From the Indiana Lawyer:
A split 7th Circuit Court of Appeals panel affirmed a grant of summary judgment to the Social Security Administration on Monday in a class-action suit brought by a Canadian woman with dual citizenship who alleged her U.S. Social Security benefits were wrongly reduced based on similar benefits she receives from Canada.
Lorraine Beeler, a dual citizen of Canada and the United States, has established nearly 20-year careers in both countries and receives monthly retirement benefits from the Canada Pension Plan, that country’s equivalent to U.S. Social Security. She also worked at jobs on which she paid Social Security taxes in the United States.
Beeler’s earnings in Canada were not subject to Social Security taxes, and her earnings in the United States were not subject to Canada Pension Plan taxes. But Beeler ran into a problem after she alleges her Social Security benefits were wrongly withheld. She then sued the Social Security Administration in the U.S. District Court for the Southern District of Indiana in the class action case of Lorraine Beeler v. Andrew M. Saul, 19-2099.
There, Beeler asserted that the reduction of her U.S. benefits is a violation of two Social Security provisions: The Windfall Elimination Provision and the U.S.-Canada totalization agreement. The class claims that both the statutory language of the WEP and the terms of the agreement prohibit the reduction of Beeler’s benefits. ...
The 7th Circuit Court of Appeals split in affirming the district court’s decision, with the majority concluding the agency correctly ruled that plaintiffs’ Canadian employment was noncovered under the Social Security Act, and thus the provision applied to reduce their Social Security benefits. ...
But Circuit Judge Amy St. Eve dissented from the majority’s opinion, finding that its analysis “rests on an unsupported premise to exclude Beeler’s work from the definition of employment. ...
I'm a little surprised that we're just now getting litigation on this issue. I suppose the reason there hasn't been litigation is that most of the time the U.S. Social Security Administration cannot apply the offset because it has no knowledge that a claimant is receiving foreign social security benefits.
By the way, I think it would have been better if this case had not been brought as a class action. When there were more class actions against Social Security than there are now, the practice was to win an individual case and THEN bring the class action in another case with a different named plaintiff so that Social Security could raise nothing other than procedural defenses. Don't put all your eggs in one basket until you have to.
7 comments:
A little confused about the facts of this case. So this woman (I did not see her age) worked a 20-year plus job in Canada and a different job (or jobs) in the United States. First of all, that is pretty impressive to clock in 2 jobs over 20 years.
So if she paid into the program in each country and is still a citizen of both countries, why does she not get both benefits?
"The WEP is a component of Social Security designed to reduce a worker’s Social Security benefits by up to 50 percent because the worker is paying into a noncovered pension plan, said Shalina Schaefer, of counsel in Ice Miller LLP’s Indianapolis office."
I am not too familiar with this WEP. But it sounds pretty unfair. So if a person pays into a pension program all these years and pays taxes for Social Security, why not get both benefits?
Thank you Ronald Reagan. The WEP provision dates to 1982. It was implemented due to "Double Dipping". If worker engaged in non-covered employment , let's say Civil Service then retired , was entitled to a pension and then engaged in covered employment for the minimum numbers of years needed for entitlement to Social Security Retirement the worker would receive a full SSA retirement benefit. In many cases the job after Civil Service would have been lower paying , let's say part-time . The Social Security benefit is skewed to benefit the lower wage earners.
@11:23
If you pay 20 years into each country's program, then it's going to look of your 40 year work history, you didn't work 20 years. That means your average earnings will be low. As both the Canada Pension Plan and Social Security Act gives an advantage to calculating benefits to low earners, that's arguably unfair since you actually did receive full earnings over 40 years, just both countries' programs are blind as to half your earnings.
That said, the WEP is absurdly arcane and I think these sorts of issues are more easily handled through totalization agreements, where the two countries exchange data, and each country pays a portion of the individual's retirement benefits, the idea being say you worked 60% in the US and 40% in Canada, and assuming during your working life your taxes work out to roughly that division, then the two countries should pay the benefits 60/40. Apparently the court believed the worker's work in Canada didn't count as "employment" and therefore the WEP applied. That's odd. If she is eligible for Canada pension benefits, I don't see how it wouldn't be based off employment.
@ 1:06
Thanks for the insight. The 60/40 scenario sounds good on paper. But let's say the taxpayer paid more in tax dollars while only working 40 percent. It seems like Canada pays more in taxes or at least percentage of income.
Just do not seem why both countries cannot adhere to the implied social contract created when money is deducted for taxes out of wages. Both countries should be the full amount the taxpayer put in.
@106 SSA did count her Canadian work as employment, just not covered under SSA. It would count it the same way as someone who worked 20 years for a govt or other entity that did not pay into Social Security. The reduction in their USA SSA benefit could be as much as $480 if they file at full retirement age, less if they file earlier due to the regular reduction due to age.
If a person works 30 years in the US under SSA and the earnings are enough to constitute a year of coverage (this year it is $25,575) there is no reduction for a non covered pension.
It is always going to be hard to be fair to everyone. As someone pointed out her US income is averaged so that she would be benefitted in SSA payments for being a low income worker. The citizenship thing is a red herring in that neither country penalizes for being a noncitizen and per US law she gave up Canadian citizenship when she took an oath for US citizenship. My spouse gets meager benefits under the totalization agreement based on two years of work in Canada and 9 in the US before he went to work for the US government. Where we lose out is because of WEP he gets nothing under my account. Which he would as a spouse ....a lot more than he gets from the totalization agreement. A person who owned a million dollar business on the other hand and did not call themselves self employed because of the way his business was structured on the other hand would get full spousal benefits. Not complaining... Just pointing out you cannot be fair to everyone
Another interesting offset case is working its ways through the courts involves a grown adult whose parents applied for SSI on his behalf in the 80s and made themselves payee representatives, never informing him of any of this. Commissioner concedes these facts and so the question is, can SSA apply SSI offsets in this situation?
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