Where U.S. public pensions stand at mid-year 2025

We’re now midway through 2025, and it’s an ideal time to take stock of how the public pension landscape is evolving in North America.

Let’s take a look at what’s trending right now and what that means for the months ahead.

Reform is real and it is accelerating

For decades, the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) have quietly reduced Social Security benefits for millions of public sector workers who also receive a government pension. This year, that changed.

The repeal of WEP and GPO, finally passed in early 2025, meaning that teachers, firefighters, police officers and municipal workers who paid into Social Security for part of their careers will now receive their full federal benefit. In some cases, that is a boost of several hundred dollars a month.

But this is not just a win for retirees. It is a wake-up call for pension systems.

This kind of policy reform does not happen often. When it does, it reveals just how agile or not a pension plan’s infrastructure really is.

Legacy platforms, siloed data and paper-heavy processes will struggle to keep up. On the other hand, systems that are flexible, data-rich and digitally enabled will be able to act quickly, communicate clearly, and deliver the transparency members expect.

Reform brings responsibility. The plans that can rise to meet it will earn something increasingly rare in the public sector: trust.

Digitization is moving from ambition to expectation

The biggest shift this year is not legislative. It is behavioral.

Members now expect their pension plan to offer the same experience they get from their bank. That means real-time access, intuitive tools, clear information and a seamless digital journey.

The good news is that many plans are making progress. We are seeing strong movement in self-service portals, online retirement estimates and digital document submission. But a significant number of systems are still operating with manual workflows, outdated software or processes that frustrate rather than support.

At the midpoint of 2025, the difference between plans that are digitally ready and those that are not is becoming increasingly visible. And that gap is only likely to grow.

Investment strategy is under the microscope

With inflation easing but market volatility still in play, more plans are turning to alternative asset classes like private equity and infrastructure. There are plan that continue to lead in this space, exemplifiedd by posting strong private market returns over the past year.

But with higher return potential comes increased scrutiny. Recent high-profile losses in the pension sector have put transparency and governance back in the spotlight. Boards are asking harder questions. Members are demanding clearer answers.

Now more than ever, pension systems need robust oversight tools and the ability to explain complex strategies in simple terms. Investment performance matters, but so does confidence in how those investments are managed.

Personalization is still the missing piece

For all the attention on systems and structures, the heart of a pension plan is its people.

Members want to understand their benefits. They want clarity, relevance and communications that reflect their individual circumstances. Yet many plans are still delivering the same one-size-fits-all messaging and generic statements they were using a decade ago.

We know that personalized digital engagement works. Video, targeted content, and member-specific projections all help build confidence and improve outcomes. But the pace of adoption has been slow.

At this stage in 2025, personalization should no longer be seen as a nice-to-have. It is a key part of the member experience and an important contributor to long-term plan sustainability.

The second half starts now

The first half of this year brought meaningful progress across the sector. The second half will be defined by how well that momentum is sustained.

Plans that modernize their systems, simplify their member journeys, and invest in clarity and communication will be best placed to build trust and resilience.

At Heywood, we work with public service pension plans in the UK and across North America to deliver scalable, efficient and user-focused solutions. Whether it is modernizing administration, enhancing engagement or supporting policy reform, we are helping clients navigate change with confidence.

Mid 2025 is a moment of opportunity. Let’s make it count.

Sources:

1. H.R. 82 – Social Security Fairness Act (Full Bill Text and Status)
   https://www.congress.gov/bill/118th-congress/house-bill/82
2. SSA – Social Security Fairness Act (WEP & GPO repeal page)
   https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
3. SSA – WEP Overview
   https://www.ssa.gov/benefits/retirement/planner/wep.html
4. SSA – GPO Overview
   https://www.ssa.gov/benefits/retirement/planner/gpo.html