Windfall Elimination Provision (WEP) for USAers

[sergio]

A US friend who worked overseas paid into the French pension system. She has not yet received any pension from France. She returned to the US and started taking Social Security at age 62. Recently she was informed by SS that her US Social Security payments have been reduced dramatically due to the WEP provision. Just curious if anyone knows about this WEP provision in the US.

 

[MilHojas]

Hi Sergio,

Check out this page on SSA website.
Windfall Elimination Provision (WEP)

 

[sergio]

I saw that but I don't understand it. Could you explain it? Does this mean that someone who receives a pension in Argentina gets less Social Security in the US? And i so, why?

 

[Ries]

Yes, it clearly says that, in many cases, you get less SS. Because unlike many people's perceptions, SS is not a savings account- its funded by current taxes, and they can with hold it for any reason they like. Read the link- its pretty clear. it tells you how to figure out whether or not it applies to your friend, based on age, number of years paid in to SS, and salaries during those years. If they have paid SS for 30 years on full time work, then it probably wont affect them. If not, then it will. She can also call the SS administration, and ask them, giving her SSN, and they will tell her. Skype is free. Survivors benefits work differently, but still will probably be less if she has an argentine pension.

 

[sergio]

Thanks Ries...I hope you're not right because she has very very little income -- and isn't even receiving the foreign pension yet. If you're right there are a lot of Argentines who receive Social Security as well as a pension from Social Security who are at risk.

 

[Ries]

This law was passed in 1983.
Its not some new thing.
All along, they have not allowed doubledipping from 2 different national pensions.

 

[sergio]

In the case of Argentina there is no agreement with the US to allow pension taxes to be sent to US Social Security as there is with some other nations (I am not sure about France). A USAer can't make voluntary contributions to the US system but in Argentina he/she would be compelled to contribute to the Argentine system. This would mean that the USAer would eventually be penalized for NOT being able to make contributions to the US system. I don't see where there is double dipping. I thought the amount of Social Security depended on how many years and how much money was contributed into the US system. Well...all confusing to me. Another issue: she hasn't even started to receive her French pension. Would this mean that anyone who contributes to a foreign pension scheme and doesn't even claim it is nonetheless penalized by having the projected foreign pension payments deducted from their Social Security? That seems to be what has happened in this case.