The Social Security Fairness Act was passed by both the House of Representatives and the Senate.  President Biden is expected to sign the bill into law.  The Act repeals the Windfall Elimination Provisions (WEP) and Government Pension Offset (GPO) for payments payable in January of 2024 forward.

UPDATE: On January 23rd, Covisum hosted a webinar outlining the impacts of the Social Security Fairness Act and made an Excel calculator available to assist with planning for clients who are unable to retrieve an earnings history. Learn more here.
 

The Social Security Fairness Act was passed by both the House of Representatives and the Senate.  President Biden is expected to sign the bill into law.  The Act repeals the Windfall Elimination Provisions (WEP) and Government Pension Offset (GPO) for payments payable in January of 2024 forward. 

These changes will take time to implement while the Social Security Administration updates its systems to conform to the legislation.  New enrollees to Social Security may be paid full benefits during the transition.  However, those who have already filed for benefits and are impacted by either provision will not see an immediate change to their benefit amounts.  When system updates are completed, impacted beneficiaries will receive a retroactive payment for any increase in benefits that would have been payable back to January of 2024.   

Over the upcoming weeks, Covisum will update all versions of its Social Security Timing® (SST) software to conform to the changes.  In the meantime, if you have clients impacted by the change, you can illustrate full benefit amounts by removing the non-covered pension data entry.  Removing the non-covered pension from the case entirely will eliminate the reductions due to these two provisions and remove the data page that discusses WEP and GPO from the printed report.   

For users of the “Portal” version of SST, if you would like to continue to show the pension income, but not the reduction due to WEP and GPO, simply change the pension type from “non-covered pension” to “pension.”  That change will continue to show the cashflow, but will remove the reduction and the printed report page explaining WEP and GPO.  

One particular area of concern for financial advisors are people who are impacted by the WEP or GPO and became entitled to benefits within the last 12 months.  Part of the motivation for an early claim may have been that spousal and/or survivor benefits would not be available to a spouse who had worked primarily in non-covered employment.  Now that spousal and survivor benefits will be available to this group, delayed claiming may make considerably more sense.  At the same time, delay will need to be weighed against the repayment and any additional retroactive payments that would be received if the claim is left as is.  In the event delayed claiming makes sense, people who have become entitled within the prior 12 months have the ability to revoke their application using SSA Form 521.  They would need to repay any benefits received, but the value of a larger eventual benefit and the fact that it may now be payable over the joint life of the couple may more than justify the time and effort associated with revoking the application.  If you have clients in this situation, you will want to review the initial analysis and ensure you have generated a PDF report, because you will not have the ability to do so once the changes go live.  You may want to compare that report to a new report generated without the impact of the non-covered pension.  

A second area of concern is for spousal benefits that may never have been requested.  If your client would have had spousal benefits reduced to $0 by virtue of the GPO, a claim for benefits may never have been filed.  It is possible that there will be an administrative fix for these situations, but in general, benefits can only be paid when beneficiaries are both eligible and have filed for benefits.  

As our understanding of the new law and the Social Security Administration's rules relating to its implementation are finalized, we will provide additional updates.  

Upcoming software changes will revise the PDF report pages to explain the Act and demonstrate the impact of full Social Security benefits beginning in January of 2024, even in the presence of a non-covered pension.  

Please reach out to our Customer Success team with any questions, 877-844-7213.