Why WEP?

Posted by Jeffrey Brown on Aug 23, 2010

Filed Under (Retirement Policy, Uncategorized)

One of the most despised provisions of the Social Security regulations is known as the WEP – an acronym for the “Windfall Elimination Provision.”  This provision is poorly named, poorly designed, and poorly understood.  But that does not mean it should be eliminated.  While the Social Security Administration does a truly horrible job of communicating it, the WEP (or something like it) has a legitimate reason for existing.

What is the WEP?  It is a provision in the law that alters the way Social Security benefits are calculated for individuals who work for state and local employers who do not participate in the U.S. Social Security system.  For example, the earnings of employees of public universities and public schools in Illinois – who participate in Illinois SURS and Illinois TRS – are not covered by Social Security. 

Illinois is not alone.  Approximately one fourth of all public employees in the U.S. do not pay Social Security taxes on the earnings from their government job according to the U.S. Government Accountability Office (GAO).  This includes approximately 5.25 million state and local workers, as well as approximately 1 million federal employees hired before 1984. 

However, many of these public employees – including the author of this blog – will still qualify for Social Security benefits, either as a result of switching between covered and uncovered employment at some point in their career or because they simultaneously work two or more jobs that span both covered and uncovered employment.  For example, a teacher in the State of Illinois may spend his summers working in covered employment.  Alternatively, a professor may spend part of her career working at a private university covered by Social Security, and part of her career working for a state university that is not covered. 

If Social Security benefits were calculated as a simple “linear” function of lifetime earnings, this would not present any problems.  If you earned 50% of your lifetime income in Social Security, you would just get 50% of the benefit that you would have earned had all your earnings been covered.  The only thing Social Security would need to know is how much you paid into Social Security.  Whether you have other “uncovered” earnings would be irrelevant.

But Social Security does not have a “linear” benefit formula.  Rather, it is explicitly designed to offer a higher ratio of benefits-to-taxes-paid for low income workers than it offers to higher income workers.  It is designed this way in an attempt to redistribute income from the rich to the poor.

And therein lies the problem.  If Social Security only observes part of a person’s total earnings (e.g., they know someone’s earnings from a summer job, but not their university salary), then they might mistakenly classify this person as a low-income individual, even though they might be a high income individual who just had a small part of their earnings covered by Social Security.  As a result, blindly applying the same benefit formula to this person gives them a benefit that is too high relative to other individuals who have the same total lifetime earnings!  In essence, we would be paying too much to people who only worked a small part of their career under Social Security.      

In order to adjust for this, the Windfall Elimination Provision (WEP) was enacted as part of the 1983 Social Security Amendments.  This provision is meant to downward-adjust the Social Security benefits of affected workers in order to eliminate the “windfall” (a poor choice of words, I am the first to admit!) that arises when, for example, an individual with high lifetime earnings (based on both covered and uncovered earnings) would appear as if he or she were a low earner when evaluated solely based on covered earnings. 

It is easiest to see the problem that would be created if there were no WEP provision in place through an example.  Consider the three individuals shown in the table below.  “Larry” is a very low income worker who works his entire life under Social Security, with an average lifetime monthly earnings of only $500 per month.  Using the 2008 benefit formula, Larry would have a full benefit $450, or 90% of his pre-retirement income.  “Mo” is a higher income worker with all of his earnings covered under Social Security, thus having an average monthly income while working of $5,000.  Under the benefit rules, Mo would have a full benefit of $1891.34, or a 38% of their working life income.  Thus far, this example simply illustrates the “redistributive” nature of the benefit formula, as Larry receives a higher replacement rate than does Mo, owing to the fact that Larry has lower lifetime earnings.

Social Security Primary Insurance Amount If No WEP Adjustment Applied


Average earnings covered by SS

Average earnings not covered by SS

Average total earnings

Benefit if SS formula applied to covered earnings

Benefit as % of income if no WEP adjustment




















Now consider Curly, a public employee.  Curly’s total lifetime earnings of $5000 are identical to Mo’s.  Had all of Curly’s earnings been covered by Social Security, Curly would have the same 38%replacement rate as Mo.  However, only 1/10th of Curly’s earnings were in employment covered by Social Security; the rest were in non-covered public employment.  If Social Security applied the standard benefit formula to Curly’s covered earnings without any WEP adjustment, Curly would receive a monthly benefit of $450, equivalent to Larry.  This provides Curly with a ratio of benefits to (covered) earnings of 90%, which is substantially more generous than the 38% ratio provided to Mo, even though Mo and Curly have identical lifetime earnings.  To use the language of the provision designed to address this issue, Curly would receive a “windfall.”  The WEP adjustment is designed to calculate Curly’s benefits differently, so that they end up looking more like Mo’s, since they both have similar lifetime incomes.    

