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A question about Social Security and WEP
Old 07-13-2017, 10:14 AM   #1
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A question about Social Security and WEP

Does the WEP offset to a Social Security pension apply because the beneficiary actually receives a non-covered pension, or does it apply because the beneficiary is eligible to receive the non-covered benefit.

The SSA is not specific on this. Most of the language refers to receiving a pension, but it's not clear (to me) that WEP would not apply if that pension is never applied for or collected.

The reason for this question: I paid into the SS system of another country, and when I was paying, legally I earned a retirement pension. Things have changed, though, I'm not certain it can be collected, nor am I willing to comply with their requirements to find out.
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Old 07-13-2017, 10:27 AM   #2
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IMHO - I think it is received that counts.
Just because you worked and paid into a system does not mean you actually collect, and the purpose of WEP is to counter the fact that a short time of SS earnings gets you a larger % of that earnings. So they don't want you to have that plus an extra pension.

So if you don't get the extra pension, then there is nothing to correct.

Now, I'm not sure it makes sense to not try to collect the other pension, as WEP claims they will at a max, reduce SS by 50% of whatever the "other" pension is. So you will miss out on effectively 50% of the "other" pension.

I will be subject to WEP, so I have strong feelings on the unfairness of it all.
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Old 07-13-2017, 11:04 AM   #3
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WEP only applies if you are receiving the pension not if you are only qualified for it. Sometimes people delay claiming their pension in order to receive non-WEPed SS for a period of time.
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Old 07-13-2017, 11:21 AM   #4
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Originally Posted by ronin View Post
WEP only applies if you are receiving the pension not if you are only qualified for it.
+1

This is a common question on the expat sites.

If the interview is conducted properly, during the initial conversation with SSA an applicant is asked if they are receiving any other pensions, or other (and all) pensions they will receive in the future. If a foreign pension is involved, WEP (due to the future foreign non-contributing pension) is not applied to the initial pension amount, and it is the responsibility of the applicant to inform SSA when the additional foreign pension is taken (under severe penalties if the pension is taken and notification is not made). If the WEP inducing foreign pension is never taken, then there's nothing to report in the future.
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Old 07-14-2017, 07:02 AM   #5
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Thanks, these responses are helpful. Would anyone by chance have any links to sources that discuss this? I was in the SSA office earlier this week (on an unrelated matter) and couldn't help but notice just how difficult it is to challenge or disagree with an opinion voiced by the employees there.
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Old 07-14-2017, 08:09 AM   #6
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Here's a FAQ from the SS website:

Quote:
When you get a pension from work not covered by Social Security, we may figure your Social Security benefits using a different formula. This lowers your Social Security benefit. We do this whether your pension comes from work you did for a U.S. government agency or in a foreign country.
Since you're not "getting" the pension, it shouldn't apply, right?

Will you lower my Social Security benefits if I get a pension from work not covered by Social Security?
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Old 07-14-2017, 08:16 AM   #7
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People who are working at SS are wrong sometimes, I got this reading Janet Quinn Bryant How to make your retirement money last.
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Old 07-14-2017, 09:06 AM   #8
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Originally Posted by MichaelB View Post
Thanks, these responses are helpful. Would anyone by chance have any links to sources that discuss this? I was in the SSA office earlier this week (on an unrelated matter) and couldn't help but notice just how difficult it is to challenge or disagree with an opinion voiced by the employees there.
In your situation, you have two sources of possible accurate information.

The first, in relation to eligibility, is to contact the SSA International office in Baltimore. Although you are not resident abroad, the office may be able to help with the availability of the foreign SS due to "Things have changed, though, I'm not certain it can be collected", even though you indicate you qualify for the pension.

https://www.ssa.gov/foreign/

The second, again in relation to eligibility, is to investigate if the foreign country has an FBU (Federal Benefits Unit) located within the US Embassy in that country.

As to specific reading on this subject from the SSA site, the site is notorious for its' lack of detailed information. Any US situ local SSA office is a lottery when seeking information as it relates to "foreign" pensions and WEP (and if and when WEP is applied), although it appears an occasional office can be well up to speed. Others have no clue.

Two aspects:

An applicant with 30 years of qualified SSA contributions will not be WEPed, regardless of the foreign pension.

