A new Social Security law could meet challenges under President-elect Donald Trump's coming administration.
The Social Security Fairness Act was passed this month, effectively getting rid of the windfall elimination provision and government pension offset.
Why It Matters
These two rules lowered payments for around 3 million pension workers and their spouses, but now that the bipartisan law has passed, Social Security payments will be higher.
Some beneficiaries are expected to see an average monthly increase of $360 to their Social Security checks.
What To Know
While Trump supported the Social Security Fairness Act, the law could face problems in getting implemented under the new president, said David A. Weaver, economist and retired federal employee.
"It will fall to his administration to actually make the new benefit structure a reality. This will be a challenge, partly because of the chaotic legislative process that brought the law into effect," Weaver said in an op-ed published in The Hill.
Then-GOP Representative Garret Graves of Louisiana originally introduced the bill two years ago, but it didn't gain ground until fall 2024. Graves had to file a discharge petition to bring the bill to the floor for a vote, which faced some pushback from other Republicans who attempted to table the legislation.
Its quick approval in the House and Senate and subsequent passage by President Joe Biden means that many of the details of how the law will be executed haven't been sorted, Weaver said.
"This hurried process allowed for little discussion of the practical details associated with implementing the legislation," Weaver said. "The Social Security Administration (SSA) will now need to quickly scramble and begin issuing large back payments to millions of individuals."
This is while the SSA is already facing a funding crisis that could see full payments disappear by mid-2035. The agency also faces a tough budget and staffing shortages.
"SSA staff will expend substantial work time dealing with confused — and possibly upset — members of the public," Weaver said.
It might be tempting for the SSA to tell pension workers they do not need to reach out to get their higher payments, but not everyone impacted by the government pension offset are even in SSA's computer system, Weaver added.
"To make the best of the situation, SSA should think clearly about a communication strategy. It will need to achieve the twin goals of minimizing contact from members of the public unaffected by the law and maximizing contact with those who need to take action (that is, file for benefits)," Weaver said.
What People Are Saying
Former Congresswoman Abigail Spanberger of Virginia said in a statement: "This moment is more than 40 years overdue — and this moment is a huge win for thousands of Virginians and millions of dedicated public servants across the country. After years of hard work, I'm proud to see my bipartisan Social Security Fairness Act now signed into law to finally eliminate the WEP and GPO. I want to thank my colleagues in the Problem Solvers Caucus for agreeing that no retiree in America should be penalized for pursuing public service."
Michael Ryan, finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "The Social Security Administration's infrastructure isn't ready for this shift. With staffing at a 50-year low and systems designed around WEP/GPO calculations, processing millions of retroactive payments isn't just a matter of flipping a switch. Based on my experience with previous Social Security changes, beneficiaries should prepare for potential delays of 6-12 months for retroactive payments, particularly if they have complex work histories involving both public and private sector employment."
Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, told Newsweek: "The government faces several significant challenges in implementing the Social Security Fairness Act, with cost being the most pressing. Overhauling the system to retroactively process payments for an estimated 2.7 to 3 million beneficiaries will require substantial administrative and financial resources. At the same time, ongoing distribution amounts will need to be recalculated for public sector retirees, adding further complexity. Given the current push to reduce government spending, this initiative presents a major logistical hurdle for the administration."
Martha Shedden, president and cofounder of the National Association of Registered Social Security Analysts, told Newsweek: "The level of chaos and cost to the SSA that implementation of this hurried passage of a two-year old proposal, will be tremendous. This January 2023 bill was proposed with a start date of January 2024. With no amendments made, or even considered, an entire year of retroactive payments is now - in January 2025 – required."
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "This is a classic example of the government putting the cart before the horse. While the introduction and passage of the Social Security Fairness Act was met with praise from both Republicans and Democrats, little was said about the strategy for actually implementing it. There could potentially be over 70,000 additional recipients with added Social Security benefits because of the act, and that requires more manpower and processing time from the Social Security Administration."
What Happens Next
Beneficiaries could also see higher tax brackets based on the higher Social Security payments or see their Medicare premiums rise as a result of the new law.
"I'm advising beneficiaries to consult tax professionals now to explore strategies like spreading these payments across tax years when possible," Ryan said.
The law is also estimated to cost $196 billion over 10 years, further contributing to the SSA's depleting fund.
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