The passage of the Social Security Fairness Act in January 2025 marks a significant victory for over 2.5 million public sector workers across the United States, including teachers, firefighters, police officers, and other government employees in Texas. For decades, those covered under the Teacher Retirement System of Texas (TRS) and the Employees Retirement System of Texas (ERS) have suffered reductions in their Social Security benefits due to two specific provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These provisions would often slash their retirement benefits and create financial insecurity. For Texas educators, state employees, and first responders who dedicated decades of their lives serving others, the Social Security Fairness Act gives them some long-overdue relief. The law ensures that TRS and ERS retirees will now receive the full benefits that they have earned, thus strengthening their financial situation.
One of the provisions that was eliminated by this Act is the Windfall Elimination Provision, or WEP. This provision adjusted the social security benefit for anyone that qualified for social security but also were receiving pensions from non-Social Security-covered employment. For example, a public-school teacher in Texas may have worked for a company for the first 15 years of her career but then left to become a teacher in the TRS system where she did not contribute to Social Security. In this case, the Social Security benefit she receives would be reduced due to this provision and, in many cases, quite significantly reduced. By repealing the WEP, she would now be able to receive her full benefit.
The Government Pension Offset is the other provision that this act eliminates. The GPO reduced Social Security spouse and survivor benefits for the spouses of covered workers that were receiving a pension from a state or local government. Using the same example above, assume that this public-school teacher’s spouse worked for 40 years in the private sector for a corporation where he contributed into the Social Security system every year. If he then passes away, normally his spouse would be able to get his higher social security benefit. However, under the GPO, because she was receiving a government pension, this social security benefit that she would have been normally entitled to would be greatly reduced thus possibly creating a financial hardship when the spouse with the much larger social security benefit passed.
The provisions were eliminated with the passage of the act in January and the increased payments will take effect some time between April and July 2025. However, the payments will be retroactive to January 2024 which means that beneficiaries will not only see an increase in payments starting this year, but they will also receive an additional amount to make up for the penalties applied in 2024 and in 2025. If an affected beneficiary has already passed away in 2024, it is important for the estate or the descendants of that beneficiary to claim the possibly substantial benefits of the deceased party. You should work with your financial advisor to help you do this.
This is a major win for TRS and ERS participants! In many cases, this might mean that you could retire earlier than expected. You should work with your financial advisor to see how this applies to you and how to plan accordingly.
If you do not currently have a financial advisor that is well-versed in social security and TRS, feel free to contact us by clicking here. We have been working primarily with retirees and TRS and ERS participants for the past decade and are happy to help.
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