In short, because Social Security is a redistributive program, there is a real need for something like the WEP.  Most people affected by it, however, hate it.  And who can blame them given that SSA does a terrible job of explaining it?  In essence, instead of telling a retiree that “your benefit will be $800,” SSA tells them “your benefit would be $1100, but because of the WEP, it is only $800.”  But for the individual in question, the $1100 benefit is a red herring.  In no way, shape or form is the $1100 benefit a relevant amount to start with.  So SSA’s poor communication and negative framing raises a lot of hackles unnecessarily.  As a result, thousands of letters are written to elected officials every year demanding that it be repealed.  And, every year, bills are introduced in Congress to eliminate it.  And every year, those bills fail as they should.

This is not to say that the WEP is perfect.  Far from it.  I have written more extensively elsewhere that the WEP calculation may be close to correct on average, but it is almost certainly wrong for each individual.  Sadly, it hits lower income individuals harder than it should, and does not hit most high income individuals hard enough.  There is a “right” way to calculate the WEP, but implementing it requires that SSA have a full history of both covered and uncovered earnings, but they did not collect the uncovered earnings in a systematic way until the early 1980s.  As such, we probably have to wait another 10 years before they can implement the fix.  In the meantime, SSA could do themselves and a lot of elected officials a huge favor by taking the time to adequately educate affected individuals on the rationale for this program.

43 Responses to “Why WEP?”

  • Christopher Lindsey says:

    As you say, it hurts lower income workers.

    I know someone (relation withheld since I have to list my name) who spent 15 years in social security at low income wages, then spent 15 years in SURS at low moderate wages.

    At retirement they received less than if they had put 30 years into SURS or 30 years into social security because of WEP.

    Why is it that the IRS can’t share earnings data with SS? Surely the government has both sets of data — why do they have to wait 10 years before reworking the formula?

  • Bonnie says:

    Although what you’ve written makes sense, (it’s really the first time it was explained to me so I understood it) it does not help those of us (like me) who started our early careers paying into social security and then switched to a state job later in life. According to what I’ve paid into SS (I never made a lot of money then) I would have gotten about $630 a month in SS when I retire. With the offest of my state pension, which will not be huge, my SS will be cut to about $150.
    If congress really wants to make sure the income is redistributed evenly from rich to poor, why don’t they eliminate SS benefits for CEO’s of major corporations or anyone else who gets huge pensions and still get their SS simply because they paid into it. That would seem more fair than penalizing people who have moderate to low incomes and will go into retirement losing several hundred dollars which may make a big difference in their retirement life style.
    Windfall Elimination Provision is a terrible title for this law. I’m sure there are very few individuals who will get a windfall by having SS and a state pension. How about calling it Watered-down Earnings Provision.

  • Bea says:

    I wish the public/university college’s would have HR explain this to new hires – I would have thought very seriously about taking a job in public education if I knew my SS would be reduced because I am a public employee. This is not shared with new employees.

  • Frank Goudy says:

    Good explanation o fwhy SS is a con job for so many Americans who have actually worked their “a double s” off so it canbe redistributed to “lower income workers.”

  • Pat Craig says:

    What this does not discuss but should be included, is the fact that state employees not paying onto SS are also inelligable for their spouses SS death benefits. Should my spouse die, all the money he has paid in and which would normally provide a death benefit to me, will go back into the system. It’s called the Government Pension Offeset. One more thing that should be included in information provided before someone takes a ‘state’ job.

  • Jeffrey Brown says:

    Hi Bonnie,

    Sorry if I end up responding twice – had some trouble with posting my first reply.

    There is a maximum WEP. For those retiring at the normal retirement age in 2010, the maximum adjustment is $380.50. If you are experiencing a larger adjustment than that, it is either because (a) you are looking at numbers for retiring years down the road, (b) you are retiring later than the normal retirement age, or (c) you are including the Government Pension Offset (GPO) in with the WEP.

    None of this is to say that the number is not big – I just wanted to clarify that there is a cap. And the cap is hit at relatively low levels of covered lifetime earnings, which is why I noted that it is less fair to lower income individuals.

  • Jeffrey Brown says:

    Hi Pat,
    Yes, in addition to the WEP, there is a GPO (Gov’t Pension Offset) that affects the benefits of spouses of workers who have state/local pensions. It is equally complicated. Like the WEP, there are some legitimate reasons for having some form of a GPO. But also like with the WEP, the government does a truly terrible job of explaining it. And like the WEP, it is not implemented in an ideal manner. Perhaps some day in the future I will find the time to write about that too. I agree it is an important topic.

