Last month, the Social Security Administration (SSA) released an updated version of Form SSA-1945 (03-2025), “Statement Concerning Your Employment in a Job Not Covered by Social Security.” The SSA has directed state and local government employers to discontinue using previous versions.
Purpose of Form SSA-1945
Under Section 419 of the Social Security Protection Act of 2004, state and local government employees hired on or after January 1, 2005, in positions not covered by Social Security must receive prior to commencing employment in that position a written notice explaining how pension benefits earned in connection with that noncovered position1 could reduce their potential future Social Security benefits due to the effect of the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO). The written notice must include a form for employees to complete and sign to certify they received the notice. Form SSA-1945 is used to satisfy this disclosure requirement.
Updates under the Social Security Fairness Act of 2023
The Social Security Fairness Act (SSFA) of 2023, signed into law on January 5, 2025, retroactively repealed the WEP and GPO provisions effective January 2024.2 However, the requirement to provide state and local government employees hired into positions not covered by Social Security with a written statement about how their Social Security benefits could be affected by such noncovered employment was not eliminated. As a result, the updated Form SSA-1945 reflects the enactment of the SSFA and simply notifies employees that wages earned in noncovered positions (i.e., positions not subject to Social Security taxes) will not be used in determining their eligibility for or in calculating potential future Social Security benefits or survivor benefits. The updated Form SSA-1945 also explains the SSFA’s elimination of the reduction of Social Security benefits under the WEP and GPO for employees entitled to pension benefits from employment not covered under Social Security.
Action required for state and local government employers
Before starting employment, newly hired employees in positions not covered by Social Security must receive and sign the updated Form SSA-1945. A copy of the signed form should be provided to both the employee and the pension-paying agency (i.e., the pension, annuity, retirement, or similar fund or system established by the governmental employer that is responsible for paying the pension benefits).
Please contact your Milliman consultant regarding how this change may impact you.
1 Section 11332 of the Omnibus Reconciliation Act of 1990 (OBRA90) tasked the Secretary of the Treasury to prescribe within regulations the way state and local government entities can meet an exception to participating in Social Security. Treasury Regulation §31.3121(b)(7)-2(e)(2) and Revenue Procedure 91-40 set forth these rules, whereby state and local government employers can provide employees with coverage under a public retirement system or plan as an alternative to otherwise mandatory Social Security coverage (called a FICA replacement plan) if the retirement system or plan provides certain minimum benefit levels (in the case of a defined benefit pension plan) or minimum contribution levels (in the case of a defined contribution individual account plan).
2 Refer to our January 13, 2025 Benefits Alert regarding the enactment of the Social Security Fairness Act of 2023 for more information.