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WEP Impact Calculation Factors

big windfallIn this blog we’ve covered the Windfall Elimination Provision (WEP) from many different angles. Here we’ll go into some more depth on the actual calculation of the WEP, including how some of the factors are determined.

As you are likely aware, the Windfall Elimination Provision or WEP impacts your Social Security benefit when you are receiving a pension based on work where Social Security tax was not applied to the earnings. The point of WEP is ostensibly to act as an offset, since the reason no Social Security tax was applied to the earnings is because the pension is intended to replace Social Security benefits for that worker. WEP impact is applied as a reduction to the first bend point of the calculation of the Primary Insurance Amount. (Calculation of the PIA is explained further here.)  

WEP Impact Calculation

For calculating WEP impact, it is important understand a few things about how Social Security views your pension.

First of all, the pension must be based on your earnings from the non-SS-covered employment, and not simply on your years of service.

The pension must also be your own pension, not the pension of a spouse or someone else. In other words, receiving a survivor pension from a non-SS-covered job in itself will not trigger WEP impact to your benefits.

The pension amount for calculation is considered as a monthly benefit. If the pension is paid on a different schedule such as quarterly or in a lump sum, Social Security will determine a monthly amount based upon the amount you’re receiving (or received) on the alternate schedule.

WEP impact is computed based upon a single-life annuity (unreduced) rather than on an amount of annuity payment that has been reduced to provide a survivor annuity.

When WEP impact is calculated, the amount of the pension is considered first. If 1/2 of the pension (based on the parameters given above) is more than $413 (for 2015), then the maximum WEP impact is limited to $413. Each year this figure is increased with the bend points.

On the other hand, if the pension is less than double the maximum WEP impact ($413 in 2015), then the WEP impact is reduced to half of the amount of your pension (as a monthly amount).

In addition to the factors above, WEP impact is further adjusted if you have had substantial earnings over your lifetime from a job that was subject to Social Security tax. If these substantial earnings were received for 21 or more years, the maximum WEP impact is reduced by 5% for each year more than 20 that you received the substantial earnings.

In all cases using the figure of 50% of your pension amount and/or 50% of the first bend point, the larger of the calculated benefit is the amount you will receive.

Below are a couple examples to help explain how this works.

Example 1. Rick is due to receive a lump sum pension from his work for the state government. This lump sum benefit calculates to a monthly pension amount of $300. Rick also worked part-time for 20 years in a job that was covered by Social Security. He is due (before WEP calculation) a Social Security benefit of $900 per month.

Rick began receiving Social Security benefits earlier this year at his Full Retirement Age. When he receives the lump sum from his state pension, WEP impact will apply to his Social Security benefit.

Using the numbers we referenced above, we calculate two amounts: when we reduce his SS benefit by $413, the amount is $487; reducing his SS benefit by 50% of the pension amount (calculated at $300/month) the resulting amount is $750. The higher of the two figures, $750 is what Rick’s WEP impacted Social Security benefit will be.

Example 2. Brad worked alongside Rick for several years. However, Brad, being a more highly-skilled worker, has a pension coming from the state government in the amount of $1,400 per month. Brad had the same part-time job as Rick, which garnered him a Social Security benefit of $900 per month before WEP impact.

Running the numbers for Brad, reducing his SS benefit by $413 we come up with $487; reducing his SS benefit by 50% of his pension amount ($1,400/month) we come up with $200 ($900 minus $700). So the higher of those two amounts, $487, is what Brad will receive in Social Security benefits after the WEP impact.

Example 3. Freddy worked the exact same job as Brad, earning the monthly pension of $1,400. The difference is that Freddy worked a different part-time job, at which he earned substantial earnings for 24 years, and his Social Security benefit (before WEP impact) will be $1,200 per month.