  • Jeffrey Brown says:

    I suspect the reason they do not explain it well is that many of them do not have a full understanding either. I do not mean this as a criticism of our very good HR folks. I simply mean that SSA has never provided adequate explanation or information to the HR folks any more than the have to the general public.

    But more importantly, I am quite confident that if we took your earnings over your career, Bea, and compared what you would have gotten from SS if you were in a non-university job to what you got being in a university job covered by SURS and subject to WEP, we would find that have a much higher retirement income having taken the state job. The “internal rate of return” on SURS contributions – even after netting out the WEP — makes it a great deal compared to SS.

  • Edwin Viglia Jr says:

    Well that’s all well and good however you all miss one very important fact some of and I am included collected all of our SS quarters long before becoming an Professor Director of a program at a community college, so someone explain to me why I should suffer under WEP. I receive about a 10th of what I should receive in the SS realm.

  • Jeffrey Brown says:

    Hi Edwin,

    Well, explaining why you fall under the WEP is precisely the point of my post, and I am afraid from your comment that I still may not have done a good enough job of explaining it. Whether you earned your quarters early or late is not really the relevant issue. Indeed, in my example of the three stooges, I did not specify whether the fraction of earnings that were covered by SS came early or late in the career.

    The point is that if we had no WEP, Social Security would be treating you like somebody who earned what you earned in the first part of your career and then had zero earnings ever after — which would look to the system like had an extremely low level of lifetime earnings. When in fact, based on the entirety of your earnings, you are not an extremely low lifetime earner. So, again, the point is to explain that there is a good reason for something like the WEP to exist (even though its current incarnation is imperfect).

  • John Gebhardt says:

    Is there a reason why a person who has worked the majority of their career under Social Security type wages who takes a job where they do not pay Social Secuirty, is not allow the ability to continue to contribute to Social Security (paying their share and their employers share) so they can achieve the 30 years in Social Secuirity without being penalized by the WEP?

  • Mark Schwendau says:

    Some hold that it was illegal for the feds to change the rules for teachers after they had worked in both ss and TRS for so many years and there could still be a law suit over this as we should have been grandfathered. I had my 40 quarters almost in when they made this change in the 1980′s. It was my understanding the teacher’s unions were going to challenge the legality of changing the rules once the game was started. I am going to need all the help I can get, I think… Most baby boomers will.

  • Mary Haub says:

    If the government really wanted to make social security a redistributive program they would eliminate the maximum annual wage that is subject to social security. Any earnings over 106,800/year is not subject to social security. Those folks can most afford to pay into the system. The idea that delaying the retirement age is a way to save SS does have some merit, but try working a factory job till you are 69-70 yrs old….

  • Jeffrey Brown says:


    You are correct that eliminating the wage cap would make the system more progressive, because the incremental benefits on those additional taxes would be quite low. This is one of the reasons that this proposal is often included in reform plans, especially (although not exclusively) from the Democratic side. The downside from an economic perspective is that there are significant economic costs to substantially increasing taxes on labor supply in that income range. Work by Jeff Liebman (Harvard) and Emmanuel Saez (Berkeley) has shown that every dollar of revenue raised this way costs the economy quite a bit more than a dollar because of its impact on labor supply incentives. Still, I suspect that if we ever get around to fixing social security, this is likely to be part of the bargain.

    Of course, whether we do this or not does has no impact whatsoever on the WEP.

  • Jeffrey Brown says:

    Mark – I suppose the only way we will ever find out if it is really illegal is if one of the unions manage to challenge it in court. While I do not know, I suspect the fact that it has never been challenged is an indication that their legal advisors indicated that they would probably not win … but that is just speculation on my part.

  • Jeffrey Brown says:


    Good question. When states were given the choice between entering into SS coverage or not, it was pretty much an “all-or-nothing” decision for each plan. I suspect the reason that keep the decision at the plan level, rather than the individual level, simply has to do with administrative complexity. But it is a great question.


  • George says:

    I just had a very frustrating 1 hour phone call to the social security information number.

    I simply asked them to confirm that there is a $380 cap in 2010 for the amount of your social security reduction if you fall under the windfall elimination provision. They could not answer that. In fact, they (2 different social security reps) were not aware of it.


    I have 19 years of substantial income under the social security law.

    I will be retiring in about 6 years.

    I will have a foreign pension of around $2500 per month.

    My US social security at 66 is on my annual form from the social security on the top of page two is about $1400.

