Eileen Kleinman, a teacher from Cincinnati, Ohio, has long believed that it’s unjust for her Social Security benefits to be lower due to her profession. Thankfully, her circumstances might be on the verge of change.

Recently, the bipartisan Social Security Fairness Act gained sufficient support to proceed to a House vote. This Act aims to eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which currently diminish Social Security benefits for certain retirees who also receive pension income. Should the bill pass, it will then move to the Senate for consideration to become law.

WEP and GPO impact nearly three million individuals, including police officers, firefighters, postal employees, and public-school educators.

Kleinman, 73, who continues to work as a substitute teacher and in retail, remarked, “The term ‘windfall’ is a complete misnomer. There is no actual windfall.”

How Do WEP and GPO Impact Social Security?

• The Windfall Elimination Provision (WEP): This provision reduces Social Security benefits for those receiving “non-covered” pension income from jobs, usually in the public sector, that did not pay Social Security payroll taxes. The reduction can be substantial, potentially cutting benefits by up to half the pension amount.
• The Government Pension Offset (GPO): This offset reduces survivor or spousal benefits when a pension is non-covered. Although it affects a smaller group, it can cut Social Security benefits by two-thirds of the pension amount.

For instance, if someone receives $1,200 monthly from their pension, their spousal or survivor benefit would be decreased by $800. If that benefit is $800 or less, the GPO would reduce it to nothing.

The original intent behind these regulations was to avoid overpayment of Social Security to individuals with non-covered pensions, as policy analysts have explained. Those who earned income outside the Social Security framework can appear to have lower earnings.

Given that Social Security provides a higher replacement percentage for lower-paid workers compared to higher earners, there was concern that individuals receiving generous government salaries for extended periods would gain the same benefit in Social Security computations as long-term low-income workers.

Why Do Some Americans Consider WEP and GPO Unfair?

Some experts argue that those with non-covered pensions may have also held other jobs that contributed to Social Security. Not receiving the full benefits they contributed towards feels unjust, they claim.

Mary Johnson, an independent analyst specializing in Social Security and Medicare policy, stated, “These are individuals who earned credits for Social Security benefits through secondary jobs outside their primary government employment. They shouldn’t be penalized for serving as firefighters, teachers, or in any other public sector roles. Hardworking individuals deserve the totality of their Social Security benefits.”

How Does Reduced Social Security Affect Retirement?

Mike Barker, a retired police officer aged 67, has faced reduced Social Security payments, compelling him to take a $15-per-hour job in Brimfield, Ohio.

Even though Barker has accrued enough credits for a monthly Social Security benefit of $700, his government pension significantly reduces this. Post-WEP, he only receives $168 per month, which is just below the amount deducted for his Medicare Part B coverage from his Social Security checks.

“I receive monthly bills without fail,” he shared. “The frustrating part is that I’m still working four days a week. They continue to deduct Medicare and Social Security contributions from my current earnings, even though I am receiving payments.”

According to Barker, $23.72 is deducted weekly for Social Security, along with $5.44 for Medicare.

“With an additional $600 to $700 a month from Social Security, I would consider giving up my current job,” he stated.

Is it a Good Idea to Repeal WEP and GPO?

According to estimates from the Congressional Budget Office, erasing WEP and GPO could cost around $196 billion across a decade.

With Social Security anticipated to face potential cuts by 2033, some economists warn that a repeal could worsen the situation. The nonpartisan Committee for a Responsible Federal Budget cautions that cuts to Social Security could arrive sooner than expected.

The Center on Budget and Policy Priorities, considered center-left, suggested instead of outright repeal, adjustments to WEP and GPO could be made, proposing a proportional formula that calculates benefits based on the income derived from jobs contributing to Social Security. For example, if someone earns 75% of their income from such jobs, they would receive 75% of the Social Security benefits that would be applicable if all their income came from those positions.

This proportional approach would not significantly impact the long-term viability of Social Security, according to their assessment.

What Are the Chances of the Social Security Fairness Act Passing?

It remains uncertain whether the bill

There is optimism regarding a pending law, with Barker suggesting that securing a vote in the House is “the closest we’ve come” to achieving it, though he remains skeptical that a divided Congress can successfully pass it.

Rep. Garret Graves (R-LA), who is one of the bill’s supporters, mentioned that the House will likely vote on the petition in the next few weeks.

Kleinman expressed, “I continue to contribute to both systems. I hope for a positive resolution before my retirement.”