In 1983 Congress passed the Windfall Elimination Provision (WEP). This legislation put a stop to workers collecting full Social Security retirement or disability benefits and a full pension from their job even though during that job they were not paying Social Security taxes. This was certainly an advantage for people who were allowed maximum benefits, but now people who have a separate pension from an employer should determine whether they are paying Social Security taxes at the job where they were eligible for a pension to see if the WEP would apply to them.
Below is a more in-depth explanation of the WEP as identified by Social Security.
Your Social Security retirement or disability benefits can be reduced
The Windfall Elimination Provision can affect how we calculate your retirement or disability benefit. If you work for an employer who doesn’t withhold Social Security taxes from your salary, such as a government agency or an employer in another country, any retirement or disability pension you get from that work can reduce your Social Security benefits.
When your benefits can be affected
This provision can affect you when you earn a retirement or disability pension from an employer who didn’t withhold Social Security taxes and you qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay taxes.
The Windfall Elimination Provision can apply if:
- You reached age 62 after 1985; or
- You became disabled after 1985; and
- You first became eligible for a monthly pension based on work where you didn’t pay Social Security taxes after 1985. This rule applies even if you’re still working.
This provision also affects Social Security benefits for people who performed federal service under the Civil Service Retirement System (CSRS) after 1956. We won’t reduce your Social Security benefit amounts if you only performed federal service under a system such as the Federal Employees’ Retirement System (FERS). Social Security taxes are withheld for workers under FERS.