To run the numbers for Freddy, instead of $413 we’ll have to adjust this figure, since Freddy had substantial earnings for more than 20 years. In fact, the four additional years (above 20) of substantial earnings results in reducing the WEP impact figure by 5% per year. So for the first calculation we reduce Freddy’s Social Security benefit by only 30% of the first bend point, or $248 for 2015, resulting with $952; again, subtract 50% of his non-SS-covered pension ($700) and we get $500.  The higher amount, $952, is what Freddy will receive in Social Security benefits.


  1. Bob JenningsNo Gravatar says:

    2 Questions:

    1) For 2 pensions which could cause a WEP benefits reduction, are the pensions lumped together, or is the reduction figured separately for each?

    2) For a WEP benefits reduction of $360, suppose a person elects to not file for SS benefits at age 66, but instead waits until age 70 to do so. In the meantime he collects his pension (or pensions), say, from age 62 until age 70. At age 70 WEP works to reduce SS benefits, but is it the same amount per month that would have been calculated roughly 4 years earlier at age 66?

    1. jblankenshipNo Gravatar says:

      1) I believe all pensions being received are added together to determine WEP impact.
      2) This is complicated – Because the WEP reduces your PIA (Primary Insurance Amount), which is the amount of benefit you are eligible to receive at FRA, as your benefit increases, so does the impact of the WEP. If your PIA is $1,000 and your WEP reduction is $200, at FRA your SS benefit would be $800. At age 70 (assuming 66 as FRA) your SS benefit would be $1,056, whereas if there was no WEP the SS benefit would have been $1,320. This is a reduction of $264, rather than $200.

      1. Bob JenningsNo Gravatar says:

        This is a bit strange, and maybe you’d have a brief comment on the “50%” issue:

        I used the Social Security site calculator (link below), and using certain data came up with $887/month for SS benefits at age 66, and $1171/month for benefits at age 70, WITHOUT inputting a non-covered pension. WITH a non-covered pension of $720, age 66 benefits were reduced to $527 (a WEP of $360), and age 70 benefits were reduced to $695 (a WEP of $476). The age 66 WEP is thus 50% of the non-covered pension, but the age 70 WEP is about 66%. I thought the WEP was limited to no more than 50% of the monthly pension amount? (Or is this just a calculator error, as the site does note “the WEP calculation could be incorrect”?)

        The more I think about it, the more it’s a ridiculous law, since most of those non-covered pensions are Federally taxable, resulting in less dollars to a retiree.

        Calculator site link:

        1. jblankenshipNo Gravatar says:

          WEP reduces your PIA. At Full Retirement Age, your benefit is equal to your PIA. If you file at age 70 (assuming FRA is 66) your benefit is 132% of your PIA.

          So, if your PIA is reduced by WEP, the amount of reduction is greater as your benefit increases with delay credits after FRA.

          For example: your PIA before WEP is $1,000, and the WEP reduction is $200, so your reduced PIA is $800. If you file at FRA your WEP reduction is $200.

          However, if you delay to age 70 to file, your PIA is multiplied by 132%, so your benefit is $1,056, which is a reduction of $264 from the $1,320 that your benefit would have been without WEP.

          Apologies for my lack of clarification earlier.

          1. Bob JenningsNo Gravatar says:

            No apologies necessary, and thank you very much for the clarification!

  2. JaimeNo Gravatar says:

    HELP! Totally confused with WEP (& GOP as well). I’m 59, single, recently retired from County of Honolulu (government pension @ 3K mo), to recieve @ 62yo SSA benefit of $450 (accrued from other employment,)… where do i stand with regards to WEP? Does being single play into it? or irrelevant? Went to a retirement seminar and the speaker said to expect to collect 40% of what the stated SSA# is. So, in my example $450 x 40% = $180 ??? That seems ridiculous but?? I fed the system like a regular person too, yet i’ll be penalized because i collect a government pension? Thanks in advance

    1. jblankenshipNo Gravatar says:

      The largest reduction to your SS benefit from WEP is 50% of the benefit amount or 50% of your pension amount, whichever is smaller. (This assumes that your SS benefit is less than double the maximum WEP reduction, which is $428 in 2017.) So if your SS benefit at your FRA age is $450, the least your WEP-affected SS benefit would be is $225.

