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Windfall Elimination Provision

Windfall Elimination Provision 2016

Your Social Security retirement or 

disability benefits can be reduced

The Windfall Elimination Provision can affect 

how we calculate your retirement or disability 

benefit. If you work for an employer who doesn’t 

withhold Social Security taxes from your salary, 

such as a government agency or an employer in 

another country, any pension you get from that 

work can reduce your Social Security benefits.

When your benefits can be affected

This provision can affect you when you earn 

a pension from an employer who didn’t withhold 

Social Security taxes and you qualify for Social 

Security retirement or disability benefits from 

work in other jobs for which you did pay taxes.

The Windfall Elimination Provision can 

apply if:

• You reached 62 after 1985; or

• You became disabled after 1985; and

• You first became eligible for a monthly 

pension based on work where you didn’t pay 

Social Security taxes after 1985. This rule 

applies even if you’re still working.

This provision also affects Social Security 

benefits for people who performed federal service 

under the Civil Service Retirement System (CSRS) 

after 1956. We won’t reduce your Social Security 

benefit amounts if you performed federal service 

under a system such as the Federal Employees’ 

Retirement System (FERS). Social Security taxes 

are withheld for workers under FERS.

How it works

Social Security benefits are intended to replace 

only some of a worker’s pre-retirement earnings.

We base your Social Security benefit on your 

average monthly earnings adjusted for average 

wage growth. We separate your average earnings 

into three amounts and multiply the amounts 

using three factors to compute your full Primary 

Insurance Amount (PIA). For example, for a 

worker who turns 62 in 2016, the first $856 of 

average monthly earnings is multiplied by 90 

percent; earnings between $856 and $5,157 by 

32 percent; and the balance by 15 percent. The 

sum of the three amounts equals the PIA which 

is then decreased or increased depending on 

whether the worker starts benefits before or after 

full retirement age (FRA). This formula produces 

the monthly payment amount.

When we apply this formula, the percentage of 

career average earnings paid to lower-paid workers 

is greater than higher-paid workers. For example, 

workers age 62 in 2016, with average earnings 

of $3,000 per month could receive a benefit at 

FRA of $1,456 (49 percent) of their pre-retirement 

earnings increased by applicable cost of living 

adjustments (COLAs). For a worker with average 

earnings of $8,000 per month, the benefit starting 

at FRA could be $2,573 (32 percent) plus COLAs. 

However, if either of these workers start benefits 

earlier, we’ll reduce their monthly benefit.

Why we use a different formula

Before 1983, people whose primary job 

wasn’t covered by Social Security had their 

Social Security benefits calculated as if they 

were long-term, low-wage workers. They had 

the advantage of receiving a Social Security 

benefit representing a higher percentage of their 

earnings, plus a pension from a job for which 

they didn’t pay Social Security taxes. Congress 

passed the Windfall Elimination Provision to 

remove that advantage.

Under the provision, we reduce the 90 percent 

factor in our formula and phase it in for workers 

who reached age 62 or became disabled between 

1986 and 1989. For people who reach 62 or 

became disabled in 1990 or later, we reduce the 

90 percent factor to as little as 40 percent.

Some exceptions

The Windfall Elimination Provision doesn’t 

apply if:

• You’re a federal worker first hired after 

December 31, 1983;

• You were employed on December 31, 1983, by 

a nonprofit organization that didn’t withhold 

Social Security taxes from your pay at first, but 

then began withholding Social Security taxes;

• Your only pension is for railroad employment;
• The only work you performed for which you 

didn’t pay Social Security taxes was before 

1957; or

• You have 30 or more years of substantial 

earnings under Social Security.

The Windfall Elimination Provision doesn’t 

apply to survivors benefits. We may reduce 

widows or widowers benefits because of another 

law. For more information, read Government 

Pension Offset (Publication No. 05-10007).

Social Security years of 

substantial earnings

If you have 30 or more years of substantial 

earnings, we don’t reduce the standard 90 

percent factor in our formula. See the first table 

that lists substantial earnings for each year.

The second table shows the percentage used 

to reduce the 90 percent factor depending on 

the number of years of substantial earnings. If 

you have 21 to 29 years of substantial earnings, 

we reduce the 90 percent factor to between 

45 and 85 percent. To see the maximum 

amount we could reduce your benefit, visit 

www.socialsecurity.gov/retire2/wep-chart.htm.

A guarantee

The law protects you if you get a low pension. 

We won’t reduce your Social Security benefit more 

than half of your pension for earnings after 1956 on 

which you didn’t pay Social Security taxes.

Contacting Social Security

Visit www.socialsecurity.gov anytime to 

apply for benefits, open a my Social Security

account, find publications, and get answers to 

frequently asked questions. Or, call us toll-free at 

1-800-772-1213 (for the deaf or hard of hearing, 

call our TTY number, 1-800-325-0778). We 

can answer case-specific questions from 7 a.m. 

to 7 p.m., Monday through Friday. Generally, 

you’ll have a shorter wait time if you call after 

Tuesday. We treat all calls confidentially. We 

also want to make sure you receive accurate and 

courteous service, so a second Social Security 

representative monitors some telephone calls. We 

can provide general information by automated 

phone service 24 hours a day. And, remember, 

our website, www.socialsecurity.gov, is available 

to you anytime and anywhere! 

Printed on recycled paper

Year Substantial earnings

1937–1954 $900

1955–1958 $1,050

1959–1965 $1,200

1966–1967 $1,650

1968–1971 $1,950

1972 $2,250

1973 $2,700

1974 $3,300

1975 $3,525

1976 $3,825

1977 $4,125

1978 $4,425

1979 $4,725

1980 $5,100

1981 $5,550

1982 $6,075

1983 $6,675

1984 $7,050

1985 $7,425

1986 $7,875

1987 $8,175

1988 $8,400

1989 $8,925

1990 $9,525

Year Substantial earnings

1991 $9,900

1992 $10,350

1993 $10,725

1994 $11,250

1995 $11,325

1996 $11,625

1997 $12,150

1998 $12,675

1999 $13,425

2000 $14,175

2001 $14,925

2002 $15,750

2003 $16,125

2004 $16,275

2005 $16,725

2006 $17,475

2007 $18,150

2008 $18,975

2009–2011 $19,800

2012 $20,475

2013 $21,075

2014 $21,750

2015-2016 $22,050

Years of substantial

earnings Percentage

30 or more 90 percent

29 85 percent

28 80 percent

27 75 percent

26 70 percent

25 65 percent

24 60 percent

23 55 percent

22 50 percent

21 45 percent

20 or less 40 percent

Social Security Administration

SSA Publication No. 05-10045

ICN 460275

Unit of Issue - HD (one hundred)

January 2016 (Recycle prior editions)

Produced and published at U.S. taxpayer expense