Senate approves Equity in Social Security Legislation
In the tally during the vote, 76 senators endorsed the bill, while 20 senators opposed it.
If President JoeBiden signs this legislation into law, it would apply to all benefits issued post-December 2023.
The Social Security Fairness Act, which garnered widespread bipartisan support in the House in November, aims to abolish two policies that have reduced Social Security benefits for public service workers. These are individuals who are entitled to pension benefits from their non-Social Security-funded jobs, but they or their spouses did contribute to Social Security through other jobs.
The first such policy is the Windfall Elimination Provision (WEP). As described by the Congressional Budget Office, "The WEP lessens the benefits for retired or disabled workers who have fewer than 30 years of substantial income from Social Security-covered employment, if they further receive pensions from non-Social Security-covered employment."
The second policy set to be abolished is the Government Pension Offset (GPO). The Congressional Budget Office explains that "The GPO decreases the spousal or surviving spousal benefits of individuals who receive pensions from non-Social Security-covered employment."
Individuals can claim retirement benefits if they've contributed to Social Security for at least a decade and are also eligible for spousal or survivor benefits due to their partner's Social Security contributions.
As per the Congressional Research Service, "the two most substantial groups of Social Security beneficiaries that may be affected (or currently are affected) by the GPO and WEP are (1) about 28% of state and local government employees covered by alternative retirement systems; and (2) most civil servants hired before January 1, 1984."
The bill's main sponsors – outgoing Democratic Sen. Sherrod Brown of Ohio and Republican Sen. Susan Collins of Maine – have argued that the formulas used to determine the Social Security benefits for pension-eligible public sector workers unfairly penalize them for serving their communities.
Before a procedural vote earlier in the week, Collins shared the story of a retired public school teacher in Bangor, Maine, who returned to work at age 72 after her husband (who contributed to Social Security for 40 years) passed away. Her survivor benefits were cut by two-thirds due to the GPO provision. "She no longer had the financial security to remain retired," Collins mentioned.
After Saturday's final vote, Collins stated, "In 2003, I held the first-ever Senate hearing on WEP and GPO, and I'm pleased that now these unfair provisions in our Social Security system will finally be eliminated."
Those against the legislation argue that it is unfunded and will accelerate Social Security's insolvency date.
The Congressional Budget Office predicts that the legislation will cost nearly $200 billion over a decade. Currently, the Social Security trust fund is projected to exhaust its resources by 2033 – or, if combined with the disability trust fund, by 2035, at which point the system will only have sufficient income to pay out 83% of promised benefits to everyone, barring any legislative reforms prior to that.
The Committee for a Responsible Federal Budget estimates that the SSFA could bring forward the program's insolvency date by half a year.
Critics who advocate for reforming the WEP provisions but not abolishing them argue that it is "a reasonable method to prevent overly generous and unintended benefits to certain workers who would otherwise gain from the Social Security regular benefit formula" as per the Congressional Research Service.
The Social Security Fairness Act, if passed, could potentially impact the business operations of retirement planning firms, as it aims to abolish policies that reduce Social Security benefits for public service workers with non-Social Security-funded pensions.
Due to the anticipated cost of the Social Security Fairness Act, some critics raise concerns about its potential impact on the overall financial stability of the Social Security system, which could affect various businesses that rely on Social Security benefits as a source of income for their clients.
