Retirees whose benefits were cut because of the Government Pension Offset (GPO) or the Windfall Elimination Provision (WEP) will be able to get back payments for 2024 if President Joe Biden signs the Social Security Fairness Act before the end of this Congress.
This is according to the Social Security Administration. The National Association of Plan Advisors says that the information was confirmed by an SSA spokeswoman.
The proposal says that the Windfall Elimination Provision and the end of the Government Pension Offset would apply to monthly insurance payments made under Section II of the Social Security Act for months after December 2023.
What is the difference between the Government Pension Offset and the Windfall Elimination Provision?
The “windfall elimination” part of H.R. 82 cuts Social Security benefits for people who get a public pension or disability benefit from a job that is not covered by Social Security.
The rule is meant to make sure that workers are not treated differently because they make less money but get more benefits. But supporters say it unfairly cuts or eliminates Social Security payments for people who work for the government.
On the other hand, the government pension offset cuts spouse and widow benefits from Social Security to two-thirds for those whose pensions come from jobs that are not covered by Social Security.
According to a letter from bill sponsors to Senate leadership, the offset also lowers or gets rid of Social Security survivor payments for retirees who worked their whole lives to help others.
Millions of Americans could be eligible for back payments this year
People who lost benefits because of the Government Pension Offset and Windfall Elimination Provision must be paid the benefits they would have been due in 2024.
A Social Security Administration representative told ThinkAdvisor that the agency is waiting for the Social Security Fairness Act to be signed into law and for rules on how to use it. As more information from the Social Security Administration website comes in, we will add it to this page.
The Senate passed H.R. 82, the Social Security Fairness Act, on December 20. This bill would get rid of the GPO and WEP parts of Social Security. The law passed the House on November 12 by a vote of 327 to 75 and is now waiting for Biden to sign it.
People who are eligible for their own Social Security payments are affected by the Windfall Elimination Provision. People who are eligible for spousal or survivors’ payments are affected by the Government Pension Offset.
The Government Pension Offset and Windfall Elimination Provision laws, which were passed by Congress in 1977 and 1983, cut Social Security payments.
Some workers could receive back payments and higher benefits
Rule critics say that the WEP and GPO unfairly punish first responders and public sector workers, among other groups. According to a recent report by ThinkAdvisor, the clauses were put in place decades ago to fix problems with the way Social Security calculates benefits.
These problems could have led some government workers to get higher Social Security benefits than long-term low-wage workers, even though they made a lot of money on the job and got a government retirement benefit equal to their earnings.
According to what people thought at the time, these rules were necessary and fair because people with seemingly similar work histories could have very different experiences when applying for benefits depending on how their work history was split between covered and uncovered work.
But because there was not enough information at the time, Congress passed formulas that were wrong. For example, the Government Pension Offset tends to overcorrect benefit calculations in a way that hurts families with higher incomes, while the Windfall Elimination Provision (WEP) tends to overcorrect benefit calculations in a way that hurts families with lower incomes more often.
Over the next few decades, another issue has come up: the complicated Government Pension Offset and Windfall Elimination Provision (WEP) rules mean that the Social Security Administration sends a lot of wrong payments to recipients, which may be refunded later. Because of this, some lawmakers want to shorten the time you have to pay back the debt to three years.
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