We’ve been reporting on Civil Service Retirement System (CSRS) Social Security reform for several years here at Serving Those Who Serve. And for good reason, since the latest proposed legislation — called the Social Security Fairness Act — could impact benefits for 2.8 million American recipients

Should the bill pass, it will repeal two provisions that currently restrict Social Security benefits for certain employees working for federal, state, and local governments. According to a 2020 study, the Urban Institute estimates the repeal of these two provisions alone could add an average $7,300 annually in Social Security benefits to affected beneficiaries. 

The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) 

The two provisions the Social Security Fairness Act proposes to repeal are the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). When WEP was introduced in 1983, it was intended to improve Social Security’s fairness by preventing workers who received pensions (such as CSRS employees) from also receiving full Social Security benefits if they did not contribute to the Social Security program. It aimed to promote retiree equity by preventing “double dipping.”

The problem with WEP is that it reduces Social Security benefits for those workers who have worked both public sector and private sector jobs during their careers. Despite having paid into Social Security as part of their private sector jobs, about 2 million retirees see their Social Security benefits reduced because of the way WEP is calculated.

Similarly, the GPO provision also reduces benefits, but this time the impact is felt by spouses and widows or widowers of individuals who receive pensions from government jobs not covered by Social Security. The GPO calculation — which impacts nearly 800,000 retirees — reduces Social Security benefits by two-thirds of the government pension.

Who Would Be Affected by the Reforms?

Police officers, firefighters, postal workers, educators, and other public servants with non-Social Security covered jobs are among the groups that could see a significant increase in benefits from the Social Security Fairness Act. It’s common for these workers to have second careers or part-time jobs where they have contributed to the Social Security system. If the reforms pass, they could see a significant boost in their benefits.

Likewise, there are many Feds who are part of CSRS who have earned Social Security credits through other employment and could also see a benefits’ increase. The Urban Institute estimates eliminating the WEP and GPO could increase Social Security benefits anywhere from $3,600 to $8,900 each year for impacted retirees.


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Questions of Fairness in the Proposed Reforms 

Proponents for the complete elimination of WEP and GPO say it’s a matter of fairness to give public sector workers the full Social Security benefits they’ve earned through other employment. This is especially true for middle and low-income earners who face economic struggles as they try to live on a fixed income during retirement. Additionally, complicated and confusing WEP and GPO rules make it difficult to recruit workers in public sectors that are already facing critical worker shortages — such as teachers and first responders. 

Opponents say that repealing the WEP and GPO is too costly. They estimate the bill will add about $150 billion to Social Security’s costs over the next 10 years, thus hastening the program’s projected insolvency by a full year. They argue that WEP and GPO are important provisions to ensure fairness for all retirees and prevent overgenerous payments to people with non-covered pensions. 

They argue a better solution is to update or refine WEP calculations instead of complete repeal. One alternative would mean creating a proportional formula that would apply to all past earnings from both non-covered and covered employment. 

Some legislators suggest making targeted adjustments to the formula to help the most severe cases of benefit reduction, particularly for low and middle-income retirees. Another alternative would be to gradually phase out WEP and GPO to give Social Security time to mitigate the financial impact on the program. 

Legislative Progress and Outlook

Introduced by Rep. Garret Graves (R-LA) and co-sponsored by Rep. Abigail Spanberger (D-VA), the Social Security Fairness Act has bipartisan support. In a press release, Congressman Graves reported that a “discharge petition for the bipartisan Social Security Fairness Act has hit 218 signatures — the number required to force a vote in the U.S. House of Representatives.” 

The press release did not mention a specific date for the vote on the bill. However, it seems likely the vote will occur when Congress reconvenes after the November 5 election. If it passes, the bill will then move to the Senate for consideration. Time is of the essence as both houses must pass the bill before January 3, 2025, which is the beginning of the next Congress.

Key Points for CSRS Employees 

Let’s recap a few key points CSRS employees should understand regarding the Social Security Fairness Act:The act proposes to repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

  • If passed, it could increase Social Security benefits for CSRS retirees with qualifying work history.
  • The bill has bipartisan Congressional support but faces challenges due to cost concerns.

Our team at Serving Those Who Serve understands the importance of keeping Feds updated about reforms that could impact their retirement. Have questions about your federal benefits or retirement planning? Feel free to contact us at [email protected].

The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers  and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **