When we determine that a foreign pension is based in part on non-covered earnings
and in part on a factor or factors that do not trigger the WEP, prorate the foreign
pension to obtain only the part based on non-covered earnings.
Prorate the foreign pension as follows (convert from a weekly to monthly amount, when
needed):
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Step 1: Multiply the total pension amount by the ratio of the number of months of
non-covered work over the total number of months used in the computation.
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•
Step 2: Multiply the pension amount by the total number of months of non-covered work
after 1956, and
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Step 3: Divide this number by the total number of months used by the foreign country
to compute the pension, based on both non-covered work and the pension payment that does not trigger the WEP.
EXAMPLE: A NH is entitled to a German pension of 400 Euros (EUR) based on periods of employment
and voluntary contributions in Germany from January 1951 through December 1970 (a
total of 240 months). The NH had 72 months of non-covered work before 1957. The NH
made voluntary contributions to the German pension plan from January 1968 through
December 1970 (a total of 36 months).
In this example, we would prorate the foreign pension as follows:
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Step 1: Exclude the 72 months before 1957, since the WEP Guarantee applies only to
non-covered earnings after 1956. 1951 - 1957 = 6 years. 6 x 12 = 168 months.
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Step 2: Exclude the 36 months from 1968 through 1970 for which the NH made only voluntary
contributions, that is, the NH did not work in non-covered employment. This leaves
132 months during which the NH worked in non-covered employment after 1956.
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Step 3: Multiply 400 EUR by 132 (52,800 and divide this number by 240; i.e., 400 EUR
132 months = 52,800 divided by 240 months = 220 EUR. Therefore, for purposes of the
WEP Guarantee, the worker's foreign pension based on earnings from non-covered employment
is 220 EUR.
Treat any month for which there are both non-covered earnings and one of the non-usable payments (e.g., a month for which voluntary contributions were
made) as a month of non-covered earnings.