TN 92 (10-22)

GN 00307.290 Evidence of Foreign Pensions and the Windfall Elimination Provision (WEP)

A. Introduction to evidence of foreign pensions and WEP

WEP is intended to eliminate the windfall of Social Security benefits for some number holders (NHs) entitled to Retirement Insurance Benefits (RIB) or Disability Insurance Benefits (DIB). These NHs also receive pensions based on work that was not covered under the U.S. Social Security system. For more information on WEP, see RS 00605.360.

For months after December 1994, this instruction applies only to individuals eligible for both a regular Title II (T2) non-totalization benefit and a foreign pension other than a foreign totalization benefit that is based on an agreement with the U.S.

For months before January 1995, this instruction applies to individuals eligible for a regular T2 benefit and any foreign pension. This includes one based on a totalization agreement. See GN 01701.300 and GN 01701.320 for information on foreign pensions based on a totalization agreement with the U.S. and the effect of WEP.

B. Definition of a foreign pension

A foreign pension is any periodic or lump-sum payment made by a Social Security program, a private employer, or government employer in a foreign country. Foreign payments may be only partially based on work (see GN 00307.290C.4).

C. Policy for foreign pensions that are subject to WEP

1. Foreign pensions that trigger WEP

A foreign pension based on post-1956 work will trigger WEP if it is:

  • a private or governmental pension from a country that lacks a totalization agreement with the U.S., or

  • for months after December 1994, a private or governmental pension from a country that has a totalization agreement with the U.S., and the individual is receiving a non-totalized benefit from the U.S. and the foreign country.

Only the part that is based on non-covered work after 1956 is used. For a list of Totalization agreement countries, see GN 01701.005.

2. Foreign pensions that do not trigger WEP

Foreign pensions based solely on non-covered foreign employment before 1957 do not trigger WEP, (for example, Ghetto pension or commonly known by the German acronym ZRBG). For more information on ZRBG, see SI 00830.711.

Foreign pensions earned by the following under dual coverage situations do not cause WEP to apply:

  1. a. 

    U.S. citizens and residents who worked in foreign countries and were subject to both U.S. and foreign Social Security coverage on the same earnings (for example, a U.S. citizen working for a foreign affiliate under a 3121(l) agreement — see RS 01901.070);

  2. b. 

    self-employed persons who were covered by both the U.S. and the foreign country on the same earnings.

3. Payments that cannot be used to apply the WEP Guarantee Provision

Some foreign pensions are not based in whole or in part on work performed after 1956. Therefore, the following foreign pension payments cannot be used to apply the WEP Guarantee Provision:

  1. a. 

    Universal pension supplements payable to all aged individuals in a particular country, and not just to qualified workers.

  2. b. 

    The part of a pension based on voluntary Social Security contributions that some countries allow individuals to make to increase the amount of their pension.

    EXAMPLE: Individuals in the United Kingdom may continue to make (voluntary) Social Insurance contributions to that system during periods they are not working in covered employment or self-employment.

  3. c. 

    Statutorily mandated minimum Social Insurance benefits: That is, the part of a Social Insurance benefit that represents the difference between the amount of the benefit based on non-covered earnings and the actual amount paid after the benefit is raised to a statutory minimum.

    EXAMPLE: Italy pays a statutory minimum Social Insurance benefit, administratively increased if the benefit based on the individual's work history alone is not sufficient to meet the minimum required by law.

  4. d. 

    Other allowances allotted for dependents that increase the pension amount to a given worker and are unrelated to actual work performed.

    EXAMPLE: Both Ireland and Germany pay family allowance benefits for children, which are unrelated to the pensioner's work history.

  5. e. 

    Pensions based only on residence or citizenship in a particular country; that is, the pension is not based on work.

    EXAMPLES:

    • Australia and New Zealand pay Social (insurance) Security benefits that are financed entirely from general revenue. There is no direct tax to either employees or employers to support the program. Both countries pay the benefits to all residents and may pay benefits abroad in certain situations.

    • In Israel, the National Insurance Institute (NII) pays a flat-rate old-age pension to qualifying Israeli residents. The NII pension is payable whether a person worked or did not work.

      Since the basis for payment of the Australian, Israeli and New Zealand pensions are not derived from an individual’s work-related earnings, these benefits do not cause WEP to apply.

    • Japan's National Pension is based only on residency and not subject to WEP. Contributions to this pension fund are not based on earnings.

  6. f. 

    The part of a foreign pension that is based on covered work (for example, part of the work on which the pension is based was for an employer that lacked a 3121(l) agreement for its employees, while part was for an employer that had such an agreement).

NOTE: The examples listed above are not all-inclusive. Other countries allow voluntary contributions, pay family allowance benefits, and have needs-based pensions.

4. Countries that have “multi-tiered” Social Security systems

Many countries have “multi-tiered” Social Security systems, that is, some benefits are directly related to the individual's work and earnings, while other benefits are based on residency. In other countries, payments made under the Social Security program may appear to be earnings-based but in fact are not. It is therefore important to question the NH closely during the claims interview (and to examine any evidence they have) to determine whether the pension received may, in fact, be used to apply WEP. Generally, an award notice or letter issued by the paying agency in the foreign country will suffice.

EXAMPLES:

  1. a. 

    Canada: Payments made under the Old Age Security Program (OAS) are residence-based and are not subject to WEP. Payments made under the Canada Pension Plan (CPP), or the Quebec Pension Plan (QPP) are earnings-based and are subject to WEP.

  2. b. 

    Sweden: Benefits paid under Sweden's pension program include a flat-rate basic benefit based on residence and are not subject to WEP. Benefits paid under the earnings-related supplementary pension program (known as ATP) are subject to WEP.

