Foamy

I recently applied for US social security and was told that although I fully qualify for US social security the amount will be reduced because I recieve a pension from a company I worked for in Holland for a year.
Also, when I start to collect my UK pension in a couple of years the US SS will be cut further.
They call this process a WEP (Windfall Elimination Provision).
This does not seem right, I paid into all 3 systems and should receive benefits from each.
I moved from UK to Holland in 1986, then to the USA in 1998, became a US citizen in 2002 and have full credits for state pensions in UK and USA.
Does anyone know if cutting my US ss is correct and are there any steps I can take to prevent this

dreamercon

Yes social security benefits are reduced if you are getting other pensions.
There isn't much you can do about it.

Rete

Yes, it is true. It is under the windfall act that social security is able to decrease your entitlement for retirement benefits.

My husband lost 2/3rd's of his ss benefits in June when he retired due to his old age pension from Canada.

Just another way for the US to keep seniors in a lower income bracket unless they are independently wealthy.

Michelmas

Or another way to ensure that there is enough SS to go round to those who have it as the only means of income and aren't fortunate enough to have multiple income streams.

dunroving

... or spent their earnings on toys and holidays instead of paying into a retirement scheme. Sometimes fortune is the result of hard work and frugality rather than just luck.

Rete

Sure penalize those that worked all their lives in their own country and in this one by decreasing their normal eligible benefits.

DH served 36 years in the RACF. Had a lovely little pension which was virtually lost when he became 65 and started to receive Canadian old age benefits and now loses 2/3rd's of his US SS benefits.

He qualified for all of $735 a month in SS benefits but because of the windfall gets all of $221 a month. And as a non-resident of Canada, he pays taxes on his old age benefits in Canada.

Believe me, I feel for those who have to struggle to live on SS benefits in this country if you have a high paying position. There would be plenty of SS monies to go around if Congress didn't use it to fund other projects.

lansbury

It is done on a sliding scale

This page explains it and show the mazimum amount you can lose.

http://www.ssa.gov/retire2/wep-chart.htm

lansbury

That is socialism and not the American way. If you pay in the full amount you should be able to take out the full amount.

Fortunately for us my wife's SS will be reduced, but as I have never worked in the US I can claim off of her contributions. What we lose one way we get back another. But her SS is reduced by WEP and then I get half of that. They then reduce my half because of WEP. So my SS get reduced twice.

lansbury

Yes it's correct and if you pay into SS for 30 years or more it isn't cut. So to prevent it work and pay into SS for 30 years.

CelticRover

That theory might fly only if workers had had a choice on whether the government took mandatory deductions for SS throughout their working life.

Michael

Normally private company pensions don't enter into the calculations but most other government pensions do. If they didn't consider other government pensions or pensions from other governments, a person who worked in different countries or in private as well as government jobs would have a financial benefits advantage over people who worked in one country only in private jobs for the same period of time even though both paid the same amount of retirement taxes.

So I'm curious why the US government is taking your private pension from Holland into consideration. Is that pension being paid by the government of Holland? In my case, I get a pension from a company that I worked for as well as my 401k and those are not considered in the calculations.

Foamy

Hi Lansbury, thanks for the link and your comments. If I am understanding this correctly, there is a "Maximum" amount that I can loose.

If I am being hit with the maximum now based on my current pension from a Dutch company, does this mean that when I start receiving a UK pension in 3 years time I won't get hit again ? What do you think?

Foamy

Hi Michael, I am getting a pension from a private company (SABIC - formerly GE Plastics bv). So, like you I assume this should have no impact on my US social security, it should be treated like an annuity. According to my ss person Annuities from USA or overseas are NOT taken into account.
But my ss person insists that because it is a "Pension" it is taken into account. She did mention that someone in the USA government is trying to have this WEP law changed??

Michael

Were you paying into that pension plan in lieu of retirement taxes to the Dutch government? If that was the case, then I could see it possibly falling under the WEP law.

How did social security even know that you were getting that pension since they never asked me about my private pension?

I wouldn't hold my breath about any advantageous changes in the WEP law.

Michael

When social security reduces your benefits due to WEP, do you still get the tax benefits that you get when you are paid 100% by social security?

Social security benefits are not taxed at 100% but 100% of your social security benefits can be excluded from your income if your total income (including social security benefits) is below about $35,000 if filing single. As your income rises above that, a a portion of your social security benefits are taxed but never more that 85% of your social security benefits are taxed. Do foreign retirement benefits also get the same tax treatment? If they don't and your social security benefits are reduced due to WEP, you would be paying more taxes and be at a tax disadvantage.