Windfall Elimination Provision
Your Social Security Benefits May Be Reduced
If you work for an employer who does not withhold U.S. Social Security taxes from your salary, such as a government agency or an employer outside the United States, the pension you get based on that work may reduce your Social Security benefits.
The “windfall elimination program” affects how the amount of your retirement or disability benefits is calculated if you receive a pension where U.S. Social Security taxes are not taken out of your pay. A modified formula is used to calculate your benefit amount, resulting in a lower Social Security benefit.
If you are a federal employee, the windfall elimination provision will affect you only if you are getting a Civil Service Retirement System (CSRS) pension. It will begin with the first month you get both a Social Security benefit and the CSRS pension.
This provision affects Social Security benefits when any part of a person’s federal service after 1956 is covered under the CSRS. Federal Service where U.S. Social Security taxes are withheld (Federal Employees’ Retirement System or CSRS Offset), however, will not reduce your Social Security benefits.
Your Social Security will be reduced if:
- You reached 62 after 1985; or
- You became disabled after 1985; or
- You first became eligible for a monthly pension based on work where you did not pay U.S. Social Security taxes after 1985, even if you are still working.
Your Social Security benefits are reduced because Social Security benefits were intended to replace only a percentage of a worker’s pre-retirement earnings. The way Social Security benefit amounts are figured, lower-paid workers get a higher return than highly paid workers. For example, lower-paid workers could get a Social Security benefit that equals about 55% of their pre-retirement earnings. The average replacement rate for highly paid workers is about 25%.
Before 1983, people who worked in jobs not covered by U.S. Social Security received benefits that were computed as if they were long-term, low-wage workers. They received the advantage of a higher percentage of benefits in addition to their other pension. Congress passed the windfall elimination provision to eliminate this advantage.
The windfall elimination provision does not apply to survivors benefits. It also does not apply if:
- You are a federal worker first hired after December 31, 1983;
- You were employed on December 31, 1983, by a nonprofit organization that did not withhold U.S. Social Security taxes from your pay at first, but then began withholding U.S. Social Security taxes from your pay;
- Your only pension is based on railroad employment;
- The only work you did where you did not pay U.S. Social Security taxes was before 1957; or
- You have 30 or more years of substantial earnings under Social Security.
If you get a relatively low pension, you are protected. The reduction in your Social Security benefit cannot be more than one-half of that part of your pension based on your savings after 1956 from which U.S. Social Security taxes were not deducted.
For more information, please visit http://www.socialsecurity.gov or contact the Federal Benefits Unit of the U.S. Embassy in Warsaw at:
American Embassy
Federal Benefits Unit
ul. Piekna 12
00-539 Warszawa
phone: (+48 22) 504-2112
fax: (+48 22) 504-2122
e-mail: fbuwarsaw@state.gov
IN THIS ISSUE:
Welcome to our Readers || All Visa Applicants To Be Fingerscanned || A Note to Tourists || 2004 Elections Swiftly Approaching || Windfall Elimination Provision || ASSISTING VICTIMS OF CRIME IN POLAND || ASSISTING THOSE ACCUSED OF CRIMES || VISA REFUSALS AND AMERICAN CITIZEN SERVICES || The Diversity Visa Program || Work And Travel Program Brings Polish Students To the United States || How Can I Get Answers To My Consular Questions?
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