Windfall Elimination Provision (WEP)
A pension based on earnings not covered by Social Security can affect the amount of your Social Security benefit. We do not know whether you are eligible for such a pension, so the benefit estimates you have received may not have been adjusted for such a possibility.
Our WEP factsheet explans whether you might be affected.
How WEP Can Affect Your Benefit
If you think your pension will affect your Social Security benefit, you can
The Windfall Elimination Provision (WEP) reduces your Eligibility Year (ELY) benefit amount before it is reduced or increased due to early retirement, delayed retirement credits, cost-of-living adjustments (COLA), or other factors. The following examples show how the WEP reduction changes when the ELY benefit is affected by other factors.
The monthly retirement benefits are increased or reduced based on your age after WEP reduces your ELY benefit.
If you turn 62 in 2013 (ELY 2013) and you have 20 years of substantial earnings, WEP reduces your monthly benefit by $395.50.
Your full retirement age is 66. If your full retirement benefit is $1,396, your ELY benefit after the WEP reduction would be $1,000.*
If You Choose Early Retirement
If you start getting retirement benefits the month you turn 62, you will get benefits before you reach full retirement age. Your monthly benefit is reduced to 75% because you will get benefits for 48 additional months.
Your age 62 retirement benefit is $750 ($1,000 x 75% = $750) per month. If your full retirement benefit had not been reduced by WEP, your age 62 retirement benefit would have been $1047. Early retirement changed the reduction for WEP from $395.50 to $297.
If You Choose Delayed Retirement
You decided to wait to age 70 to receive benefits so you could get Delayed Retirement Credits.
Your eligibility year is still 2013.
If your retirement benefits start after your full retirement age (66 years) the benefit increases 8% for each year before age 70 that you delay retirement. If your benefits start at age 70, you get credit for the 48 additional months when you did not get benefits and your monthly benefit will be 32% higher.
Your age 70 retirement benefit is $1,320 ($1,000 x 132% = $1,320). If your full retirement benefit had not been reduced by WEP, your age 70 retirement benefit would have been $1,842. Delaying retirement increased the reduction for WEP from $395.50 to $522.
The COLA is added to your monthly benefit amount after WEP reduces your ELY benefit
When you became disabled in 2013 (ELY 2013) WEP reduced your $1,396 ELY benefit to $1,000 *.
The following year, the 1.5% January, 2014 COLA increased your benefit by $15 ($1,000 x 1.5% = $15). If it were not reduced by WEP, your benefit amount would have increased by $20 ($1,396 x 1.5% = $20). The new benefit would have been $1,416* instead of $1,015. COLA increased the reduction for WEP from $395.50 to $401. ($1,416 - 1,015).