Millions of public workers are set to get higher Social Security benefits. Here’s why

A new bill signed into law by President Biden will increase Social Security payments for nearly 3 million current and former public employees.

The law, named the Social Security Fairness Act, repeals a pair of provisions that had limited benefits for recipients with other pensions.

That means workers who previously received reduced payments, including those who served as teachers, firefighters and police officers, among other public-sector occupations, will soon receive benefits in the full amount. In all, the changes are estimated to affect roughly 2.8 million beneficiaries.

“The bill I’m signing today is about a simple proposition. Americans who have worked hard all their life to earn an honest living should be able to retire with economic security and dignity,” Biden said Sunday during a signing ceremony at the White House.

The legislation rescinds the Windfall Elimination Provision and the Government Pension Offset, which were enacted over 40 years ago.

The Windfall Elimination Provision trimmed benefits for public employees who received pensions not covered by Social Security payroll taxes. The Government Pension Offset cut Social Security spousal or widow benefits for those who also received public pensions not covered by Social Security.

The two provisions were intended to prevent beneficiaries who collect state or local pensions from being able to “double-dip” into retirement benefits. But unions representing public service workers say that in reality, those provisions unfairly penalized them.

“After 40 years of being treated like second-class citizens, a wrong has finally been righted, and millions of retirees can afford to retire with dignity — and with the Social Security benefits they earned and paid into,” Edward Kelly, the president of the International Association of Fire Fighters, said in a statement.

Some recipients could see hundreds more every month

Recipients who were affected by the Windfall Elimination Provision can expect their monthly benefits to increase by an average of $360 by December, according to an estimate by the Congressional Budget Office (CBO).

Also by December, some spouses who were affected by the Government Pension Offset are anticipated to receive an average monthly increase of $700 and surviving spouses receiving a widow or widower benefit a monthly average of $1,190, according to the CBO.

These benefits will also grow over time in line with Social Security’s cost-of-living adjustments. Changes will also apply to benefits from January 2024 onward, meaning some recipients will also receive back-dated payments.

In a statement on Monday, the Social Security Administration said it was currently evaluating how to implement the newly signed measure. The agency said beneficiaries do not have to take any immediate action, other than making sure their mailing address and direct deposit information are up to date.

The changes come at a critical time for Social Security

Aside from ensuring that public workers receive the full amount in benefits, Social Security has been grappling with a looming issue: insolvency.

A government report from Social Security trustees released last May warned that the retirement program’s trust fund will be exhausted by November 2033 — leading to an automatic reduction of benefits by 21%.

The Social Security Fairness Act will affect about 4% of Social Security beneficiaries and cost nearly $196 billion over a decade.

The CBO estimated in November that repealing the Windfall Elimination Provision and the Government Pension Offset would shorten the time before the program’s insolvency by roughly six months.