  3. JennyNo Gravatar says:

    Hi. I’ve talked to everyone you can imagine, and received only contradictory information, so I’m wondering if you can help: I am a part-time employee at a California State University. I am arranging for a service credit purchase so that I will be vested in my CalPERS account and thus eventually receive a retirement pension from the State. I’m trying to determine if I’ll be affected by the WEP or not, and everyone I speak to (HR dept., 457 advisor, CalPERS, SSA) has a different answer. The SSA (which unfortunately does not always give out accurate information), says that, since I will not have 20 years of substantial earnings, I will be hit by a 40% WEP reduction to my SS benefits no matter what. Others have said that since, during the years in which my employer paid into the CalPERS account, they also paid social security, I won’t be affected by the WEP. My pension will likely be quite small: 400 a month. But the SSA said this doesn’t matter–it will still be reduced by 40%. Do you know how things actually work? Without 20 years of substantial earnings, will I be stuck with the WEP problem despite the years of paying into the pension also being years when I did pay into social security? (Just not enough, apparently?)

    1. jblankenshipNo Gravatar says:

      If you were paying Social Security tax on the job that is generating the pension, you should not have WEP impact. This is regardless of how many years of substantial earnings you have – the fact that the SS tax was applied to your income, the same income that’s generating the pension, there should be no WEP. However, if you do a service credit purchase, this will represent a pension that is not based on income that was subject to SS tax – so naturally the waters are muddied with that credit purchase. My guess is that you’ll have a potential WEP impact of something less than 50% of the amount of the pension (50% of the pension is the maximum WEP).

  4. KevinNo Gravatar says:

    I am eligible to receive Canada Pension which has a reduced benefit based on when you first draw it similar to Social Security. The reduction is approximately 30% if you take it at 60 instead of 65. For purposes of the WEP, what number do they use – the value at 60 when I am first entitled to it, the value at 62 when I am first eligible for Social Security or the actual value I receive when I first draw it ie could I avoid WEP until age 70 by not drawing CPP until then?

    1. jblankenshipNo Gravatar says:

      My understanding is that you don’t have the WEP impact until you start taking the pension that causes WEP. So if you delay taking the Canada pension, you shouldn’t have any WEP impact until you start it.

  5. NoelNo Gravatar says:

    From SSA proration chart, on a lump sum of $86K the sum is factored for WEP purposes by dividing $86K by 137.3, based on age. This gives a monthly pension figure of $626.50 which is totally unrealistic in reality, nowhere can you buy a pension that gives you that amount.
    How do they come up with such a figure?

    1. jblankenshipNo Gravatar says:

      That’s a good question for SSA. The figures are determined actuaries and don’t represent a pension or annuity, but rather a payout over an expected life-span.

  6. Duane EssexNo Gravatar says:

    Hi Jim: I have a pension form the County based on 14.86 years of service. During 13.39 of those years I paid into Social Security, as required by the County. However I did not pay into Social Security for the balance of 1.47 years since those were extra help and part-time work over a span of eight years. But the County allowed me to “buy back” the 1.47 years of service. Both the 13.39 and the 1.47 years carry equal weight in calculating my County pension of $2392.42/mo. The pro-rate amount for the 1.47 years is $237.92/mo.I also have a separate pension of $112/mo. based on other part-time work. So I feel that I receive about $349.92 ($237 + $112) from my non-SS pension. When I applied for Social Security at age 70 the un-WEP-corrected amount was $1738.00. After the WEP correction the SS agent indicated that the amount would be approximately $1250, close to $500 reduction I’m my Social Security check, more than I receive from non-SS benefits.I am waiting for the letter to show the exact amount. The agent said that he had to use the entire amount of the pension for calculation. I will appeal but do you know why they would take more that I earn from my non-SS pension?

    1. jblankenshipNo Gravatar says:

      You need to take your calculations to them to show what pension is from non-SS work. Otherwise, if the pension is paid in a single amount every month there is no way to know what is covered and what is not.

