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I spent 30 years working for a US megacorp: however, I joined the company in the UK. I was on the UK payroll for about six years, and therefore a very small part of my pension is paid by the UK company (with COLA). I was astounded, when I applied for Social Security, to find that the US government was going to reduce my benefit by the amount of my UK pension.
How did that make sense? I had not paid into SS during those years, so they were excluded from the calculation of my benefit. If, instead of working in the UK, I had stayed home with a small child in the US, I would have the same number of missing years in my SS record, but I would have kept the entire payment.
There wasn’t anything I could do about it, and I figured it wasn’t a large sum, but it was annoying. Obviously, I was pleased by the repeal of this “Windfall Elimination Provision” (Windfall? What windfall?) effective January of 2024. My monthly payment has increased by $50 and last month SS deposited an additional $700 in my checking account, for January 2024 through February 2025. I had written the deduction off as a lost cause, and not much money, but it actually works out that the government kept $6,300.
I seem to remember someone complaining about the elimination of the WEP here recently. I am not complaining.
Hello Kathy,
I am new to humbledollar.
I think the crux of the matter is that Social Security is designed to replace a greater percentage of a low wage earner’s income than a higher wage earner’s income. It’s graduated (just like the income tax) to give more to those who earned less.
Social Security is looking at your average earnings. The zeros in your calculation make it look as if you earned no money those years. Someone who stayed home with children would actually have earned zero and would have less overall earnings.
Your experience is perhaps a little atypical.
A better example would be someone who worked 20 years as a police officer (they don’t pay social security taxes) and then worked 15 years as a security officer as a college (they do pay social security taxes). His average earnings would look smaller because there would be 20 zeros and only 15 years of earnings. He would be given a greater percentage of his earnings because the average looks smaller.
Another point to note is that because police don’t pay social security taxes the FOP union usually negotiate larger pensions for them.
That would make some sense, except they simply deducted the amount of my UK pension.
Glad to hear your good news, Kathy. I’m sure you’ll spend it wisely. 😉
Lol. I should arrange dinner out to celebrate. 😌