    Question: Can I assume that in six years, if my normal entitlement under social security remains unchanged at $1400 and if the “monthly maximum reduction” remains at $381 six years from now, that my social security pension would amount to $1009 ($1400 – 381).

    Can I expect to get $1009 from social security under these assumptions in 6 years?

    Am I missing something?

    Is there any way that I can definitely confirm this with the social security office?

  • Jeffrey Brown says:

    Sorry for the frustration, George.

    Go to the following website to find the maximum reduction:

    If you are still a few years away from retirement age, the maximum number ($380.5) will likely rise by the growth in the Average Wage Index. So if you are still several years from claiming age, count on these numbers rising a bit.

  • John says:

    For some reason no one will report on the past policy of TRS that allowed TRS members to trade wages earned as certified teachers/TRS member for FICA credit. Teacher and administrators were allowed to accumulate the necessar 40 quarters from wages as teachers and administrators, in lieu withholding to TRS from TRS wages. TRS will deny the fact that TRS members earned FICA credit but the policy is outlined int their Spring 2002 newsletter, Topics & Reports.

  • Chris says:

    This is absurd. Anyone who reads their benefits statement knows benefits are based on earnings.
    I pad my fair share and earned these retirement benefits. Now I am earning my fair share of retirement benefits as an educator, but will be penalized because of this.
    This is not confusing, we know when we are getting the shaft. This needs to be challenged in the courts by the unions.

  • Jeffrey Brown says:

    As Upton Sinclear would say, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” The whole point of this post was to point out why the WEP has a good reason to exist, and why the benefit statement you receive is incorrect because it fails to account for the WEP, and why SSA does not help matters by presenting information to you in a way that makes you believe you are entitled to a higher level of benefits than you really are.

  • Dennis says:

    I am also frustrated. I worked for the Post Office for 11 years and received a disability retirement because I was no longer able to do the job for which I was hired. I receive about 1200 per month in Civil Service Disability retirement. I went back to school and received an MA and PhD and now work for the state. I have enough time paying into SS before the Post Office job and after and if I retired now would receive about 600 per month from SS except that the WEP cuts it in half. If I had continued with the Post Office I would now have a nice retirement but through no fault of my own I was retired with a small disability retirement and my SS retirement is cut in half. It just seems so unfair.

  • John says:

    You are wrong about Illinois TRS. As a teacher I was required to withhold to FICA from TRS wages. TRS created a scam to avoid annuity and health benefits through a hybrid state/federal social security policy. Even published the false information per U.S.P.S.

  • Jeffrey Brown says:

    Every source I have seen states unequivocally that TRS participants are not part of Social Security. Indeed, the teachers unions also point this out frequently when defending their retirement benefits.
    It may be that you are making a smaller FICA contribution- the Medicare portion only- but not the bigger Social Security part.

  • Larry says:

    I paid into social security for 16 years before becoming a teacher. I now pay into Texas teacher retirement and not into ss. I have paid my full quarters into ss and yet it is my understanding I will be penalized as a result of my new career choice ( that doesn’t contribute to ss). Is it true I will not receive my full ss benefits? My teacher’s retirement is so poor ( will be approx. 50% of my salary) that I need my full ss benefits just to get by with little or no luxuries. As a result I am very concerned. I have tried to be responsible all my life and yet I feel I am being taken advantage of by the government. I agree with Chis that educators are “getting the shaft.” If you know the answer to my question or can give advice I will truly appreciate it. Thanks.

  • Jeffrey Brown says:

    You will get the full benefit to which you are entitled under Social Security, but this amount will be less than what is reported to you on your annual Social Security statement. The problem is that Social Security does a terrible job of explaining this – so what they will end up presenting you with is information along the lines of “well, you earned a benefit of $1000, but we have to reduce it be $300 because of your employment with Texas.” But they are misleading and harmful when they put it this way. What they should say is “You have earned a benefit of $700.” As my post tries to explain, if they did not apply the WEP, you would actually be getting a “better deal” on your 16 years of Social Security contributions than someone else with your same lifetime earnings who worked under Social Security the whole time. the WEP is meant to correct for this, and in so doing, get you what you really deserve rather than what one might think by inappropriately applying the redistributive formula. I know this is complex. But, on average, people in your situation are NOT being ripped off. Rather, SSA presents this information so horribly that they make you think you are being ripped off. (I say, on average, because some people come out a bit ahead and some a bit behind, but it is pretty close for the average person affected).

  • b brown says:

    If WEP is so fair, why don’t all 50 states participate in it?

