There are millions of American residents for whom Social Security represents more than a monthly income, it is something like their livelihood that guarantees them economic stability in the most “vulnerable” moments such as retirement, the loss of a loved one or the diagnosis of an unexpected disability. And so, not all beneficiaries receive the same, but rather they receive according to their economic and social situation.
Now, a new bill promises to correct these inequalities, and the beneficiaries’ relatives, who for years have faced continuous reductions, are the ones who will see this relief. We explain what this legislative reform is about below.
What is the new bill?
This bill has been known as the Social Security Equity Act, and it proposes to eliminate two provisions that limit benefits for some workers and their families, we are talking about the Windfall Elimination Provision (WEP), so that it would be modified so that people who have not been affiliated with the SSA can receive pension payments (based, of course, on those jobs they performed in the past).
In other words, the idea is that the monthly benefit would be reduced by a small amount and linked to what that person receives from a pension program in which he or she enrolled instead of paying Social Security payroll taxes.
Let’s explain in better
Mainly spouses and widows, with the so-called Government Pension Offset, the benefits they receive are reduced based on the income of their partners (in case they also have pensions from public programs). Under the law currently in place, compensation is set at two-thirds of the alternative pension payment.
Let’s explain this with an example to make it easier to understand. Imagine a retired public health nurse receiving $1,500 a month (from a state pension plan that is not part of the Social Security system). If she later becomes eligible to receive her deceased partner’s Social Security benefit, that benefit would be reduced by $1,000 (every month!!) due to the state pension she is already receiving.
How did Congress vote?
This project, although it has raised criticism from some conservatives, has had bipartisan support, and the House of Representatives approved this measure by a vote of 327 to 75. Supporters hope that the Senate will vote in favour of this measure to take effect before it is passed to the new Congress that will be formed in January with the arrival of the Trump Administration.
Who would benefit from this change?
- Civilian federal employees hired before 1984. These are workers covered by the Civil Service Retirement System (CSRS), but those hired after that date are subject to a different retirement system (which requires their participation in the SSA)
- State and local government employees
- Railroad workers (included in a federal program independent of the SSA)
- Some members of the clergy.
According to CRS (Congressional Research Service) reports, 1% of all SSA beneficiaries saw their benefits reduced because of the GPO, and nearly 2 million people were affected by the WEP.
What would be the economic impact of this measure?
- Beneficiaries affected by the WEP: Would see an average increase of $360 per month in their payments by December 2025.
- Surviving spouses: The 380,000 beneficiaries eligible for spousal benefits would receive an average increase of $700 per month.
- Widows or widowers: The 390,000 survivors would receive an average increase of $1,190 per month
Between 2024 and 2034, these changes would increase Social Security’s net spending by $198 billion. However, there is an estimated savings of $2 billion in the Supplemental Nutrition Assistance Program (since some families would see their eligibility reduced as their Social Security income increases).