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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Social Security: The Windfall Elimination Provision (WEP)

Christine Scott, Specialist in Social Policy

January 8, 2013

http://www.fas.org/sgp/crs/misc/98-35.pdf

[full-text, 10 pages]

 

Summary

The windfall elimination provision (WEP) reduces the Social Security benefits of workers who

also have pension benefits from employment not covered by Social Security. Its purpose is to

remove an advantage or “windfall” these workers would otherwise receive as a result of the

interaction between the Social Security benefit formula and the workers’ relatively short careers

in Social Security-covered employment. Opponents contend the provision is basically imprecise

and can be unfair.

 

This report will be updated annually or upon legislative activity.

 

Contents

Background ...................................................................................................................................... 1

Who is Affected by the WEP? ......................................................................................................... 3

Legislative History and Rationale .................................................................................................... 5

Arguments for the Windfall Elimination Provision ................................................................... 6

Arguments Against the Windfall Elimination Provision ........................................................... 6

The WEP’s Impact on Low-Income Workers ............................................................................ 6

 

Tables

Table 1. Social Security Benefit Formula in 2013 ........................................................................... 1

Table 2. Monthly PIA for a Worker With Average Indexed Monthly Earnings of $1,500 and Retiring in 2013 ................. 2

Table 3. WEP Reduction Falls with Years of Substantial Coverage ................................................ 3

Table 4. Number of Beneficiaries in Current Payment Status with Benefits Affected by Windfall Elimination Provision (WEP), by State and Type of Benefit, December 2011 ............ 4

 

Contacts

Author Contact Information............................................................................................................. 7

Acknowledgments ........................................................................................................................... 7

 

 

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