    I’m a California teacher….who worked 20 years under SS and 20 years as a teacher……poor me.

    If I lived in Hawaii, Wash, Ore, Nev or Ariz, I would be entitled to ALL the money I put into SS, and ALL the money thrown away on my teacher’s pension.

    With hindsight, I should have worked in a state unaffected by WEP. Who knew?

    ALSO: I can’t retire because of the WEP, and will work as long as possible. IF I were to retire……and the WEP adjustment was changed somewhere down through the years, would there be any redress for people to go back and claim what they were denied at retirement?

    Thanks for your help.

  • Jeffrey Brown says:

    B brown – to your question, “if the WEP” is so fair, why don’t all 50 states participate in it? Because most states decided several decades ago to have public employees participate in SS rather than have the public pension serve as the primary retirement income source. Keep in mind that if California had done the same, 1) you would have paid much more in FICA taxes over your life and 2) California would have provided a much less generous teacher’s pension. On net, you probably would have been financially worse off on a lifetime basis, not better off, because the internal rate of return on FICA contributions for SS is far below the return you have gotten from CAL teachers pension.

  • b brown says:

    “On net, you PROBABLY would have been financially worse off on a lifetime basis, not better off, ………etc., etc., etc.” All I know is that if I had worked in a surrounding state to California, I would be allowed to collect BOTH pensions that I’ve EARNED. I worked for ten year (very low wage) before having children, and I’ve worked for six years as a teacher. I’ve earned about $500/mo in SS pension and $600/mo in teacher’s pension.

    I laugh when I hear the President ask retired engineers to teach math and science classes in high school to help the nation. You want them to work for no retirement?! Who’s crazy enough to do that?

    Did you happen to see Gov. Perry boldly proclaim he’s entitled to BOTH pensions he EARNED in Texas? He said the Bible says he should take care of his family, and by darned he EARNED BOTH PENSIONS, and he’ll follow the Bible and COLLECT BOTH PENSIONS! The citizens of his state can’t, because of the WEP provision, but he does!

    I have had so many Social Security counselors tell me that the law is such a mistake, unfair, and punishes people from some states……but nothing can be done about it.

    Thanks for your time. B. Brown.

  • Joeb says:

    Let’s get real. No one should have their EARNED Social Security benefits reduced for reason. But our Congress changed rules mid-stream on millions of people who were already contributing to the system. This should not have happened. If you paid into the system for all those many decades, you Earned it.

    Secondly, no on should have their Earned Social Security benefits reduced simply because they have Also paid into another retirement system, and it doesn’t matter what secondary system that is. You should receive every cent you Earned from Social Security whether you receive a public pension, a private pension, IRA funds, inheritance funds, trust funds or any other annuity. Fair is fair!

    Lastly, the author of this article doesn’t know what he is talking about. The WEP and GPO laws have reduced a retirees EARNED Social Security benefits by up to 60% and have been responsible for causing millions of seniors to live below poverty level. So, no, these laws are in no way just.

    Work to repeal the unfair WEP and GPO provisions or you may be next on the government’s economic hit lits.

  • Joeb says:

    Millions of senior citizens have been thrown into poverty due to the unfair WEP and GPO laws. Yet the author of this article – Mr. Jeffrey Brown – is so smug that he uses the names Larry, Moe and Curly as the subjects of his Social Security Payments Chart. How insensitive he is to the plight of seniors who have become economically disadvantaged due to the enactment of WEP and GPO? Go out and get some actual life experience, Mr. Brown.

  • Jeffrey Brown says:

    I am not being smug, as I am one of the affected workers – I don’t think it gets more “actual” than that. Further, I would hardly call it being “insensitive to seniors” to try to provide a public service of providing an more easily accessible / understandable explanation of why we have these provisions.
    As for the actual substance of your remarks, rather than your unnecessary name-calling, I would only submit that I must have failed to adequately explain the rationale if you continue to believe that you earned the benefits that would accrue if one were to incorrectly apply the standard PIA formula to earnings for a worker that has earnings outside of the Social Security system. The whole point of the post was to try to explain why it would be entirely inappropriate and unfair to non-state/local workers to apply a non-linear benefit formula to only a portion of your life’s earnings. The very fact that you feel as if you are getting a bad deal is further justification for why I think Social Security needs to completely reframe the conversation.

  • Jeffrey Brown says:

    P.S. Joeb … one of my colleagues at the University of Illinois – Professor Jon Solomon, a classicist – wrote the definitive work on the Three Stooges. I actually consider them to be one of the most brilliant comedy acts of all time. So, if you think I was trying to imply anything by that reference, you should know that it is respect for their creative brilliance. You can read about my colleague here: http://www.slcl.illinois.edu/people/josolomo

  • Patrick Healy says:

    Just because you can’t get people to see things your way doesn’t mean you can explain it away by saying things like “I haven’t explained this well enough.

