The Social Security Fairness Act could restore benefits for millions of people, but the policies still cause difficulties

At 84, Evelyn Paternostro spends her days working part-time as a cashier at Dollar Tree. For decades she dedicated her life to education and served as a teacher and principal in Louisiana. But despite her years of public service, she now finds it difficult to make ends meet.

“People in the store constantly ask me, ‘Are you doing this for fun? Why aren’t you retired?'” she said. “Because I have to eat.”

After her husband’s death, Paternostro discovered that she could not collect his Social Security benefits due to two federal policies called the Windfall Elimination Provision and the Government Pension Offset.

Reduce or eliminate these provisions social security Advantages for millions of Americans if they receive a government pension where no Social Security tax is withheld. Those hardest hit are retired teachers, firefighters and other civil servants.

“I was really taken aback,” she said. “I knew I was going to retire as a teacher. I would join the Louisiana Teachers Retirement System. And I never really thought about my husband’s income and what that would mean for me.”

Who is affected?

Nearly 2.8 million people in the United States are affected by WEP and GPO. Its impact extends to all state, county, municipal and special district employees in 26 states. Teachers in 13 of those states, including certain districts in Kentucky and Georgia, are also feeling the impact.

In Massachusetts and certain districts in Rhode Island, not all city employees are affected, only teachers.

The purpose of these two 1980s programs was “so that there was no way to get a federal pension and Social Security at the same time,” explains CBS News economic analyst Jill Schlesinger.

The Windfall Elimination Provision affects people who qualify for Social Security benefits through their job but also receive a pension from another job where they did not pay into Social Security.

It can reduce their social security contributions by up to half of their pension.

For example, Michelle Cosgrove’s benefits were cut in half from $866 per month.

Cosgrove spent the first half of her career as a paralegal and contributing to Social Security before staying home to raise her children.

She later became a public school teacher in the San Francisco Bay Area and contributed to CalSTRS, the California educators’ pension fund. However, her retirement plans took an unexpected turn when she discovered the intricacies of the pension system.

When she retired, Cosgrove’s reduced payments affected her ability to pay bills and cover expenses.

The other program, the Government Pension Offset, impacted Cosgrove even more after her husband, Mike, died in 2022. Although she had worked in the private sector for decades and contributed to Social Security, his benefits were largely inaccessible to her because of the GPO. Mike, a welding supervisor, was diagnosed with a rare cancer at age 52 but continued to work until his health deteriorated. He died at the age of 63.

If annuitants are widows or widowers of individuals who received Social Security benefits, that annuitant may receive fewer survivor benefits or receive no benefits at all.

“If I had stayed home and done nothing, I would have gotten all the money,” Cosgrove said. “If I had known that, I might not have worked as a teacher. I would have chosen something else.”

According to the Congressional Research Service, the GPO primarily affects women, with 83% of those affected by the GPO being female.

“When you see the GPO numbers going up, it’s because a lot of these people were probably teachers and were married to someone who worked a Social Security job,” said Joslyn DeLancey, vice president of the Connecticut Education Association. “You’re not going to get that spousal benefit. … It’s such a messy and nuanced thing.”

Paternostro estimates she would have received $2,500 a month in Social Security benefits — about $300,000 over the last decade.

“That’s a lot of money,” she said. “That’s more money than I can imagine.”

But these measures caused a very different kind of heartache for Dede Ruel, a retired school psychologist in Illinois.

She said she recently received a letter from Social Security informing her that she owed more than $13,000, which reduced her Social Security checks by 21%.

These policies are one of the most common reasons for Social Security overpayments, which totaled more than $450 million in the 2017-2021 fiscal years, according to a CBS News analysis of federal data.

“I tried to appeal through their process but was rejected at every level,” Ruel said.

Bipartisan support for the Social Security Fairness Act

The Social Security Equity Actone of the most bipartisan bills in Congress this session, aims to repeal WEP and GPO.

The House of Representatives voted in favor pass the law November 12th. The Senate is expected to do so Vote on the Social Security Fairness Act this week.

Social Security is expected to run out of funds in 2035 unless changes are made Costs and income of the fund System.

Although proponents of the Social Security Fairness Act argue that it will deplete the Social Security fund just six months sooner than expected, some critics believe there are better solutions and suggest that states should restructure their pension systems to address the causes rather than relying on the federal government fixes it.

“Many critics say this will cost a lot of money, almost $200 billion, over the next ten years,” Schlesinger explains. “Critics say there is a reason we force people to pay into the Social Security system. These are two separate systems.”

Representative Garret Graves, a Louisiana Republican who initiated the bill, said: “People should receive benefits based on what they have paid into the system. The formula should largely be based on this. I understand the efforts in the ’70s and “the overcorrection probably cost these people $600 to $700 billion in benefits.”

Devin Carroll, a financial planner, encounters many clients who are “completely surprised.” Carroll often instructs his clients to use the Social Security Administration’s WEP calculator, a tool that calculates benefits taking into account the impact of the WEP.

Carroll explains that figuring out future Social Security benefits can be difficult. The benefit formula includes “bending points” that are adjusted annually based on wage inflation.

These adjustments are critical because the actual amount of the WEP reduction is determined in the year a person turns 62.

“You have to make some projections and assumptions about future inflation, both price inflation and wage inflation,” Carroll explained. “Once you’ve done that, you can start working through that and using a calculator like the SSA’s, which will do a lot of this for you and tell you what your WEP adjusted for retirement benefits should be.”

Carroll also sees the impact of these regulations firsthand. His daughter-in-law is a teacher in Texas and his son is a firefighter in Texas.

“Essentially this money has been stolen from all of us over the years,” Paternostro said. “That’s not fair.”

Jill Schlesinger contributed to this report.