Q & A
Ask Rusty – U.K. Pension Affects Social Security Benefits
Dear Rusty: Today I had my interview for Social Security and was told that because I receive a government retirement pension from the United Kingdom, my Social Security check will be reduced by up to 55%. My question is, how can this be so? My U. K. pension was not a voluntary contribution but a mandatory deduction withheld from my paycheck just like for my U.S. Social Security. Is there any way to get around this drawback? Any information you can give me will be greatly appreciated as I am not financially well off and was depending on both checks and not still having to work after retirement. Signed: Perturbed
Dear Perturbed: If you worked and earned enough separately in both countries to be independently eligible for benefits from each, your U.S. Social Security benefit will be reduced by Social Security’s Windfall Elimination Provision (WEP). WEP was enacted by Congress in 1983 to equalize benefits between those who collect only Social Security, and dually entitled workers who collect both Social Security and a pension from an employer which did not participate in or contribute to Social Security. The United States has Social Security “totalization agreements” with many other countries, and here is an excerpt from the Agreement between the U.S. and the U.K.:
“A U.K. pension may affect your U.S. benefit. If you qualify for Social Security benefits from both the United States and the United Kingdom and did not need the agreement to qualify for either benefit, the amount of your U.S. benefit may be reduced. This is a result of a provision in U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security.”
The “agreement” referred to is the “totalization” agreement between the United States and United Kingdom which provides for coordination of benefits between the countries. The bilateral agreement is helpful when someone has some time working in both countries but not enough in either to qualify for full benefits. In that case the agreement allows for totaling credits earned in both so that a person has enough total credits to be eligible for benefits. But when someone is independently eligible for full benefits in both countries, the Windfall Elimination Provision applies and will reduce Social Security benefits by up to 50% of your U.K. pension amount, or up to the maximum reduction for the year you became eligible for U.S. benefits.
I’m afraid there is no way around this, unless you have more than 20 years of U.S. employment which contributed to the U.S. Social Security system. The WEP reduction to your U.S. Social Security is less if you have more than 20 years of SS-covered “substantial earnings” and WEP goes away if you have more than 30 years of SS-covered employment with substantial earnings. But if you have less than 30 years of SS-covered substantial earnings, WEP will reduce your U.S. Social Security benefit. For additional information, here is a link to an article I previously published on how WEP works: https://socialsecurityreport.org/ask-rusty-wep-windfall-elimination-provision/
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.