Retirement Benefits

Will the ‘Windfall Elimination Provision’ Reduce My Social Security?

10 months ago

If during your career, you worked for both an employer who did withhold Social Security taxes and an employer who didn’t (while earning a pension), this provision may apply to you.

In 1983, Congress passed the Windfall Elimination Provision (WEP) to prevent employees who received non-covered pensions from the “windfall” of receiving the higher Social Security benefit calculation typically used for longtime, low-wage earners. These earners have the advantage of receiving a Social Security benefit representing a higher percentage of their income while they were working.

A non-covered pension is a pension paid by an employer who didn’t withhold Social Security taxes from your salary.

In December 2021, about 2 million people (or about 3% of all Social Security beneficiaries) were subject to the WEP according to a 2021 Congressional Research Service report (PDF).

Does the WEP Apply to Me?

Not all CalPERS members are affected by the WEP. To check if it may apply to you, look at your pay stub to see if Social Security taxes have been withheld. If they haven’t, then you may be earning a non-covered pension.

Important Points to Know

  • Any reduction would be to your Social Security benefit, not your CalPERS pension.
  • Even if you choose to take a refund of your CalPERS retirement contributions in a lump sum, Social Security will still calculate the reduction as if you had chosen to receive monthly payments for your government pension.
  • The WEP may not apply if you have 30 or more years of substantial earnings in employment where you paid Social Security taxes. If you had between 20-30 years of substantial earnings covered by Social Security, the WEP may still apply, but at a reduced level.
  • The WEP only applies to retirement and disability benefits. Survivor benefits are not affected by the WEP.
  • Your Social Security statement does not reflect any reduction in benefits due to this provision. The Social Security Administration will wait until you file to tell you how much the reduction is. It’s important that you share whether you are or will be receiving a non-covered pension.

Resources From the Social Security Administration

For more information about how the WEP works and a list of exceptions, and a list of substantial earnings, review Windfall Elimination Provision (PDF).

Create your personal my Social Security account and obtain a copy of your earnings record.

Use the WEP Calculator to get an estimate of your Social Security benefit after the WEP deduction.