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The Social Security Fairness Act: Implications for MA State Pensioners During Divorce Thumbnail

The Social Security Fairness Act: Implications for MA State Pensioners During Divorce

The Social Security Fairness Act (SSFA), signed into law on January 5, 2025, eliminates certain provisions that previously affected how Social Security and state pension benefits were divided during a divorce, including the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

As a result of SSFA, employees in the public sector with state pensions will now be eligible to receive their state pension as well as unreduced Social Security benefits they may have earned from other employment covered under Social Security. Additionally, state-employed spouses are now eligible to receive unreduced spousal Social Security benefits from their counterparts. Prior to SSFA, these benefits may have been previously reduced or eliminated by the WEP or GPO.

Let’s take a look at what’s changing and how this may impact individuals going through a divorce.

What Are WEP and GPO?

  • Windfall Elimination Provision (WEP): The WEP is a formula that was designed to reduce Social Security benefits for individuals who also have state or federal pension benefits. This formula was previously applied to Social Security benefits earned by the state employee for any service in the private sector, effectively reducing their benefits depending on the size of the state pension. The SSFA eliminates this provision, allowing public-sector employees to receive the entirety of any Social Security benefits that may have been accrued throughout their work history.
  • Government Pension Offset (GPO): The GPO is a formula that was designed to eliminate or reduce spousal Social Security benefits that would otherwise be payable to the state-employed spouse based on their spouse’s benefit amount. Spousal benefits are available to couples who have been married for more than 10 years (even after a divorce). This provision was more restrictive than the WEP and would often eliminate the spousal Social Security benefit entirely. The SSFA repeals this GPO reduction, providing state pension employees with full eligibility to spousal Social Security benefits once the 10-year marriage rule is met.

How Will This Affect Your Divorce?

  • Before SSFA: Dividing state pensions equitably during the divorce process posed various challenges due to WEP and GPO provisions. State employees would often be required to forfeit 50% of their pension benefits, while their spouse would be entitled to the other 50% in addition to their full Social Security benefits. This would create significant disparity in how marital income benefits were divided, leaving spouses who are state employees with only 50% of their pension and minimal Social Security benefits.
  • After SSFA: The SSFA eliminates WEP and GPO reductions, providing state and public sector employees with a more equitable path to pension income division during a divorce. However, even with these new changes, a complete accounting of all marital benefits (including both spouses’ Social Security and pension benefits) is still recommended to achieve an equitable division of marital assets.

Hypothetical Example: An Ongoing Disparity Post-SSFA

Consider a couple that were married for 32 years where Spouse A worked in the private sector earning Social Security benefits while Spouse B worked in a state job, accruing only a state pension. At the time of divorce, 50% of Spouse B’s state pension would go to Spouse A, who is also entitled to their own full Social Security benefits. Spouse B would then receive the other 50% of the state pension, plus the greater of either their own earned Social Security (if any) or 50% of Spouse A’s. Even with these improvements, the state-employed spouse will still likely continue to receive less total income.1

Conclusion

Following the enactment of the Social Security Fairness Act, financial outcomes resulting from divorce are now more equitable for spouses who work in the public sector. However, there is still a notable income disparity that remains. Working with a financial professional experienced in the divorce process can offer a more equitable distribution with a full accounting of marital assets taken into consideration.

About Adam Waitkevich

Adam is a Certified Divorce Financial Analyst™, Certified QDRO Specialist™, and Founder of Divorce Financial Solutions, a firm specializing in all financial aspects related to divorce. Since 2010, Adam has helped thousands of divorcing couples and family law attorneys avoid unintended mistakes in the division of marital estates.

Scheduled a consultation with a divorce financial professional today or call us at 508-839-3730.

1Hypothetical examples are for illustrative purposes only. Actual results may vary. These examples do not constitute as investment, legal, or tax advice for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted. These examples do not represent actual clients. Any resemblance to actual people or situations is purely coincidental.