Social Security Fairness Act awaits Biden's approval

About 2.5 million public employees could get a significant boost to their retirement income under a Social Security bill awaiting President Joe Biden’s signature.

On Saturday, the Senate passed the Social Security Fairness Act, following approval by the House. The legislation, which would eliminate the longstanding Windfall Elimination Provision and Government Pension Offset, has been floated for decades but only this year got enough support to get through both houses of Congress.

Those two rules reduce Social Security benefits for public-sector workers including teachers, firefighters, and many others. The Windfall Elimination Provision (WEP), for example, applies to an estimated 2.1 million people who are covered by public pensions but have also paid into the Social Security system for at least 10 years. The Government Pension Offset (GPO) affects roughly 800,000 spouses and survivors who did not pay FICA taxes for long enough to be eligible for Social Security but whose partners did.

“It is a provision that is detested by millions of people around the country,” said former InvestmentNews contributing editor Mary Beth Franklin, who specializes in Social Security planning. Speaking with senior columnist Bruce Kelly on a recent edition of the InvestmentNews Podcast, Franklin said that, despite no revenue offset to cover the estimated $190 billion the Social Security Fairness Act will cost, the political environment was just right this year for passing it.

“This year is different,” she said, noting that a co-sponsor of the House bill, Rep. Abigail Spanberger, D-VA, is not seeking reelection. Spanberger is running for governor of Virginia next year.

“You’re in a lame duck session,” Franklin said. “It’s a no-harm, no-foul, feel-good kind of vote.”

Indeed, public employee groups and state pensions praised its passage.

In Colorado, for example, public employees do not pay into Social Security and thus have benefits reduced because of the two rules.

“While the $200 billion price tag sounds steep, we know our members see that money as contributions they have made to Social Security and benefits they’ve earned and paid for just like every other American,” said Andrew Roth, executive director of the state’s Public Employees’ Retirement Association, in a statement.

To hear more about the current state of Social Security, from Franklin’s recent interview on the InvestmentNews Podcast, click here.