      Best of luck to you – I think you’re correct (as long as the facts back you up) in your thinking about this.

  7. DonnaNo Gravatar says:

    I retired from teaching in TX in June 2016. I am getting over $3K a month from my TX teacher retirement. I will turn 66 next month and haven’t applied for social security yet. My 2016 soc. security statement says my full payment would be $843 based on 18 years of employment before coming to TX. The statement says the maximum amount the wep reduction can be for 2016 is $428. I am trying to figure out how much the reduction is now in 2017. Will the reduction amount go up every year even if I ‘m not working? I thought my soc. security payment would go up after 66 but if the wep reduction goes up too there’s no point in waiting to take my soc. security. Is that right? I talked to a rep and she couldn’t give me the amount I would get if I apply at 65 or 66. She said another local rep would call me but that hasn’t happened yet.Thanks for your help.

    1. jblankenshipNo Gravatar says:

      The $428 figure is the maximum amount for 2017 as well. You need to have the SSA folks work with you to tell you what your WEP reduction will be though, as it’s related to your date of birth.

  8. KimNo Gravatar says:

    Hello, I’m not sure this thread is still active but I figured it was worth a shot.

    I have 19 yrs of substantial earnings and 10+ working in S. Korea where i’m eligible in few months for the national pension for amount of $300. Currently I’m eligible for $700 in the states. So if my calculations are correct, I would be eligible for 550 in the states?

    Also, is there anyway to add those 10 years on to 19 years? or is it just worth it for me to take a lump sum in S.Korea?

    Thank you in advance!

    1. jblankenshipNo Gravatar says:

      Your calculations seem proper, can’t say for sure without seeing all of your documentation though.

      There is no way to add together working records from SK and US – great thought, but not available.

  9. richard alansNo Gravatar says:

    To clarify– 30 years of covered earnings for US social security so that the WEP doesn’t kick in– unless I take my Canadian CPP

  10. richard alansNo Gravatar says:

    Hi Jim,
    I’m a U.S. citizen, age 60 living in Canada for the past 20 plus years. I have 24 years of substantial earnings in the U.S. and about the same in Canada. My question is, I read there’s a way to get my income earned in Canada counted as substantial earnings so that I would reach the magic 30 years of earnings. Do you know if this is true?

    1. jblankenshipNo Gravatar says:

      I don’t know of a way to do this – in order to do so you’d have to either make your earnings in Canada subject to the US Social Security taxation in some fashion, or perhaps utilize a totalization agreement such that you would not receive credit for your Canadian income against Canadian retirement benefits and apply that credit against your US income.

      I don’t know that such a totalization agreement exists with Canada – I believe that some countries have arrangements with the US, but don’t know if Canada is one. Your best bet is to talk to the SSA and Canadian authorities to determine what the best action will be for you.

  11. SuzanneNo Gravatar says:

    Hi, I’ve been reading some of the questions posted in order to figure out what is happening with the WEP that I got blasted with back in 2015. I received full retirement from SS and also retired here in Israel after working for a company for 12 years and also receive monthly Pension from the Israeli government plus I received a lump sum pension from the company and in 2015 received the wonderful news that SSA applied the WEP to my benefits. My question is how long will this continue? my amount was (before WEP) $741 a month and after WEP $318…My lump sum pension was approx. $17,000. I’m 69 yrs. old and want to know if I’ll ever see the full retirement from SSA again? I never received an explanation as to the details of the period of time will elapse. Any help with this would be very much appreciated. Shalom

    1. jblankenshipNo Gravatar says:

      It is likely that this WEP impact will continue for the rest of your life, being based on all of the pension money from the lump sum and the Israeli government pension.

