What is the windfall provision for social security?

The Windfall Elimination Provision (WEP) was a formula that could reduce the size of your Social Security retirement or disability benefit if you also received a pension from a job in which

you did not pay Social Security taxes. Congress voted in December 2024 to repeal the WEP, ending benefit cuts for those receiving such “non-covered” pensions. The repeal law, the Social

Security Fairness Act, is retroactive to benefits paid for 2024, which means people previously subject to the WEP will receive a lump-sum repayment of the benefits withheld during that year.

The Social Security Administration (SSA) says it expects to deliver the retroactive payments to most affected beneficiaries by the end of March 2025, with higher monthly benefits starting

in April, but some more complex cases may take longer to resolve. Updates on implementing the act can be found on the Social Security website. HOW DID THE WINDFALL ELIMINATION PROVISION

WORK? Under the WEP, the SSA could reduce your monthly benefit payment by up to half of the amount of your pension. (By law, it could not eliminate your benefit; Social Security set a cap on

the maximum reduction, which in 2024 was $587 a month.) About 2.1 million people — roughly 3 percent of Social Security recipients — were affected by the provision, according to a February

2024 report by the Congressional Research Service. Most worked for state or local government bodies such as school systems, police and fire departments, and other public service agencies,

many of which do not participate in the FICA payroll-tax withholding that provides most of Social Security's funding. The WEP’s effect was proportional: The more years in which you did

“covered” work (in which you paid Social Security taxes), the less the provision cut into your benefits. If you had 30 or more years of covered work, the WEP did not apply. Congress approved

the Windfall Elimination Provision in 1983 as part of a larger package of Social Security reforms (including an increase in the full retirement age). The intent was to remove an unintended

advantage for workers who collect non-covered pensions but also did some "covered" work in jobs that paid into Social Security. Because relatively little of their lifetime income

was reflected in their Social Security earnings records, these workers benefited from Social Security’s progressive formula for figuring retirement payments, which is weighted in favor of

low-wage workers. In other words, someone who collected a healthy government salary for decades received the same advantage in Social Security calculations as did a longtime low-income

worker. The WEP compensated for this by tweaking the formula for people also receiving non-covered pensions in a way that reduced their Social Security retirement benefits. Critics of the

provision said it penalized public-sector workers who also paid into Social Security via other employment. KEEP IN MIND The Windfall Elimination Provision affected Social Security retirement

and disability benefits. A separate rule, the Government Pension Offset (GPO), covered people who received spousal or survivor benefits in addition to a non-covered government pension. The

Social Security Fairness Act also repealed the GPO.