Government Pensions, Social Security & the “WEP”
If you’re a participant in a government sponsored pension plan and looking to collect Social Security in retirement, you may find yourself subject to the “Windfall Elimination Provision” or “WEP”. This mainly applies to workers in government jobs hired before 1984 whereby they didn’t pay into Social Security during their government employment, but may have accrued Social Security credits for other income over their career. The idea behind the WEP is to avoid retirees “double dipping” into both their government pension plan and Social Security and will therefore reduce the Social Security benefits that would have otherwise been payable. The reduction in Social Security benefits will never be more than 50% of your monthly pension benefit. If you’d like to see how it impacts your particular situation, there is an online calculator on the Social Security to allow you to see it’s impact. Also, f you have 30 or more years of “substantial earnings” covered by Social Security, the WEP would not apply where “substantial earnings” are defined as $21,750 in 2014.