More than a year. That is the length of time that millions of retirees, including teachers, firefighters, police officers and other public pension workers, could have to wait to receive the $360 increase in their Social Security benefits. This delay is due to the implementation of the Social Security Fairness Act, legislation passed to correct certain historical inequities, but which faces significant operational challenges.
In fact, despite the Social Security Fairness Act being signed last December by then-President Joe Biden, the implementation of this law will not be immediate. According to the SSA, the lack of funding and adequate personnel is making it difficult to make adjustments in a timely manner, which are emerging as the main reasons for this delay. In fact, this new policy measure has revived the debate on the financial sustainability of the Social Security system. Lawmakers and economists have pointed out that the measure benefits millions of public sector workers, but it also poses a challenge to the trust funds of the program, which are already facing pressures due to the aging population and the growing number of retirees.
Changes in Social Security benefits
In accordance with the provisions of the US Social Security Equity Act, the elimination of these provisions will allow beneficiaries to receive higher payments, both retroactively and in their future monthly deposits. According to estimates from the Congressional Budget Office, repealing the Surplus Elimination Provision will increase monthly benefits by an average of $360 for more than two million people by December 2025.
On the other hand, the elimination of Government Pension Offset will benefit around 380,000 spouses of deceased individuals, who will receive an average increase of $700 in their monthly payments. In addition, another 390,000 spouses who faced reductions in their own benefits could receive increases of up to $1,190 per month.
These changes, therefore, seek to ensure that workers in the public sector and their families receive fairer compensation compared to those who have worked in the private sector. Government employees had experienced significant cuts in their benefits due to these provisions, despite having contributed to the Social Security system throughout their working lives.
Consequences for the Social Security system
These new payments also face a new reality, as they could put additional pressure on the trust funds of Social Security, which are already facing an insolvency crisis in the coming years. Although the law seeks to correct inequalities, its implementation could further complicate the financial sustainability of the system.
Currently, Social Security funds are financed through payroll taxes, but with an increasingly aging population and an increase in the number of beneficiaries, some experts have warned that the system could run out of funds by the year 2034 if no structural changes are made. In addition, the SSA warned that the delays will not only affect the beneficiaries of the new law, but also all users of the system.