We’re getting a lot of questions about the Social Security Fairness Act (HR 82) which repeals the Government Pension Offset and Windfall Elimination Provision. This bill passed the house on November 12th, just 6 days after the election by a wide margin of 327-75. Similar legislation has been introduced several times before, as there are few topics as divisive among those impacted as these two provisions of the Social Security rules. This sort of bill creates great headlines and serves as campaign fodder for future elections. At the same time, it is highly unlikely to pass. The companion bill in the Senate is S 597: Social Security Fairness Act.  According to Govtrack.us (Social Security Fairness Act (S. 597) - GovTrack.us) has a 1% chance of passing.

Keep in mind that this Congress has only a few weeks left and the Senate bill is still in committee. It was originally introduced in the first 90 days of this Congress two years ago, and was a reintroduction of a bill from the prior Congress. According to Social Security’s actuaries, in item B7.14, eliminating these two provisions would create an additional 0.12% of payroll tax shortfall, which is not insignificant, given the long-range shortfall is 3.5% of payroll.

In short, this bill should be considered political pandering by politicians and click-bait by news organizations, not something any financial professional should pay close attention to. Even if impacted individuals ended up surprised by a gift from a lame-duck congress, implementation would not be immediate, as the Social Security administration would need to determine how to implement the law which would give financial professionals plenty of time to adjust projections.

To the extent passage would speed the depletion of the Social Security trust funds, the conversation and demonstration of potential benefit cuts that most advisors who are well-versed in Social Security are already having, and is included in Covisum’s Social Security Timing software and consumer marketing seminar, would prove to be even more valuable.