Who Benefits from the Social Security Fairness Act?
Bottom Line: On Sunday, President Biden signed the bipartisan Social Security Fairness Act into law. It’s a law that is purported to bring additional benefits to millions of Social Security recipients. So, who are the beneficiaries and how much more can they expect to receive?
According to the Social Security Administration the new law eliminates the reduction of Social Security benefits while entitled to public pensions from work not covered by Social Security. It’s a straight-forward explanation but it still requires some additional understanding. Approximately 2.5 to 3 million current and former public sector employees thave had Social Security payments reduced under two rules that were repealed under the new law: The Windfall Elimination Provision and Government Pension Offset.
Previously the Social Security Administration would reduce what are known as non-covered pensions, or a pension paid by an employer that does not withhold Social Security taxes from one’s salary, most commonly public sector employees. The idea was to keep public sector employees from effectively double dipping from government provided pension programs and Social Security payments. With the passage of the Act, the average beneficiary of the change will receive $360 more per month in their Social Security payments.
While the reform is certainly a plus for those benefiting from the new law, it will place additional strain on the Social Security Program.
The cost increase from the new Social Security law is estimated at $180 billion. The result is that the Social Security program is now expected to reach insolvency approximately six months sooner than previously estimated in 2035.