    Let’s do the math, fake or course, but just to keep it simple,

    I work 14 years serving my country in the military, making low wages and paying into ssn.

    This earns me $100 dollars a month ssn when I retire.

    I work 20 years for the city I live in, not serving my country, but serving my community. They have their own retirement system. I retire from them and get $500 a month. I do not pay into ssn so my ssn benefit stays $100.

    You would think I should get $600 a month for all my hard work. But wait, once the WEP is figured in, I no longer get the $100 ssn.

    How is this not stealing and why is it ok to redestirbute my contributions?

    I understand everything your saying. You think it’s ok to give my money to people who didn’t earn it and I don’t.

  • Jeffrey Brown says:

    Patrick – this is not about “my way” or “opinion.” It is a statement of fact about how the benefit formula works and how it goes awry when one applies it to only part of a person’s earnings. The problem with your example is that you think it is clear that you “earned” $100 per month in Social Security benefits just because they tell you that is what it would be in the absence of the WEP. In reality, the benefit that you earned is not equal to $100 per month, because that $100 per month assumes that you never held another job in your life aside from the time you spent paying into SS while serving your country. If we totally ignore your earnings while serving your community, you look like a lifetime extremely poor individual, when in fact, you are most likely a lifetime middle-income individual. So if you get the same return or replacement rate on your contributions as other people in your same lifetime financial situation, then you would not get $100 per month, you would get something less than that. The WEP is meant to adjust for that. It is not a perfect adjustment for the reasons I explain in the piece, meaning that it may over or under adjust you. The very fact that so many people view it as unfair is precisely why I think SSA needs to do a better job of explaining it and/or change the way it is calculated. But it is quite clear that some adjustment is needed, otherwise people who spend part of their careers covered by SS and part of their careers outside of SS get a rate-of-return on their contributions that far exceeds other people with similar lifetime earnings.

  • Ric says:

    WEP is inappropriately applied in a number of cases…

    Case Law on point: David Petersen v. Michael Astrue SSA Commissioner (Nebraska Federal Court) won his case in lower Court and won again on Appeal.

    He was uniformed military and clearly WEP could not be applied to him.

    Here’s the outrage: The SSA was not required to fix the other 8-10,000 folks similar to Petersen’s case who were similarly damaged…

    AND WEP cannot be applied to people who have participation in any foreign social security program if that country has a “totalization” Agreements on pensions… !!!!!!!!
    (my situation)

    AND HERE’s the “coup de grace” … The SSA Pension plan is not a “casualty insurance plan” (where premiums are to provide for a number of possible contingencies all uncertain and any or all of them may or may not happen…

    … it is a defined benefit for a defined contribution… based on the likelihood that WE ALL DIE at some point, and we might live long enough to collect a pension… this is “Life Insurance” and defined benefit pension plans fall into this form of insurance… and are not “Casualty by ‘happenstance’ …”

    Not only is the real calculation of overlapping benefits or overlapping indexing periods EVER performed (in order to calculate … and believe this part: the TRIVIAL AMOUNT OF OVERLAP, … The SSA, be not issuing pro-rata refunds of contributions (employee and employer), has retained “premiums” on a benefit that it NEVER INTENDED PAYING …

    What do you think would happen to an insurance company that collected premiums ostensibly for a “benefit” that it KNEW FROM THE OUTSET it would never pay?

    (uh, I think that one should be considered by the superintendent of insurance…)

    Nonetheless, there is a simple way to ensure that social security pensions are properly integrated to other pensions… but we seem to make these situations MUCH MORE complicated than they need to be…

    Anyway, that’s my “2 cents”

    B. Math Actuarial Science & Computer Science
    15 years Employee Benefits – Actuarial Valuations … Generalized Group Pension Administration Computerization
    … and well about 15 corporate pension administration assignments that had festered for years, that were corrected within HOURS !!!!!!! This stuff ain’t “rocket science”

    Want to see another outrage?

    Contra Costa County Employee Retirement plan (an outrage in “actuarial” obfuscation !!!!!) You ought to see how this plan and similar public pension plans were “slipped” into law and how the county supervisors were totally blindsided (in my opion … but “maybe they knew”…) by the hidden costs …

    And there are how many counties in this country ? This is HUGE as well as the Social Security mess.

