What’s next for the Social Security Fairness Act?

What’s next for the Social Security Fairness Act?

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As Congress managed to avoid a government shutdown, the Senate also passed a major bill that will increase Social Security benefits for some public workers.

The Social Security Fairness Act, passed in the early hours of Saturday by a vote of 76-20, will repeal current Social Security provisions known as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). for decades.

The WEP reduces Social Security benefits for individuals who receive retirement or disability benefits from employment where they did not pay Social Security payroll taxes. The GPO reduces Social Security benefits for spouses, widows and widowers who also receive their own state pension income. In total, the provisions affect an estimated 3 million people.

The bill received enthusiastic support from organizations representing teachers, firefighters, police officers and other government workers affected by the benefit cuts.

The government will close at midnight if no agreement is reached

“You shouldn’t penalize people for income outside of a system when you’ve paid into it and are receiving that benefit,” John Hatton, vice president of policy and programs at the National Active and Retired Federal Employees Association, said before the vote. “We’ve been trying to repeal this for 40 years.”

The bill had received overwhelming bipartisan support. The Social Security Fairness Act passed the House of Representatives in November with a majority of 327 votes.

The measure passed in the Senate after a key amendment sponsored by Sen. Rand Paul, R-Kentucky, was defeated.

Changes may include raising the retirement age

According to the Congressional Budget Office, the Social Security Fairness Act would cost an estimated $196 billion over 10 years.

These additional costs come as the trust funds that Social Security relies on to pay benefits are already facing imminent depletion. Social Security trustees have forecast that the program’s trust fund, used to pay retirement benefits, could be depleted in nine years, when only 79% of benefits may remain payable.

Some senators who opposed the Social Security Fairness Act had expressed concerns about the pressure the additional costs would put on the program.

Senator Paul, who voted against introducing the current version of the bill in the Senate earlier this week, proposed an amendment to offset these costs by gradually increasing the retirement age to 70 while taking life expectancy into account. The full Social Security retirement age — when beneficiaries receive 100% of their earned benefits — is currently 67 for people born in 1960 or later.

“It is absurd to consider a proposal that would make Social Security both less equitable and financially weaker,” Paul said at the time. “To undo the harm caused by this legislation, my amendment to gradually raise the retirement age to reflect current life expectancy will strengthen Social Security by providing nearly $400 billion in savings.”

More from Personal Finance:
Answers to common questions about the Social Security Fairness Act
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A study shows that early retirement comes as a surprise to many employees

Social Security advocacy groups have pushed for broader Social Security reform that would use tax increases to fund more generous benefits.

“We want to help make this happen, but we would rather it be part of a much larger Social Security reform,” Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare, previously told the Vote.

—CNBC’s Katrina Bishop contributed to this report.

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