Signed into law January 5, 2025

This law repeals the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) for everyone who has retired under Social Security (SS) beginning effective January 2024. These reductions in SS applied to those receiving annuity payments from the any federal, state or local pension plan (Government Pension).

Key Changes Under the Act

1. Windfall Elimination Provision (WEP):

• What Changed: The WEP formula, which reduced SS benefits for individuals receiving a Government Pension has ended.
• Impact: Government Pension retirees will now receive their full SS payments if they have earned a SS benefit.
• Example: Previously, a retiree with a $1,000 calculated SS benefit could see it reduced by about $400 under WEP. With WEP repealed, the full $1,000 benefit will be restored.

2. Government Pension Offset (GPO):

• What Changed: GPO, which reduced or eliminated SS spousal or survivor benefits by two-thirds of a Government Pension, has been repealed.
• Impact: Retirees are now eligible to receive their full spousal or survivor benefits without reductions.
• Example: A spousal benefit of $1,000, previously reduced to $0 due to a $3,000 Government Pension, will now be paid in full.

Who Benefits?

1. Current Retirees:

• Retirees who previously lost SS income due to the WEP or GPO will see increased benefits due on or after January 2024.
• While retroactive payments are included, they apply only from January 2024 onward. Benefits will not be backdated to retirement years before the new law’s effective date.

Example: If you retired in 2022 and your SS income was reduced under WEP or GPO, you will begin receiving full SS payments in 2024 but won’t receive SS for reductions incurred during 2022–2023

2. Future Retirees:

• Individuals who retire after 2024 will not face WEP or GPO reductions, ensuring full payment of SS benefits due on or after January 2024.

3. Individuals with No Social Security-Covered Work History

• Those who never worked in Social Security-covered employment will not directly benefit from WEP’s repeal.

The Social Security Administration currently says on its website that individuals do not need to take any action – that if they are affected then their SS benefits will be corrected.

Examples

Who will be most affected by these changes? Here is a high level assessment of married couples and an individual working after retirement:

1. Life-Long Educator* + Non-Educator = Likely Greater Spousal Benefit
2. Second Career Educator + Non-Educator = Likely Higher Benefit (unless Spousal Benefit is higher)
3. Life-Long Educator + Life-Long Educator = Maybe No Increased Benefit
4. Life-Long Educator who takes second career in private industry after retirement – Likely No Increased Benefit

However, the economy is in a very different place than it was eight or even four years ago. Will a new economic cycle and a vastly different interest rate environment change plans and outcomes?

Example Estimates**: 

Why are Examples under item 3 and 4 showing no increase in SS and what could change these?

In order to earn and receive Social Security credits, the individual would have had to earn at least about 7,000 per year in college (in today’s dollars). Thus, the only credit they would have would be their 5 years paying into Social Security after their pension-covered retirement – but you have to have at least 10 years of Social Security credit to get any Social Security benefit.

In order to earn 4 quarters / 1 year of Social Security credit, earnings on which you pay into Social Security (FICA tax) for 2025 is $7,240 ($1,810 per quarter). For individuals in full-time careers as an educator, they may or may not have reached these earnings while in college and in part-time employment later. The Social Security incomes under items 3 and 4 would improve significantly if they earned a number of Social Security credits in these previous periods of employment.

The best thing to do is go to www.ssa.gov, create a Social Security account and obtain your record of actual Social Security credits.

Important Notes

Additional Details on Formula Changes

1. WEP Formula Details:

Previously, the WEP formula reduced the percentage of earnings factored into Social Security benefit calculations. Most individuals with fewer than 20 years of paying SS/FICA tax on “substantial earnings” would receive approximately 40% of their normal SS income (subject to a floor amount). The percentage of their SS went up with each year of substantial earnings; many people who had 30 or more years had no offset. To be more exact, the reduction was 40% of the first tier of SS calculation, which could be 44.44% for someone whose income is only in that tier and the percentage could vary if they have income in second or third tiers that were not impacted by WEP. For those with 30 or more years paying into SS under substantial earnings, they would receive 90% of the first tier. To the extent they had income in tiers two and three, the money paid to them could be very close to 100% of the benefit on their SS statement.

2. GPO Offset Details:

Under GPO, spousal or survivor benefits were reduced by two-thirds of the recipient’s Government Pension pension. This offset no longer applies, allowing retirees to claim full benefits.

Footnotes

*Or other government worker covered by a state or local pension plan

**Using assumptions and calculators in the SS Quick Calculator online program. This includes discounting current salary by 2% back to the beginning of the number of years the individual is in SS. For Government Pension, example is of unreduced annuity with no spousal benefit or deductions, before taxes. SS example is before taxes.

IMPORTANT DISCLOSURES

Investment advisory services offered through HUB Investment Partners LLC, an SEC registered investment advisor f/k/a TCG Advisors LLC. Insurance Services offered through HUB International. HUB International, owns and operates several other entities which provide various services to employers and individuals across the U.S. HUB FinPath and Tax Services are offered through RPW Solutions. Cypher is offered through Cypher Security, LLC. Consulting Services are offered through TCG Consulting Services, LLC. TeleWealth virtual meetings are offered through TCG Advisors. TCG Advisors, TCG Administrators, HUB FinPath, RPW Solutions, Cypher Security, LLC and TCG Consulting Services are under common ownership of HUB International and are affiliates of TCG Advisors. Legal and Tax advice may be provided by Hessler Legal, an unaffiliated law firm. Certain of TCG Advisors’ investment advisory representatives may also be affiliated with Hessler Legal. TCG Advisors does not receive compensation from Hessler Legal for referrals.  

HUB International, owns and operates several other entities which provide various services to employers and individuals across the U.S. Employees of HUB International may offer securities through partner Broker Dealers not affiliated with HUB. Employees of HUB International provide advisory services through both affiliated and unaffiliated Registered Investment Advisors (RIA). Global Retirement Partners, LLC, HUB Investment Advisors, TCG Advisors, Millennium Advisory Services, and Sheridan Road Advisors, LLC are wholly owned subsidiaries of HUB International.