Liz Weston

Dear Liz: I understand your explanation of the windfall elimination provision that reduces Social Security benefits if someone is receiving a pension from a job that didn’t pay into Social Security. I am a teacher with such a pension who also worked more than 10 years in the private sector. I’d accept the explanation and the reduction if the WEP were applied in all 50 states. As you know, it is not. How is this reduction justifiable in any way?

Answer: The idea that WEP doesn’t apply in all states is a myth. WEP applies regardless of where you live. What matters is whether you’re getting a pension from a job that didn’t pay into Social Security. Some states provide such pensions while others don’t.

“If a state doesn’t provide its workers with their own pension and instead has them join Social Security, then exempting them from the windfall elimination provision is fully appropriate,” says economist Laurence Kotlikoff, president of Economic Security Planning Inc., which offers Social Security claiming software at MaximizeMySocialSecurity.com.

As mentioned earlier, WEP is not designed to take away from you a benefit that others get. Rather, the provision is designed to keep those who receive pensions from jobs that didn’t pay into Social Security from getting significantly higher benefits than workers who paid into the system their entire working lives.

That can happen because of the progressive nature of Social Security benefits, which are meant to replace a higher percentage of a lower-earner’s income than that of a higher earner.

People who don’t pay into the system for many years can appear to be much lower earners than they actually are. Without adjustments, they would get bigger benefit checks than people in the private sector with the same income who paid much more in Social Security taxes.