Goodbye WEP & GPO

Social Security benefits will rise for some pensioners

A recent change in social security affects those, or their spouses, who receive pensions from employment where social security taxes were not deducted.

This is not an increase in social security benefits. It eliminates a reduction of Social Security benefits for those that have pensions from employment that was not covered by Social Security. It does not affect everybody but is estimated to affect over three million people in the U.S.

The Social Security Administration recently adopted the Social Security Fairness Act. The Act only affects those (or their spouses) that have pensions from employment that was not covered by Social Security. The Act does not change any pension benefits.

Before the Act, anyone receiving a pension earned from a job where they did not pay into Social Security, but did earn Social Security benefits from other employment, had their Social Security benefits reduced. The amount of the reduction was based on years worked and level of earnings.

The new rule eliminates two provisions within Social Security whereby non-Social Security benefits are reduced if the recipient (or their spouse) earned a pension from employment where they did not pay Social Security taxes. The two provisions were the Windfall Elimination Provision (WEP), and the Government Pension Offset (GPO). The key difference in these rules is to whom they apply. The WEP applied to individuals that are covered by a pension plan that did not pay into Social Security but also have earned Social Security benefits from another job where Social Security taxes were deducted. The WEP altered the formula that calculates Social Security amounts reducing the Social Security benefit. The goal was to eliminate what was perceived as a “windfall” where an employee receives a full pension plus full Social Security benefits.

The GPO is similar but geared towards spousal and widow(er) benefits. In the GPO scenario, a spouse that earns a government pension had their Social Security spousal benefits reduced by two-thirds of the amount of their pension.

With the passage of the Act, the WEP and the GPO have been eliminated. Pensioners will receive full Social Security benefits, and their pensions are unaffected. Spouses (and widows) that were previously affected by the GPO, will now receive their full spousal Social Security benefits.

In addition, the law which took effect in January 2025, is retroactive to January 2024. That means there will be true up payments for those affected by WEP and GPO. The retroactive payments will only apply to 2024’s reduced benefits. Going forward, there will no longer be any reduced benefits from the WEP or GPO.

This is a positive development for those that have been affected.

If you have any questions or are unsure if this affects you or your spouse, please reach out to a financial professional.

This page from the Social Security Administration is also helpful. For members of PERA here in Colorado, please see this site for more information.