The ‘Social Security Fairness Act’ that recently became law allows US President Joe Biden to boost retirement benefits for millions of Americans. The law exists to help seniors become more financially stable while raising their living standards. Public sector employee benefits form the central goal of this legislation, which also aims to finish outdated discriminatory protocols.
What is the ‘Social Security Fairness Act’?
Under this law, the ‘Windfall Elimination Provision’ (WEP) and ‘Government Pension Offset’ (GPO) will be eliminated from January 5, 2025. Earlier, due to these rules, the Social Security checks of those people were cut, who were getting pensions from such employment where they did not contribute to Social Security. Now with the removal of these rules, millions of retirees will be able to get their full benefits.
Under this law, the Social Security checks of about 2,750,000 people of California will increase by an average of $360 per month. Those for whom this increase has come into effect from December 2023 will get the previous amount of the whole year in the form of a lump sum check.
Who will be the main beneficiaries?
The biggest beneficiaries of this act will be public sector employees like teachers, firefighters, and police officers. These are the people whose Social Security benefits were reduced due to WEP and GPO. Now after the removal of these provisions, they can claim full benefits for their lifetime.
This act will benefit not only the employees but also their families and surviving spouses. Earlier, due to GPO, the Social Security survivor benefits for widows and widowers were reduced. But now these benefits have been fully restored.
How much will the benefit amount be?
Due to the end of WEP, existing beneficiaries will get $360 more every month till December 2025.
After the GPO ends, the average monthly income of 380,000 beneficiaries and 390,000 surviving spouses will increase by $700 and $1,190, respectively.
What will be the economic effects?
The recently enacted law benefits millions of retirees yet it adds increased financial strain on social security programs. Budget calculations from the Congressional Budget Office show the Social Security Fairness Act will create a $195 billion deficit for the federal government during the upcoming ten-year period. Dept. of Social Security trust funds are at risk of running out by 2033.
The government faces a choice between either raising Social Security tax rates or extending mandatory working years to avoid causing further damage to the program’s financial health.
Future challenges and solutions
The main challenge for legislators over the next few years will be creating equilibrium between benefits and economic development goals. Even though the Social Security Fairness Act introduced positive changes, it fails to address the substantial economic problems these new provisions will create.
This legislation stands as a significant step forward to defend the rights that public sector workers, along with their family members, receive. By reducing discrimination, this bill ensures public sector employees earn the exact compensation that matches their dedication.
Conclusion
The ‘Social Security Fairness Act’ promises a better future for millions of Americans. This law strengthens their financial and social rights. However, given its economic impact, some additional steps may be needed in the future.
People eligible to get benefits under this law are advised to consult a financial advisor and apply on time. This step will not only raise their standard of living but will also provide them a dignified and secure retirement life.
FAQs
Q. What is the Social Security Fairness Act?
A. It’s a law that aims to increase retirement income by eliminating rules that reduced benefits for public sector employees.
Q. How does this law help retirees?
A. The law removes the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), allowing retirees to receive full Social Security benefits.
Q. Who benefits from this law?
A. Public sector employees like teachers, firefighters, and police officers, as well as their families and surviving spouses, benefit from this law.
Q. How much will Social Security benefits increase?
A. Existing beneficiaries will see a $360 monthly increase, and surviving spouses could get up to $1,190 more per month.
Q. When do the changes take effect?
A. The changes will go into effect on January 5, 2025, and some beneficiaries will receive a lump sum for arrears from December 2033.