  • Ric says:

    to Jeff Brown…

    I’ve read several of your posts … you’re a very knowledgeable fellow…

    and Chuck Blahous is a very good friend of yours?

    You might ask him, as Trustee for Social Security, why the SSA spends SOOO much money dragging out appeals about inappropriate pension benefits being paid … he might want to look up my situation currently in process…

    The SSA is playing a VERY dangerous game with Mr. Astrue’s approach to claiming everything as a legislative “ambiguity” so that he can decree whatever he wants…

    I wonder what will happen when the Supreme Court strikes down the individual mandate for Health Care… What will they do when every member of Social Security “opts out” and claims a recinding refund of employee and employer contributions with interest (after all, those contributions were PAID INCOME, after all !!!!!!)

    What a mess, eh?

  • Ric says:

    To Jeff and All !

    The idea that WEP was to take away the “advantage” that someone might have from contributory participation in 2 or more plans is the GREAT MIS-DIRECTION OF ALL TIME !

    It was a “money grab” from the beginning… a true bait and switch … by the same “Master of Misdirection” as got us all into this “Global Free Trade” mess… (see NAFTA agreement U.S.-Canada … and check out who was key in both NAFTA and WEP !!!!!!)

    However that’s an issue for a different blog !

    The concept of “wealth redistribution” within the Social Security Plan is a total mis-representation…

    While that might seem to be the case, THAT’s NOT WHAT PENSION PLANS ARE…

    The Social Security Pension plan is not a welfare plan… IT IS A CONTRACT BETWEEN THE AMERICAN PEOPLE that I will provide a floor level of income protection to my elders while I am working, in return for the youngers providing me with a similar modest income when I retire…

    It’s a contract between differing stratifications in age of our people… It’s a modest plan at best, and absolutley sustainable if you consider the basic premise of pension sustainability:

    The country MUST grow the employment base by 2% per year… and that doesn’t mean outrageously increasing the maximum earnings tax base … RECKLESSLY INCREASING THE PENSIONABLE EARNINGS BASE just to increase premium/contribution revenues creates a TIME BOMB of enormous magnitude !

    (you ought to compare the annual increases in the pension earnings index here in the U.S. compared to Canada … (our rates of wage index growth were about the same for the past 25 years…

    Another problem: and this is “administrative” … Under the Social Security … your history of pensionable earnings CONTINUES TO INDEX AND GROW EVEN IN YEARS WHEN YOU ARE NOT PARTICIPATING WITH CONTRIBUTIONS !!!!!!

    Why? well, because 50 years ago (before computerization), it was arithmetically expedient to calculate a table of indexes by CALENDAR YEAR …rather than calculating index benefits with a factor of only 1.0 for years of non-participation and accumulating the indexed amounts on an individual participation basis … this is easy with computers and almost impossible by hand given the huge numbers of pension applicants each year …. but we’re a long way from the days of manual calculations !

    Most all pension plans consider periods of “suspension” as having a “paid up pension” that does not continue to accrue OR INDEX while the inactive member is absent from the plan… and then “starts up” when the inactive member re-joins and begins paying contributions again…

    Now 50 years ago, most people worked in a job ’til they retired and most under Social Security jobs… but about 25 years ago we started seeing unemployment becoming prevalent… and many folks had interruptions in their careers or tried the own-your-own business route… all causing gaps in their contributions to fund benefits … and to fund indexing of benefits …

    This “administrative” arithmetic / “slight” misinterpretation oversight or lack of consideration has a HUGE impact on the numbers…

    I really wonder how any actuary actually thought he could fund for an individual’s benefits who was not making current contributions… You might do a “what if” someone worked for 10 years under the Social Security (say 1965 – 1974) at maximum pensionable earnings levels AND THEN “quit”, retiring in 2010 …

    Compare that to an individual who begins working in 2000, works 10 years at maximum and retires… (like a “stay at home Mom” who finds herself needing to take a job when she’s 56 years old…)

    Now, just try and fund the first individual’s pension !


    ANYWAY, I hope that every “uniformed military” person who is still suffering from WEP… will read:

    The Case is David Petersen v. Michael Astrue
    Nebraska Federal Court — Appeal 8th Circuit
    Case: 09-2374

    … it’s a short decision and makes for easy reading !

    AND everyone who has worked in a country that has a “totalization agreement” with the U.S. (there are about 24 countries) will write to their Senator and complain…

    Ref: Agreement on Pensions – U.S. / Canada
    Article VII 1) 2) 3) (pages 15 – 16)
    Congress Research Service report by Alison M. Shelton dated January 29, 2010 “WEP does not apply to foreign social security pensions from countries that have totalization agreement with the U.S.”

