At the end of 2024, the Social Security Fairness Act had officially been signed into law and as a result, close to 3 million public sector employees would now have their full benefits restored to them. By coming into effect, the Social Security Fairness Act effectively brought an end to two provisions that had previously been in place: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
Through either the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO), some 3 million public sector workers or their spouses had their Social Security benefits reduced due to being provided with a non-Social Security pension by their employers. As such, now that both the WEP and the GPO have been repealed, public sector workers such as teacher, firefighters, or certain federal employees will now be eligible to claim the full benefit amount they qualify for, with no reductions.
In addition to having their full benefits restored, this cohort will also qualify for a once-off retroactive payment to cover the reduction in benefits dating back to January 2024. While this new legislation will largely bring relief to the beneficiaries who were previously impacted by either the WEP or the GPO, there are some downsides to it as well. Here is what you need to know.
How big of an increase will beneficiaries see?
The WEP which was first enacted in 1983 resulted in reduced benefits for public sector workers who received government pensions that were not covered by Social Security. Its implementation was also aimed at correcting an issue with the benefit formula that resulted in government workers being considered as low-wage workers which then resulted in them receiving an excessively large benefit. As such, now that the WEP has been repealed, “affected retirees may see an average monthly increase of approximately $360 in their Social Security benefits,” according to Peter Diamond, a federally licensed tax and certified bankability expert.
The GPO, which had been in effect since 1977, reduced the spousal or surviving spousal benefits of a worker who had been receiving a non-covered pension. Both the GPO and the WEP were implemented all those years ago in order to better maintain the financial health of the Social Security program. As of February 2025, the SSA had begun adjusting all impacted claims as well as sending out the retroactive payments to qualifying beneficiaries.
Subsequently, a July 10th SSA update revealed that the agency had “completed sending over 3.1 million payments, totaling $17 billion, to beneficiaries eligible under the Social Security Fairness Act (SSFA), 5 months ahead of schedule.” The average retroactive check would have come out to around $6,710.
Tax and financial implications of the SSFA
With the SSFA coming into effect now, however, the Social Security Board of Trustees have estimated that the additional financial burden of the restored benefits, coupled with the retroactive payments is speeding up the program’s projected insolvency date. The trustees estimate that the Old Age and Survivors Insurance trust fund will become insolvent by 2033. This would then trigger an automatic 23% cut to all scheduled benefits.
Additionally, in the context of the beneficiary, a higher benefit amount could also have some less than desirable implications. This is because up to 85% of your benefit income is subject to taxation if your total combined income exceeds a certain threshold. According to the SSA, you will be required to pay taxes on up to 85% of your Social Security benefits if you file the following:
- Federal tax return as an “individual” and your “combined income” exceeds $25,000.
- Joint return, and you and your spouse have “combined income” of more than $32,000.
Furthermore, if your SSFA increase causes you to enter a higher income bracket, you Medicare premiums may also go up. According to Diamond, “higher Social Security benefits could increase a retiree’s modified adjusted gross income (MAGI), potentially leading to higher Medicare Part B and D premiums due to Income-Related Monthly Adjustment Amounts (IRMAA).”