In the waning days of the Biden administration, Congress passed legislation to remedy a longstanding complaint from people who have state and local government pensions and their families. In a surprising turn, given today’s uncertainty for government workers, the Social Security Fairness Act garnered broad bipartisan support. This legislation affects over 3 million mostly state and local government retirees who worked outside of the Social Security system, as well as their widows, widowers, and future retirees.

In short, the Act increases Social Security payments for many retirees and their families by eliminating two rules. The first is the Government Pension Offset (GPO), which reduced spousal and survivor benefits for certain government employees. The second is the Windfall Elimination Provision (WEP), which cut Social Security payments for some government retirees.

Government Pension Offset. The repeal of the GPO will increase Social Security spousal benefits for those affected by an average of $700 a month, according to the Congressional Budget Office. Qualifying survivors will see an even greater boost—about $1,190 a month on average. This change applies to those who have significant government pensions earned from work that was not covered by Social Security. For example, most local teachers pay into the PERA system and do not contribute to Social Security.

This new legislation now enables affected retirees to receive the full spousal Social Security benefit — generally 50 percent of what their spouse is entitled to receive at their full retirement age. Perhaps more importantly, affected retirees will now generally receive 100 percent of their spouse’s Social Security benefit upon their spouse’s death.

Let’s imagine retirees George and Patricia, ages 72 and 70. Patricia worked in the private sector and contributed to Social Security for her entire career. She started collecting benefits at her full retirement age of 66 and currently receives $2,500 a month. George worked for the local school district for 30 years and has a pension of $5,000 a month. Before this new legislation, George’s Social Security spousal benefit — normally half of Patricia’s, or $1,250 a month — would have been reduced to nothing. Now, he is entitled to the full amount, regardless of his pension status. If Patricia dies before George, he will receive her entire Social Security benefit.

Windfall Elimination Provision. Another important change is that some government retirees will see their own Social Security benefit increase. Again, this applies to those who spent a significant portion of their careers working in a government job outside of the Social Security system. It is estimated that the average monthly benefit for eligible retirees will increase by $360 a month.

Consider the example of Joaquin, who is unmarried and worked in state government jobs that were not covered by Social Security for most of his career. He is now collecting a pension but also worked for private employers for 10 years, earning an average salary of about $70,000. Under the previous WEP rules, his Social Security benefit — which would have been around $1,200 a month— was reduced to about $700 a month. With the repeal of WEP, he will now receive the full $1,200.

File Soon to Receive Retroactive Benefits. If you or your spouse has a government pension from employment not covered by Social Security, I urge you to investigate whether you qualify for additional benefits. The new legislation specifies that you may be eligible for retroactive benefits back to January 2024. The Social Security Administration has a website (https >> //www.ssa.gov/benefits/retirement/social-security-fairness-act.html) with the latest updates. A hotline is also available at 800-772-1213 (9 AM — 6 PM ET) for those affected by GPO and WEP who are interested in filing for benefits.

If this new law applies to you, I advise patience after filing, as the Social Security Administration estimates that processing payments may take several months. The GPO and WEP rules are notoriously complex (we’ve just scratched the surface here), and even the experts require time to sort them out.

David Gardner is a certified financial planner and is admitted to practice before the IRS. He recently retired from an independent investment advisory firm and continues to write about financial topics. As financial planning is only possible after knowing the client, the column is not intended to be personal financial or tax advice. Data presented is believed to be accurate at the time of writing.