  12. W. CollyNo Gravatar says:

    I have a rather complex situation. I worked for a U.S. corporation overseas from 1981 to 1986, paid Social Security taxes on that income, and then left that company for 2 years. I rejoined that company in late 1988. In 1989 that company became a foreign owned company. After that change no Social Security taxes were paid on my income. I took early retirement from that company in 2004. I rolled over a lump sum distribution of what would have been my pension from that company to the company 401K plan. That lump sum pension rollover was based on salary earned from both the period I paid Social Security tax and the period in which I did not. Since 2004 I have been taking regular withdrawals from the 401K plan. To further complicate matters I have rolled over a portion of the 401K into a traditional IRA and a Roth IRA. Do withdrawals from a 401K or a traditional IRA count as being a “pension” for Social Security WEP calculations? Is the lump sum rollover of the original pension what is used for calculating WEP, even if you can’t identify what portion of that was based on income Social Security tax was paid on?

    1. jblankenshipNo Gravatar says:

      You’re right, this is a rather complex situation. My guess is that the pension that was rolled over should be the only component of your foreign pension that would cause WEP impact. You should gather all of your information together and take it to you nearby SSA office and work through the situation with them in order to know for sure what your impacts will be.


  13. Vivian MitchellNo Gravatar says:

    I have worked for the Fed Gov for 32 years this June 2016. I am 68 years old. I have also worked a second job. My first 19 years of work with the Fed Gov under CSRS. I wasn’t required pay into SS. I quit in 1997 and came back to work for the Fed in 2002 under CSRS Offset. I had substantial earnings from another job prior to starting to work for the FED. I have always paid SS on the second jobs. On 31 Dec. 2015 I have 29 years of substantial earnings with SS. I confirmed with SS that 2015 was my 29th year of substantial earnings. I started getting SS payments in 2015 and I am still paying in to SS every paycheck on both jobs. I am thinking that I will retire from my Fed job 31 July 2016. I will have approximately $23,000 in substantial earnings from my FED job by that date. I will continue to work my second job (I sell real estate and do appraisals) until I am 70 or longer if my health holds up. So from what I have read after I have 30 years of substantial earnings I am out of WEP. Am I correct? When I retire I will get a leave and earnings statement with my total gross and net income. Do I send a copy to SS so they won’t dock me for WEP at 29 years when I will have earned enough in 2016 to cover substantial earnings test even if it is $23,000 to be out of WEP?

    1. jblankenshipNo Gravatar says:

      In your case, you will be receiving a WEP-triggering pension beginning in August of the year that started with you having 29 years of substantial earnings, so likely there will be some amount of WEP impact due to this fact. This is because you will not have the credit of the 30th year of substantial earnings on your record until the end of 2016. Beginning with your 2017 benefits you will have 30 years of substantial earnings, so your 2017 benefit will not be affected.

      I could have this wrong, so definitely check it with SSA to be certain.


  14. kstinmbNo Gravatar says:

    I’m receiving a pension from the German gov’t for 7 year’s work there in the 1980’s for which I did not pay SS tax. I also have 34 years of “substantial earnings” for which I DID pay SS tax according to SSA’s own report of my earnings. Will I have no WEP impact when I file for the retirement beneft? Is it that simple? Thanks,

    1. jblankenshipNo Gravatar says:

      If you have more than 30 years of substantial earnings, there would be no WEP impact to your benefits.


  15. KathyNo Gravatar says:

    Is a 401a, accumulated under non-covered SS employment, considered a pension for WEP purposes? How is the monthly amount calculated if the withdrawals are self-directed and the amount of the account is subject to fluctuating market conditions? How will delaying receiving SS benefits or making 401a withdrawals affect the amount of WEP reduction? Thank you for assistance. I have not been able to find anyone who can answer these questions.

    1. jblankenshipNo Gravatar says:

      If the 401a is the “primary” retirement vehicle under this particular employment, then it is considered a pension for WEP. There is a table found at the link here that explains how a lump sum or non-annuitized pension is factored for WEP purposes.


      1. Aloha Jim

        For those with a lump sum pension, will the WEP reduction continue throughout one’s life?

