Which provision applies to an individual with a public pension and earned Social Security benefits?

The Windfall Elimination Provision (WEP) is designed to modify the way Social Security benefits are calculated for individuals who receive a pension from work not covered by Social Security, such as certain public employment. This is particularly relevant for someone who has both a public pension and earned Social Security benefits.

Under WEP, if an individual has held a job that is not covered by Social Security for a significant number of years (usually 30 years or less), their Social Security benefit amount may be reduced. The intent behind this provision is to ensure that individuals who have had low earnings in jobs covered by Social Security do not receive a disproportionately high benefit compared to those who have contributed more to the system.

Understanding WEP is essential for advisors working with clients who may be affected by it, particularly federal, state, and local government employees who retire with pensions and also qualify for Social Security based on other employment.