A 'maximum' amount was mentioned in a previous post. I'm not sure where the 'max' is currently, but it should be below $900/month. If the foreign pension is above $900/month, it makes no difference to the WEP amount. It can be $900/mo. or $9,000/mo., the WEP amount will be the same.

Since you qualify for the foreign pension based on your contributions, a totalization agreement, if available and which can also effect WEP, is of no consequence.
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Old 07-14-2017, 09:08 AM   #9
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Quote:
Originally Posted by MichaelB View Post
Thanks, these responses are helpful. Would anyone by chance have any links to sources that discuss this? I was in the SSA office earlier this week (on an unrelated matter) and couldn't help but notice just how difficult it is to challenge or disagree with an opinion voiced by the employees there.
From what I have read on Ex-Pat sites you answer " No" to the question about are you currently receiving such pensions, but it is incumbent on you to report a change in circumstances should you later start taking a WEP qualifying pension.

We will be facing this ourselves in November when DW applies for her SS. She will be receiving a UK government pension 4 years from now, paid for when she was working in England.
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Old 07-14-2017, 03:06 PM   #10
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Originally Posted by MichaelB View Post
Thanks, these responses are helpful. Would anyone by chance have any links to sources that discuss this? I was in the SSA office earlier this week (on an unrelated matter) and couldn't help but notice just how difficult it is to challenge or disagree with an opinion voiced by the employees there.
WEP Applicability

Citations:
Social Security Act as amended in 1983 — § Sections 215(a)(7) and 215(d)(3);

Regulations 20 CFR 404.213 and 404.243.

A. Background

The Social Security Amendments of 1983 (P.L. 98-21) includes a provision that eliminates “windfall” Social Security benefits for retired and disabled workers receiving pensions from employment not covered by Social Security. Under this provision, a modified benefit formula is used to determine the NH's primary insurance amount (PIA).
Social Security benefits are based on the monthly average of lifetime earnings. In the basic formula for figuring benefits, the first part of the average earnings is multiplied by 90 percent; the second part is multiplied by 32 percent; and any part of the average monthly wage remaining is multiplied by 15 percent. However, under WEP, the 90 percent factor is replaced by a factor ranging from 50 to 80 percent for workers who reached age 62 or became disabled between 1986 and 1989. For those who reach age 62 or become disabled in 1990 or later, the 90 percent factor is replaced by a factor ranging from 85 to 40 percent depending on the number of years of “substantial” earnings the NH has.
B. Definitions

1. A pension

A pension is a periodic or lump sum payment from an employer's retirement or disability plan, based on employer and/or employee contributions and based on eligibility factors such as age, length of service or earnings. Payments from either defined benefit (DB) or defined contribution (DC) plans may be considered pensions for WEP purposes. For a pension to cause WEP, the payment must be based on earnings for service that were not covered by Social Security. (For additional guidance on DC plans, see RS 00605.364A.3. and RS 00605.364B.1.)
2. Eligible

An individual is considered eligible when he or she meets all requirements for the pension except for stopping work or filing an application. (See RS 00605.364B.)
3. Entitled

An individual is entitled to a pension when he or she has applied for benefits and has proven his or her rights to benefits for a given period of time. (See RS 00605.364B.)
4. Years of Coverage (YOCs)

YOCs are substantial years of Social Security earnings. See chart in RS 00605.362A.1.
C. Policy WEP application

1. When WEP is applicable

The formula for determining the PIA is modified when the following situation occurs:
  1. A worker becomes eligible for old-age insurance benefits after 1985; or
  2. A worker becomes eligible for disability insurance benefits after 1985; and
  3. For the same months after 1985 the worker is entitled to old age or disability benefits, the worker also becomes entitled to a monthly pension(s) for which he or she first became eligible for after 1985 and, the pension is based in whole or in part on earnings in employment which were not covered by Social Security.
NOTE: If the worker is entitled to spouse’s benefits on another social security number, the Government Pension Offset (GPO) may apply. For more information about GPO, see GN 02608.100.
2. When PIA is recomputed to apply WEP

If the NH becomes entitled to an applicable pension after the MOET for RIB or DIB, the PIA is recomputed to apply WEP in the first month of the pension entitlement. However, the WEP is not recomputed due to changes, such as yearly increases, in the money amount of the pension.


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