New Social Security Fairness Act benefits retired railroad workers

If you’re a retired railroad worker or the spouse or survivor of one, several important changes are coming to your pensions.

Previously, the U.S. Railroad Retirement Board (RRB) reduced the tier-1 amount of an individual’s railroad retirement annuity because of his or her pension.

Now, more money is going back into the pockets of many SMART-TD members.

Signed on January 5 by President Biden, the Social Security Fairness Act ends two statutory reductions (the non-covered service pension (NCSP) and the public service pension (PSP)) that are now known as the windfall elimination provision (WEP) and the government pension offset (GPO).

When the NCSP reduction and PSP offset were enacted over 40 years ago, the initial goal was to equalize social security benefit formulas for workers and their spouses with similar earnings histories.

Calculated based on someone’s lifetime earnings, the NCSP reduction lowered the individual’s primary insurance amount, which ultimately determined the monthly tier-1-annuity amount.

The PSP offset further reduced the tier-1 annuity for spouses or survivors by two-thirds of the gross public pension amount payable to those who fall under either category.

Local government employees with less than 30 years of coverage who also receive a public service pension for work not covered by social security and some federal employees hired before December 31, 1983, are some of the individuals who were affected by the NCSP reduction.

Railroad spouses and widow(er)s who were not covered by social security during the last 60 months of employment with the pension-paying government entity but received a public pension based on their own earnings fall under the category of those who were affected by the PSP reduction.

Thanks to the legislation and the repeal of both provisions, anyone who was impacted by the NCSP reduction and PSP offset will have their full tier-1 benefit amounts restored for months retroactive to December 2023 and future monthly benefit payments.

However, it’s important to note that railroad spouses and widow(er)s whose public employment was covered by social security (including federal employees hired after December 31, 1983) and those who are receiving a public pension not based on their own earnings, were not impacted by the repeal. The Social Security Fairness Act also does not impact existing laws requiring offset of railroad retirement annuities for any social security benefit, public disability benefit, or workers’ compensation received. That means that if you’re receiving an RRB and social security benefit, your tier-1 amount will continue to be offset by the social security benefit.

Click to monitor progress on the implementation of the new law. ►

Members do not need to take specific action, except for those who have moved or changed banking information. If that applies to your situation, you are asked to report these details to the RRB’s toll-free number by calling (877) 772-5772.