How the Windfall Elimination Provision in Social Security Works

For over 40 years, many retirees who expected to receive their full Social Security benefits were met with unexpected reductions due to a rule known as the Windfall Elimination Provision (WEP). This policy affected workers who had careers in both Social Security-covered and non-covered employment, such as public sector employees with pensions from jobs that did not withhold Social Security taxes. However, in early 2025, a major shift occurred – the Social Security Fairness Act was signed into law, officially eliminating WEP and the Government Pension Offset (GPO). As a result, millions of retirees will see an increase in their Social Security payments, along with retroactive reimbursements dating back to January 2024.

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What Was the Windfall Elimination Provision?

The Windfall Elimination Provision (WEP) was a rule that reduced Social Security retirement and disability benefits for individuals receiving pensions from non-covered employment – jobs that did not withhold Social Security payroll taxes (FICA). The provision was introduced in 1983 as a way to adjust benefits for workers who had split their careers between covered and non-covered jobs.

Instead of calculating benefits based on total lifetime earnings, the WEP changed the benefit calculation formula, reducing the primary insurance amount (PIA) for affected retirees. The reduction was proportional to the number of years worked in covered employment, meaning those with fewer than 30 years of Social Security-taxed earnings saw the largest reductions.

How the WEP Was Applied

Senior woman talking to a Social Security official

Before its repeal, WEP primarily impacted workers who spent part of their careers in jobs that did not contribute to Social Security but later qualified for Social Security benefits. Commonly affected groups included:

Federal employees hired before 1984 under the Civil Service Retirement System (CSRS)
State and local government employees with pensions from non-covered jobs
Teachers in states where public educators did not contribute to Social Security
Police officers and firefighters with pensions from local or state governments

The reduction was applied on a sliding scale and the reduction was capped at 50% of the retiree’s pension from non-covered employment. Those with 30 or more years of covered employment were exempt from WEP.

Windfall Elimination Provision vs. Government Pension Offset

The WEP and Government Pension Offset (GPO) both reduced Social Security benefits for retirees with pensions from non-covered employment, but they applied in different ways.

The WEP reduced personal Social Security benefits – such as retirement or disability benefits – for individuals who worked in both covered and non-covered jobs. It adjusted the benefit formula, often lowering payments for those with fewer than 30 years of substantial earnings under Social Security.

The GPO affected spousal, widow and widower benefits distributed by the Social Security Administration, reducing them by two-thirds of the retiree’s non-covered pension. This often left individuals with little or no spousal benefits.

While the WEP impacted a retiree’s own earnings-based benefits, the GPO specifically targeted dependent benefits.

What Changed Under the Social Security Fairness Act?

The Social Security Fairness Act, which passed with bipartisan support, completely repealed both the WEP and Government Pension Offset (GPO). The repeal means that approximately 3.2 million beneficiaries who were previously subject to the WEP or GPO will receive their full Social Security benefits. Retroactive payments will also be issued for benefits dating back to January 2024, restoring funds to those whose benefits were previously reduced under WEP or GPO.

How Will Retroactive Payments Work?

Under the law, eligible individuals will receive a one-time retroactive payment covering the difference between what they were paid under the WEP or GPO and what they should have received without the provisions. These payments will apply to benefits dating back to January 2024, and the SSA is expected to issue them automatically by the end of March 2025.

For those who previously delayed claiming Social Security due to WEP or GPO concerns, the repeal may also affect their future benefit calculations, potentially leading to higher lifetime payouts.

Bottom Line

The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) are no longer in effect. The Social Security Fairness Act of 2024 restores full benefits to retirees who receive pensions from non-covered employment and eliminates reductions that had previously lowered payments. For millions of retirees, this means higher Social Security payments going forward and retroactive compensation for past reductions.

Tips on Social Security

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Think you will be affected by the WEP? Then it’s important to account for this reduction in benefits when planning your retirement savings strategy. In some cases, you may need to save more in order to have a successfully funded retirement. Or perhaps you’ll need to delay retirement in order to hit the 30-year exemption threshold.