Nearly 3 million public pensioners will experience retirement changes due to the Social Security Fairness Act. Here's what that means for retirees.

• President Joe Biden has signed the Social Security Fairness Act into law.
• The law repealed the Windfall Elimination Provision and the Government Pension Offset, which reduced Social Security benefits for certain public pensioners.
• Here's how that affects retirement planning for almost 3 million beneficiaries.

On Sunday, President Biden signed the Social Security Fairness Act into law, allowing nearly 3 million public workers, including teachers, firefighters, and police, to receive an increase in their Social Security benefits.

The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which reduced Social Security benefits for certain public workers who receive pensions, have been abolished.

The WEP and GPO were established over four decades ago with the objective of ensuring that workers who receive public pensions from non-Social Security employment but are eligible for Social Security benefits through other work receive the same payout as those who contribute to Social Security throughout their careers.

The Social Security Fairness Act has been signed by Biden, and significant alterations are anticipated for both Social Security and Medicare in 2025. Despite this, 73% of workers express concern that Social Security will not be able to cover benefits.

In 1983, the WEP was introduced, which decreases Social Security benefits for certain individuals who also receive pension or disability benefits from workplaces where Social Security payroll taxes were not deducted.

In 1977, the GPO was introduced, which reduced Social Security benefits for certain spouses, widows, and widowers who also received income from their own government pensions.

How much Social Security benefits may increase

The new law affects benefits payable after December 2023.

Biden announced on Sunday that over 2.5 million Americans will receive a substantial payment to compensate for the benefits they were owed in 2024.

According to the Congressional Budget Office, eliminating the WEP will result in an average monthly increase of $360 in Social Security benefits for 2.1 million beneficiaries by December 2025.

According to CBO, eliminating the GPO will result in an average monthly benefit increase of $700 for 380,000 spouses and $1,190 for 390,000 surviving spouses as of December 2025.

"The Social Security Administration is finalizing the implementation timelines for the new law, and will update its website with further details as they become available, a spokesperson for the organization announced on Monday."

To ensure that their current mailing address and direct deposit information are up-to-date with the Social Security Administration, beneficiaries should update this information online, by phone, or in person at a Social Security office.

WEP, GPO often came as unpleasant surprise

Beneficiaries of the WEP and GPO often experienced surprise reductions in their benefits during retirement planning due to insufficient publicity of the provisions, according to Abrin Berkemeyer, a certified financial planner and senior financial advisor at Goodman Financial in Houston.

The change will bring a windfall for many people, according to Berkemeyer.

According to CFP Barbara O'Neill, owner and CEO of Money Talk, the extra income for some beneficiaries will be life-changing due to the change.

The WEP has personally affected O'Neill, a former Rutgers University professor.

After notifying the Social Security Administration that she was claiming her pension, her monthly benefits were reduced. However, it took five months for the change to be processed, resulting in the agency clawing back the overpaid benefits she received during that time.

The removal of the WEP and GPO provisions has eliminated a common source of overpayments, where beneficiaries owe money to the Social Security Administration after receiving more money than they were due. The lack of available data on pensions from non-covered employment has caused overpayment issues, as stated by the Congressional Research Service.

Simplifying retirement planning will be easier without the WEP and GPO, experts suggest.

According to Michael Carbone, a CFP and partner at Eppolito, Carbone & Co. in Chelmsford, Mass., the extra money the change provides to beneficiaries reduces the pressure on them to generate income from other assets they may have.

CFP Andrew Herzog, associate wealth manager at The Watchman Group in Plano, Texas, stated that the provisions eliminate the need for complex calculations to determine benefit income, as what's more is also included.

""Indeed, it simplifies matters," Herzog remarked, eliciting a sense of relief from the audience."