Social Security Fairness Act and California public pension benefits, Digi Mart USA News (Sacramento, California): Consider a hypothetical 68-year-old in Sacramento who spent 25 years at a California public agency that never withheld Social Security taxes, earning a $3,000 monthly pension. Before that, he spent 15 years in private-sector jobs that paid into Social Security, which earned him a retirement benefit of his own.
This week a headline reported that CalPERS booked a 100% gain on a radio spectrum investment following a deal involving SpaceX. That gain stays inside the pension fund.
What actually raised such a retiree’s check was a federal law signed nearly two years ago.
For decades, two rules affected people in this situation. The Windfall Elimination Provision reduced the benefit people earned in jobs that paid Social Security taxes if they also received a pension from work that did not.
The Government Pension Offset reduced spouse and survivor checks.
Under Social Security’s standard formula, the benefit replaces 90% of the first portion of average monthly earnings. For workers with fewer than 21 years of substantial covered earnings, the old rule lowered that percentage to 40%.
For someone who first qualified in 2023, the maximum WEP cut was $557.50 a month, before subsequent adjustments. The actual cut depended on eligibility year and earnings history.
The second rule could hit even harder. It reduced spouse and survivor benefits by two-thirds of the government pension.
On a $3,000 pension, that meant a $2,000 monthly offset, which for someone otherwise eligible for a $1,500 survivor benefit would have wiped out the entire payment.
Many pension members never faced either rule. Social Security says about 72% of state and local public employees work in jobs covered by Social Security.
The Social Security Fairness Act became law on January 5, 2025. It ended both rules for benefits payable from January 2024 forward. The administration recalculated monthly checks and sent lump sums covering the increase back to that month.
By July 7, 2025, it had sent more than 3.1 million payments totaling $17 billion.
How much each person gained depended on their work and pension history. The agency says some saw very little change, while others became eligible for over $1,000 more each month.
The full benefit will also receive the 3.6% cost-of-living increase for 2027, and each future raise now builds on the full, unreduced amount.
Bloomberg reported that CalPERS roughly doubled its investment in radio-spectrum assets connected to a SpaceX acquisition. That is a different holding from simply owning SpaceX shares.
Such gains improve the fund’s investment position, although its long-term performance depends on more than one successful deal.
A pension is set by a formula tied to salary and years of service, so the gain does not raise the monthly payment. Social Security benefits come from the covered earnings record and federal law.
The fund’s returns play no part in that calculation and had no role in the repeal.
A larger monthly benefit can mean a larger tax bill. Federal tax on benefits starts once other income plus half of Social Security tops $25,000 for single filers or $32,000 for joint filers.
A $36,000 annual pension places the hypothetical retiree above the first threshold for either filing status, and up to 85% of Social Security benefits could be taxable depending on other income and marital status. Social Security does not withhold federal income tax unless requested, and recipients can arrange voluntary withholding through their online account or Form W-4V.
Retirees should first confirm that the repeal reached their own record. Those with a pension from work that did not pay Social Security taxes and who never received a notice of a benefit change should check their online Social Security account or call the agency.
Widows and widowers who never applied for survivor benefits because the offset would have erased them may need to file now. Benefits never applied for are the easiest to lose.
Readers should also view headlines about pension fund returns as news about the health of the fund. Strong investment returns support a pension fund’s finances, although they do not automatically increase an individual’s monthly payment.
Because covered work, pension size and marital history differ, the numbers can shift by hundreds of dollars a month, and checking one’s own record is the best way to know where one stands.
