8th update from the SSA has revealed that all of the over 3.1 million impacted individuals have now been successfully processed an impressive five months earlier than what was originally estimated — and more than $17 billion in payments have rolled out.
“My top priority is to transform SSA into a model of excellence—an organization that operates at peak efficiency and delivers outstanding service to every American,” Commissioner Bisignano shared in the July 8th press release. “The American people have waited long enough for better service, and they deserve the absolute best from their government. I am deeply grateful to our dedicated employees who are already making this turnaround a reality.”
SSFA speeds up Social Security projected shortfall?
The latest annual report from the Social Security Board of Trustees has revealed that the projected shortfall for the program has been moved up a year — and payments related to the Social Security Fairness Act are cited as one of three driving forces behind this growing problem. “As in prior years, we found that the Social Security and Medicare programs both continue to face significant financing issues,” wrote the trustees.
The OASI trust fund is projected to reach depletion as soon as 2033, however, if the OASI and the DI trust funds are combined into one OASDI trust fund, it will be able to pay 100% of all scheduled benefits only up until 2034. The previous year’s report estimated that the OASDI would cover all benefits until 2035. The trustees have cited the SSFA payments as the first factor contributing to this problem. “The repeal of these provisions increased projected Social Security benefit levels for some workers, relative to projected benefit levels in last year’s report. The impact of this legislation on the OASI Trust Fund was the primary contributor to the change in the combined OASDI fund depletion date this year,” the trustees wrote.