    …Simple, clear, and unambiguous

    (On the international exemption from WEP… there are about 3 times as many U.S. citizens who have worked in Canada as their are Canadians who have worked in the U.S. So this is 3 times as big a problem for American citizens as it is for immigrants…)

    IF ANYONE WANTS MY HELP… I’ll be watching this blog daily…

    We’ll get through this !


  • Jeffrey Brown says:

    Hey Ric,
    Thanks for all your comments. Sorry I have been slow to respond.
    Yes, Chuck Blahous is a good friend. As for the disability appeals process, however, that is not within the jurisdiction of the Trustees. They are trustees of the “trust funds,” not a governing board of the agency itself. In fact, to the extent that Astrue has a governing board, it is basically Congress. There is a bipartisan Social Security Advisory Board (on which I served from 2006-08) that does a lot of work on disability, but the key word in the board’s title is that it is “advisory” – the commissioner can listen or ignore at his choosing.
    The SSDI application, appeals an adjudication process is – in my humble opinion – a national embarrassment. But, I am the first to admit, determining disability status is a very difficult task in many cases, so there are lots of errors in both directions (people getting benefits that should not, and people not getting benefits that should be). Since leaving the SSAB in 2008, I have not kept up with the details of what Commissioner Astrue is doing, so I cannot really speak to it. But if you have a personal case under consideration, my only advice is “call your Congressman.” They may not be able to change the outcome, but they can often move the case up the priority list to be dealt with.
    Sorry you are having such trouble … I wish I could tell you it is an isolated case. It is not.

  • Ric says:


    I am in contact with Senator Dianne Feinstein on this matter.

    My problem likely extends to over 400,000 others whose rights are supposedly protected by International Agreements on Pensions…

    But the real problem is that the WEP itself (IMHO … and I ain’t all that “humble”) is a travesty in itself… The manner in which it has been put into administrative practice changes the FICA to an INCOME TAX … Overpayments of FICA premiums not destined to a defined benefit cannot be retained … If they are retained, that constitutes insurance fraud.

    Where the “trustees” are “trustees” of the trust funds, they become absolutely culpable to retention of members contributions under fraudulent purposes. You might suggest to Chuck that his obligation in “trust” is to the membership of the SSA Pension Plan, and not to the vainglorious vigilantiasm of a rogue administration whose executive “can listen or ignore at his choosing”.

    Mr. Astrue should be afforded one (and only one) opportunity to resign, before the President finds himself in the untenable position of ordering him to step down.

    We’ll get this fixed, but not without a few senior folks being “embarassed”.


  • Martin p says:

    No more petitions for change! Enough is enough! It’s time to sue the U.S. government and force a repeal of the unfair WEP and GPO laws.

    I’m one of the people who’s had his EARNED Social Security benefits cut by 60% due to this nation’s unfair WEP and GPO laws (actually a hidden tax on hundreds of thousands of seniors.) Then, if you add my federal, state and local taxes, I’m paying well over 70% per year in taxes. Now the needy bell-ringing charities are trying to guilt me into giving to them what little the government has permitted me to keep. At the same time, our smiling president – that same person who plans to spend 4 million dollars of taxpayer money on his next vacation and over 100 million just for his inauguration – is completely happy to take us over the fiscal cliff. Well, who cares? As far as hundreds of thousands of seniors like myself are concerned, we went over that cliff a long time ago.

    The government has refused to even vote on any bill to repeal WEP and GPO, tying up bills in committee for the last 30 years. Things are never going to change until we join together and create a class action suit against the government.

  • Jeffrey Brown says:

    Your comment is consistent with the hypothesis that you did not read my post carefully. In it, I explain why the view that you “EARNED Social Security benefits cut by 60% due to this nation’s unfair WEP” is not a very accurate portrayal of the program. The whole point of the post was to point out that the benefit that is unreduced by the WEP would be a much larger benefit than you would be entitled to if the formula properly accounted for your total work record. It is only SSA’s insistence on framing this issue as a benefit reduction that leads to the confusion and frustration.

  • Phyllis says:

    Still think public employees affected are getting unfairly treated- it’s the formula that is wacked. WEP/GPO formulas were made some 25 years ago! Pre computers and advanced technology. What a crazy way to run a government agency- telling people one thing then doing another. Holding back important information to hard working people- confusion and frustration is right! And then we have Congress doing nothing that doesn’t affect them. Anyone notice Congress is exempt from these offsets? President Regan received 3 government pensions and a SAG union pension! Congress got right to work on the air traffic controllers because it affected them. Dam!