Ask Larry

If non covered pension was reported several years after the fact, and WEP was not applied, how to back-date the guarantee WEP, calculate the debt and a new value of SS benefits?

Thank you for answering

Hi,

I'm not sure if I understand exactly what you're asking, but if Social Security doesn't receive notice of a non-covered pension until several years after the pension started they could go back and retroactively apply any resulting benefit reduction required by the Windfall Elimination Provision (WEP). WEP can cause a person's Social Security retirement or disability benefit rate to be calculated using a less generous computation method than the method that's normally used to compute those benefit rates.

Social Security benefit reductions resulting from WEP are effective with the first month that a person receives both Social Security retirement or disability benefits and their non-covered pension. So, if a person has been receiving a higher Social Security benefit rate for several years because Social Security was unaware that the person was receiving a non-covered pension, then the person may have been overpaid by a substantial amount. Social Security would seek to recover any resulting overpayment by withholding the overpaid amount from person's ongoing benefits.

I won't go into the details of a WEP calculation, but you can find an explanation in the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10045.pdf. There is also a WEP guarantee provision that limits the amount of reduction in a person's Social Security benefit rate to no more than 50% of the amount of their non-covered pension.

Best, Jerry