What is the Windfall Provision for Social Security?
What is the Windfall Provision for Social Security?
If you collect such a pension, the WEP could reduce your Social Security benefit by up to half of the amount of your pension. (By law, it cannot eliminate your benefit entirely; Social Security sets maximums on the dollar amount, as detailed in its ) About 1.9 million people, or 3 percent of Social Security beneficiaries, are affected by the provision, according to a by the Congressional Research Service. Congress approved the Windfall Elimination Provision in 1983 as part of a larger package of Social Security reforms (including an ). The intent was to remove an unintended advantage for workers who collect non-covered pensions (typically from government employment) but also did some "covered" work in jobs that paid into Social Security. Because relatively little of their lifetime income was reflected in their Social Security earnings records, these workers benefited from Social Security’s progressive formula for figuring retirement payments, which is weighted in favor of low-wage workers. In other words, someone who collected a healthy government salary for decades received the same advantage in Social Security calculations as did a longtime low-income worker. The WEP eliminates this advantage by tweaking the formula for people also receiving non-covered pensions in a way that reduces their Social Security retirement benefits.
What is the Windfall Elimination Provision
If you collect such a pension, the WEP could reduce your Social Security benefit by up to half of the amount of your pension. (By law, it cannot eliminate your benefit entirely; Social Security sets maximums on the dollar amount, as detailed in its ) About 1.9 million people, or 3 percent of Social Security beneficiaries, are affected by the provision, according to a by the Congressional Research Service. Congress approved the Windfall Elimination Provision in 1983 as part of a larger package of Social Security reforms (including an ). The intent was to remove an unintended advantage for workers who collect non-covered pensions (typically from government employment) but also did some "covered" work in jobs that paid into Social Security. Because relatively little of their lifetime income was reflected in their Social Security earnings records, these workers benefited from Social Security’s progressive formula for figuring retirement payments, which is weighted in favor of low-wage workers. In other words, someone who collected a healthy government salary for decades received the same advantage in Social Security calculations as did a longtime low-income worker. The WEP eliminates this advantage by tweaking the formula for people also receiving non-covered pensions in a way that reduces their Social Security retirement benefits.