One of former President Joe Biden's last acts in office could increase Social Security retirement benefits by over $1,000 a month for millions of Americans.
On Jan. 5, Biden signed the Social Security Fairness Act into law, which repealed two benefit rules: the Windfall Elimination Provision and the Government Pension Offset. The policies were put in place to prevent workers from recieving an "unfair" advantage by having access to both public pensions and Social Security retirement benefits.
Under WEP, workers who received pension benefits from work where Social Security taxes were not withheld received a smaller Social Security retirement benefit. Under GPO, individuals who have their own public pensions from jobs where they didn't pay Social Security taxes could lose access to their spouse's Social Security benefit, including deceased and ex-spouses.
An estimated 3.2 million people saw smaller benefits under WEP and GPO, the Social Security Administration says. Now, eligible Americans could see monthly payments increase up to $1,190, depending on their circumstances, according to estimates from the Congressional Budget Office.
"What Congress saw in passage of the Government Pension Offset rule back in 1977 was that public employees getting that public non-covered pension were being treated better than people whose work activity was under Social Security," Kurt Czarnowski, who worked for the Social Security Administration for over 30 years and now runs a retirement planning consultancy, tells CNBC Make It.
"With the windfall provision, [your benefits] were never reduced to zero. You always get something," he says. "But with Government Pension Offset, it was possible for somebody to receive no benefits based on their spouse's, ex-spouse's or deceased spouse's work record."
Public teachers, for example, may have worked summer jobs or other part-time gigs that took Social Security taxes out of their paychecks, but their access to teacher pensions could have meant they wouldn't get all the Social Security retirement benefits they otherwise earned, Czarnowski says.
However, critics of the Social Security Fairness Act say increasing benefits for millions of Americans could accelerate Social Security's insolvency. As of 2024 estimates, the SSA will only be able to continue delivering benefits at full capacity through 2035, before accounting for increased benefits under the SSFA.
Who is eligible for increased benefits
Under the Social Security Fairness Act, eligible beneficiaries who were already collecting Social Security benefits may see their monthly payments increase and receive a lump sum of retroactive benefits earned since January 2024. Those not currently enrolled can also get back payments for funds they were eligible to receive from January 2024 onward.
The change mostly impacts public employees like teachers, firefighters and law enforcement officers, but not all are eligible for additional benefits. Only workers "who receive a pension based on work not covered by Social Security may see a larger benefit," SSA says.
Czarnowksi offers the example of teachers in Massachusetts who pay into the state's Teachers' Retirement System and upon retirement, receive their pension from that agency. They don't pay federal Social Security income taxes.
However, some have side jobs or worked for long enough in other industries before teaching that they paid Social Security taxes and earned enough credits to qualify for retirement benefits.
If they started claiming their Social Security benefits at a reduced rate, they will soon see their monthly payments increase and receive back payments to January 2024 at the higher monthly rate. If they haven't yet applied for Social Security benefits, when they do, they will qualify for the full amount they're entitled to.
Alternatively, a public worker who has their own government pension but whose spouse worked a job covered by Social Security will now be able to access spousal benefits.
Individuals can claim 50% of their spouse's Social Security benefit once the spouse is of qualifying age if that amount is higher than their own retirement benefit. And when a spouse dies, the surviving spouse at full retirement age can claim 100% of their spouse's benefits — now, even if the surviving spouse has their own government pension.
When you could see benefits
Beneficiaries who were collecting Social Security checks prior to January 2024 should automatically see their monthly payments recalculated and their back payments delivered — likely sooner than originally thought.
On Tuesday, the SSA announced it will "immediately" begin paying retroactive benefits and increasing monthly benefits. Most people will receive their one-time retroactive payment by the end of March, the agency said in a statement, and higher monthly benefits should be reflected in April.
"Social Security's aggressive schedule to start issuing retroactive payments in February and increase monthly benefit payments beginning in April supports President Trump's priority to implement the Social Security Fairness Act as quickly as possible," Lee Dudek, acting commissioner of Social Security, said in the statement.
"The agency's original estimate of taking a year or more now will only apply to complex cases that cannot be processed by automation. The American people deserve to get their due benefits as quickly as possible," Dudek continued.
If you have become eligible for retirement benefits since Jan. 5 or hadn't applied because of WEP or GPO, you should see accurate payments when you apply and start collecting benefits.
Beneficiaries can visit SSA's dedicated website to learn more about the Fairness Act and see updates on the agency's progress.
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