What Is the Windfall Elimination Provision?
The Windfall Elimination Provision (WEP) reduces the earned Social Security benefits of an individual who also receives a public pension from a job not covered by Social Security.
Who does the Windfall Elimination Provision affect?
The WEP affects people who worked both as public employees in jobs not covered by Social Security and in jobs in which they earned Social Security benefits. For example, the WEP affects educators who do not earn Social Security from their jobs in the public schools, but who work part-time or during the summer in jobs covered by Social Security. The WEP also affects people who change careers, moving from a job in which they earn Social Security benefits to a job, such as teaching, in which they are not covered by Social Security.
How does the Windfall Elimination Provision work?
The WEP reduces the factor by which average earnings are multiplied to determine Social Security benefits. How much the factor is reduced depends on when the individual becomes eligible to retire and how many years of earnings he or she has accumulated.
For example: Bob — a retired educator — worked for 17 years in Vermont, a state in which educators participate in the Social Security system. Bob then moved to Maine, a state in which educators are not covered by Social Security. Bob worked for 14 more years in Maine before retiring. According to the Social Security Administration, he earned monthly benefits of $540 per month for contributions paid into the Social Security system while he worked in Vermont. However, because of the WEP, his actual monthly benefits will be cut by $196 a month. Bob will receive only $344 per month from Social Security instead of the $540 he earned.
What is the impact of the Windfall Elimination Provision?
The WEP causes low-paid public employees outside the Social Security system, like educators, to lose a significant portion of their Social Security benefits. The WEP also impacts the teaching profession, as people are less likely to leave other careers in which they earn Social Security benefits to become educators.
What can be done to address the WEP?
Congress can pass legislation to repeal the WEP. For example, Representatives McKeon (R-CA) and Berman (D-CA) have introduced a bill (H.R. 147) to repeal the WEP.