        1. jblankenshipNo Gravatar says:

          No, when your WEP reduction is calculated against a lump sum, there is an actuarial “length of life” applied to the lump sum to determine the amount that should be considered the annual payment figure. Once that period of time has elapsed if you’re still alive, WEP should no longer apply. SSA will have to provide you with the details on the period of time for your particular situation.

          1. KathyNo Gravatar says:

            Thank you very much.

    2. KathyNo Gravatar says:

      Thank you for your help. One more question. Is the bend point used based on year of eligibility (age 62) or when you actually start receiving benefits? Thank you again.

      1. jblankenshipNo Gravatar says:

        Bend points are based on the year you reach age 62.


        1. KathyNo Gravatar says:

          Aloha Jim

          Me again…on the SS website on the page entitled: Retirement Planner: How the Windfall Elimination Provision Can Affect Your Social Security Benefit, there is a note above the chart of maximum amounts for WEP reductions. It reads:
          Note: If your retirement benefits start after full retirement age or your non-covered pension starts later than your eligibility year, the WEP reduction may be greater than the maximum shown in the chart.

          Can you give some examples of how this would apply?

          Thank you for your patience.


          1. jblankenshipNo Gravatar says:

            WEP actually reduces your PIA, not specifically your benefit. So if your PIA is $2000 and WEP reduces it by $400 (just for example purposes) to $1,600, and you have delayed your benefit beyond FRA to age 70 – your benefit without WEP impact would be $2640. With the WEP impact your benefit is $2,112. So the reduction due to WEP is $528, while the maximum WEP reduction to the PIA (as listed in that chart you saw) would be listed as $400.


  16. MichaelNo Gravatar says:

    If the Pension increases (some pensions have COLA options), is WEP recalculated every time the pension increases? Or say, if the pension starts at 70, how would the rule keeping WEP from only affecting up to 50% of the pension work if the person were filing at 67?

    1. jblankenshipNo Gravatar says:

      That’s an excellent question, Michael.

      The WEP impact is only calculated the first time that it is applied. Annual increases to the pension do not change the impact of WEP.


      1. MichaelNo Gravatar says:

        Thanks for the answer! :)

      2. Bob JenningsNo Gravatar says:

        What about if a pension goes down (as, e.g., when unions have asked retirees to agree to a pension reduction)?

        1. jblankenshipNo Gravatar says:

          If the pension reduces you can request that SSA re-calculates your SS benefit with the new information.

  17. WendyNo Gravatar says:

    It would be very helpful to see the formula written out. I am trying to duplicate the numbers Freddy’s example. I can’t make it come out with the same numbers. My own WEP numbers are very close to the Freddy’s example.

    1. jblankenshipNo Gravatar says:

      The full impact of WEP is $413 per month and Freddy has earned 24 years of coverage with substantial earnings. 10% per year is removed from the full impact of WEP for each year over 20. 4 years times 10% = 40%. 40% of $413 is $165.20. The remaining WEP impact is $413 minus $165.20 or $247.80, which I rounded up in the example to $248.

  18. IanNo Gravatar says:

    Do you know how WEP is triggered or is it based on the ‘honor’ system of self reporting?

    1. jblankenshipNo Gravatar says:

      It will show up when you file your taxes if you don’t self-report.

  19. IanNo Gravatar says:

    At the risk of becoming a squeaky wheel, I wonder if there is clarification for my situation through this website. I will begin receiving a UK state pension in May of 2015. This pension is not earnings related, it is based on number of years of contributions. I began drawing social security in 2003. I became eligible for UK pension before becoming a US citizen, and qualified for Social Security on the accuulation of the necessary ‘quarters’. Does WEP apply to a pension earned as a UK citizen – rather than an American expat or US citizen working for a non contributing entity to Social Security?

    1. IanNo Gravatar says:

      Correction: I began drawing social security in 2013 not 2003.

    2. jblankenshipNo Gravatar says:

      To the best of my knowledge a UK pension will trigger WEP impact to your US Social Security benefit. For clarification I would suggest discussing this matter with a Social Security Administration representative.

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