Due to the Windfall Elimination Provision (WEP), some American workers are going to get less than they expect in Social Security benefits once they have retired. In 1983, the WEP was signed into law to prevent workers from receiving benefits from both Social Security and public sector pensions at the same time, a financial technique often called double-dipping. Most of those that are affected by the WEP are teachers and employees of state and local government. According to the U.S. Social Security Administration (SSA), the WEP affected about 1.5 million Social Security beneficiaries in 2012, the latest year in which data was available.

Social Security benefit calculations use a shared burden formula between the pension you will receive from a certain period of your employment and from Social Security in providing your future benefits. This could be a rude awakening for those who have been paying into the Social Security system during their working years. The maximum potential cut for the WEP for 2015 is $413 per month. For workers affected by the WEP, the Social Security Administration’s statement of benefits includes a link to an online tool where the exact impact can be calculated.

Many people do not know about the WEP provisions, often shocking those affected once they have retired. Until 2005, no law required that employers inform affected employees and today, laws only require employers to inform new workers of a potential impact on Social Security benefits earned during their previous employment. Many perceive the rules as unfair and opponents have been active in pushing for repeal of them.

The WEP formula kicks in immediately when you file for Social Security if you are already receiving a qualifying pension. No WEP is applied if you have 30 years of Social Security-covered employment. A sliding WEP scale is applied from 30 to 20 years and an adjustment is made if your Social Security-covered employment is less than 20 years. The maximum loss is set at 50 percent of the amount received from the separate pension.

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