From a recent report by Social Security's Office of Inspector General:
The Social Security Amendments of 1983 include a provision that eliminates “windfall” Social Security benefits for retired and disabled workers who are receiving pensions from employment not covered by Social Security.
WEP [Windfall Elimination Provision] applies when the wage earner becomes entitled to both a pension based on non-covered employment and Social Security benefits. Under WEP, SSA uses a modified benefit formula to determine a wage earner’s monthly Social Security benefit. WEP applies to both retirement and disability benefits. However, under certain circumstances, a beneficiary’s payments are exempt from this provision. ...
Of 150 sampled beneficiaries, SSA improperly exempted 26 from WEP. Because of this processing error, the 26 beneficiaries were improperly paid approximately $774,000. Although the Agency was aware these 26 beneficiaries had received pensions, it did not reduce their benefits for WEP. Of these 26 beneficiaries, SSA may not correct the payments for 24 because of SSA’s administrative finality rules. Based on our sample results, we estimate SSA improperly paid approximately 3,600 beneficiaries $118 million.
Additionally, SSA exempted 28 beneficiaries from WEP where we found the exemptions questionable. If SSA did not apply WEP, but should have, we estimate the Agency paid these 28 beneficiaries approximately $971,000 more than they were entitled to receive.
Because of its administrative finality rules, SSA may not correct all the payment errors we identified. If it does not take corrective action, we estimate the Agency will improperly pay an additional $140 million in future payments to these beneficiaries.I'm not saying we should eliminate WEP but it's a mess to administer and claimants really, really dislike it.
Of course claimants dislike it, because it reduces their benefits, preventing them from being higher than for a person with the same average income but no earnings outside the Social Security system.
ReplyDeleteI worked for SSA for 42 years. The first 13 were under CSRS, not under Social Security. The remaining 29 under FERS, also under Social Security. My Social Security is reduced because of my early years under CSRS. I don't think I should be punished for that.
ReplyDeleteSure nobody wants benefits reduced . So what's the big deal , get the 30 YOC's( creditable years of substantial earnings ) and be exempt from the WEP . I missed the $$ amount years back by $ 104.00 !!!
ReplyDelete@9:30am - SSA should only reduce the % of the pension that included CSRS months RS00605.364 C.6). Bu
ReplyDeleteOf course, that doesn't make up for the fact that many re-hired employees were also given incorrect information about their system election options, or having to meet the same exceptions even after saving the gov't money by switching systems.
I imagine the majority of incorrect payments in the study relate to reps not analyzing the earnings record for non-covered work, or setting a follow-up date too far into the future. Beneficiary's rarely remember to report pension entitlement after benefits begin and if they retire early, contacting SS is the last thing on their mind because they are already getting benefits.