Some users might not be pleased with how the upcoming changes to Social Security retirement benefits will impact them. The removal of the Windfall Elimination Provision (WEP), which would impact a large number of retirees, is arguably one of the most contentious reforms.
According to the Social Security Administration (SSA), The WEP is “a formula used to adjust Social Security worker benefits for people who receive “non-covered pensions” and qualify for Social Security benefits based on other Social Security–covered earnings. A non-covered pension is a pension paid by an employer that does not withhold Social Security taxes from your salary, typically, state and local governments or non-U.S. employers.”
Accordingly, the WEP is designed to reduce benefits for people who have not worked the full 35 years required to obtain the maximum retirement benefit and to equalize payments for recipients who get pensions without having made any tax contributions to the system.
This is due to the fact that it is widely accepted that the pension will make up the difference between what an individual should have earned and what they would have received after working for a lifetime.
Those who have worked in both the public and private sectors, as well as in pensioned and non-pensioned jobs, throughout their lives may suffer because payments are occasionally cut when an individual has accrued credits and ought to receive a larger Social Security payout.
However, immigrants are one group that is disproportionately impacted by the WEP clause.
How the WEP impacts immigrants’ Social Security benefits
The effects are the same and equally detrimental whether you are an American citizen who has lived and worked overseas and returns home for retirement with a pension or if you are an American resident who has worked abroad in the past and now has both a domestic and a foreign right to benefits.
The WEP impacts “U.S. citizens who have worked outside the U.S. naturalized U.S. citizens who have worked in their country of birth, and legal immigrants all have their monthly Social Security pension significantly reduced because they receive a foreign pension,” according to the website change.org, which led a petition to have this provision repealed.
Their monthly Social Security benefit may be lowered by as much as $557.50 in 2023. Lower-income earners are disproportionately impacted by the WEP, and many of these earners are foreign pension claimants whose total income is frequently at or close to the poverty line.
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Fortunately, this provision and another one that is frequently used in tandem, the Government Pension Offset (GPO), which “adjusts Social Security spousal or widow(er) benefits for people who receive “non-covered pensions,” have been struck down thanks to the petition and the efforts of numerous lawmakers (the bill to repeal WEP had a great deal of support in the House of Representatives, including that of the Speaker of the House).
The measure’s co-leaders, Reps. Abigail Spanberger (D-Va.) and Garret Graves (R-La.), went into detail about how happy they were to see the bill finally pass and do rid of these outdated clauses.
Striking the WEP is a solid first step to make sure that people who have worked receive their fair share, even though there is still much to be done to guarantee that benefits are sufficient and cover recipients’ expenses.
