The new year has kicked off with a bang for clients who feel they have been penalized with lower Social Security benefits due to their career paths. On Jan. 5, President Joe Biden signed into law the Social Security Fairness Act, which repeals WEP and GPO.
These reductions have been a thorn in many clients’ retirement income plans, through no fault of their own.
WEP, the Windfall Elimination Provision, and GPO, the Government Pension Offset, are sections of the Social Security law that reduced or eliminated Social Security benefits when an individual had a “hybrid” career. These are clients who receive a public pension from years working in the public sector, plus are eligible for Social Security from work with a covered employer.
Several million people have been hit with WEP or GPO. Public jobs often include a pension in lieu of Social Security, but many clients have worked in both private and public jobs. They receive their full, earned pension, but do not receive their full, earned Social Security benefits.
After years of fits and starts, Congress pushed the repeal through with bipartisan support and an effective date retroactive to Jan. 1, 2024.
Who to Contact, and Why
Financial advisors now have positive news to share with some clients, and reaching out to them will be a terrific way to start 2025.
Any retired clients who are collecting reduced Social Security due to WEP should be contacted. Let them know that they should see an increase in their monthly Social Security benefits starting later in the year. In addition, they’ll get back payments.
Clients with hybrid careers saw their calculated Social Security benefits reduced by as much as $580 a month. Spouses who were denied spousal benefits due to their public pensions will also start to receive some Social Security benefits later in the year.
