LACERA - The Los Angeles County Employees Retirement Association LACERA Home Disclaimer Links My LACERA FAQs Contact Us LACERA Home


Search by Topic

Brochures & Forms


BENEFITS


WINDFALL ELIMINATION PROVISION

The Windfall Elimination Provision (WEP) is a federal law that reduces the Social Security benefit for retired and disabled workers receiving government pensions from employment not covered by Social Security. If you have 30 or more years of substantial earnings under Social Security, you are fully exempt from the WEP.

The Social Security Administration uses a different formula to calculate a worker’s benefit under the WEP than it does to calculate the benefit of a worker who is exempt or not affected by the WEP.

The “normal” Social Security benefit formula separates a worker’s average monthly earnings into three segments, and multiplies each by a different percentage. The WEP modifies the percentage by which the first segment is multiplied. This results in you receiving a lower Social Security benefit than you would have received were you not entitled to a LACERA pension.

THE WEP FORMULA

The WEP formula includes a sliding scale based on length of your Social Security-covered employment:

  • If you have 21 to 29 years of coverage (“substantial earnings“) under Social Security, you are eligible for a partial WEP exemption.*
  • Under a partial exemption, the 90 percent factor is reduced to between 45 and 85 percent depending on your earnings in each year you worked in Social Security-covered employment.
  • If you have fewer than 21 years of coverage, the 40 percent factor applies.
  • WEP's reduction of your Social Security benefit may be no more than one-half of the LACERA pension to which you are entitled in your initial month of entitlement to the pension.
EXAMPLE: LACERA Member Who Turns 62 in 2006 and Worked in
Social Security-Covered Employment for Less Than 20 Years
  Multiplier Under Normal Social Security Benefit Formula Multiplier Under
WEP
First $656 in covered monthly earnings 90% 40%
Next segment of earnings, up to $3,299 32% 32%
Any additional earnings 15% 15%

*A chart of “substantial earnings” can be accessed online at www.ssa.gov/pubs/10045.html.

For more information and specifics of how the WEP may apply to your individual situation, contact the Social Security Administration at 800-772-1213.

7/2/12