  3. c. 

    Norway: The basic pension paid under the National Insurance Scheme (NIS) is based on residence in Norway and is not subject to WEP. The supplementary pension is earnings-related and is subject to WEP.

  4. d. 

    Finland: The National Pension Scheme (NPS) pays flat-rate benefits based on residence and is not subject to WEP, while the Employment Pension Scheme (EPS) pays benefits based on a worker's earnings and is subject to WEP.

  5. e. 

    Netherlands: Residence-related payments are made under the National Insurance Scheme (NIS) and are not subject to WEP. Earnings-related payments made under the Employed Persons Insurance Scheme (EPIS) or Self-Employed Persons Insurance Scheme (SPIS) are subject to WEP. In addition, certain individuals who have lost their jobs prior to retirement age may qualify for a “pre-retirement” payment. This payment is a form of unemployment compensation and not subject to WEP.

  6. f. 

    Switzerland: Ordinary pension benefits are based on a worker's contributions and are subject to WEP. Switzerland also pays an “extraordinary” benefit that is needs related, not based on contributions, and payable only to residents of Switzerland. This pension is not subject to WEP

  7. g. 

    Japan: Payments made under Japan’s National Pension (JNP) are based on residency and not subject to WEP. The Employee’s Pension Insurance (EPI) is based on earnings and subject to WEP. Japan also has a pension for dependent spouses of employees covered under the EPI. This pension is not subject to WEP.

See GN 01701.320 for a list of totalization agreement countries with pensions that are exempt from WEP.

5. Evidence

We only accept original and certified photocopies of foreign pension evidence when the WEP Guarantee Provision applies. For more information on the WEP Guarantee Provision, see RS 00605.370. Evidence of entitlement to a foreign pension will generally be a letter or award notice issued by the paying agency in the foreign country.

6. Reporting responsibility

It is the NH's responsibility to notify us promptly when they become entitled to a pension based on non-covered earnings after 1956. For more information on payments while outside the U.S., and foreign rights and responsibilities, refer to SSA Pub. No. 05-10137 (Social Security - Your Payments While You Are Outside the United States), the foreign rights and responsibilities booklet.

D. Procedure for developing the amount of a foreign pension

1. Same earnings subject to both U.S and foreign Social Security coverage

Apply the same rules to verify and determine the amount of a foreign pension as for pensions based on other non-covered earnings (see RS 00605.370-RS 00605.374).

If an NH alleges they paid Social Security tax for employment or self-employment shown on the SSA-308 (Modified Benefit Formula Questionnaire-Foreign Pension) as a period of non-covered earnings for which a foreign pension is payable, verify this with the earnings record. If necessary, ask the NH to contact their employer for the information.

2. Determining if part of the NH's earnings is subject to U.S. Social Security coverage

Ask the NH to get the needed information directly from the employer or paying agency involved if the information on the SSA-308 is not sufficient to determine which parts are based on covered and non-covered earnings.

3. Verifying foreign pension amount

Process the case as explained in RS 00605.370B. If the NH has no reply or an inadequate reply to the requests they sent to the foreign employer or agency, send a request the Office Earnings and International Operations (OEIO) to assist in getting the necessary information (see GN 00904.220).

4. Converting pension amounts to monthly amounts

Be aware that some certificates of entitlement to a foreign pension allocate payments on other than a monthly basis. Pension allocations can indicate a weekly, bi-weekly, or bi-monthly pension amount rather than a monthly amount. RS 00605.364C.2. provides information to determine the amount the NH would have received if the pension were paid monthly. For example, to convert a weekly pension to a monthly pension, multiply the weekly amount by 52 and divide by 12.

E. Procedure for prorating a foreign pension

When it has been determined that a foreign pension is based in part on non-covered earnings and in part on a payment which may not be used to apply WEP (see GN 00307.290C.5.), prorate the foreign pension in order to obtain only the part based on non-covered earnings. Prorate the pension as follows:

  • multiply the total pension amount (after converting it from a weekly amount to a monthly amount, if necessary) by the ratio of the number of months of non-covered work over the total number of months used in the computation.

  • multiply the pension amount by the total number of months of non-covered work after 1956, and

  • 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 which may not be used to apply WEP.

EXAMPLE: An 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).

  • Exclude the 72 months before 1957, since the WEP Guarantee Provision applies only to non-covered earnings after 1956. This yields 168 months.

  • 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.

  • 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 Provision (see GN 00307.290F), the worker's foreign pension is 220 EUR.

Treat any month for which there are both non-covered earnings and one of the non-usable payments above (e.g., a month for which voluntary contributions were made) as a month of non-covered earnings.

F. Procedure for applying the WEP Guarantee Provision

If based on the NH's allegations, use of the WEP Guarantee Provision (see RS 00605.370) would result in a higher PIA as in the example above, apply the WEP Guarantee Provision as follows:

  • Require verification of the pension amount from the paying agency or employer. Ensure this includes the amount of the pension in the first month of concurrent entitlement to both the pension and the Social Security benefit, as well as the months of employment (after 1956) and the months of (for example) voluntary contributions on which the pension is based.

  • If the NH has the necessary documentation before adjudication, use the WEP Guarantee Provision to compute the PIA. If not, use the maximum reduction to compute the PIA and tell the NH we will recompute the PIA using the WEP Guarantee Provision when we receive the necessary verification of pension amounts from the agency or employer. Regardless of which action is taken, document the claims file. Refer any questions on WEP and foreign pensions to the Office of Earnings and International Operations at:

    Social Security Administration
    Office of Earnings and International Operations
    P.O. Box 17769
    Baltimore, MD 21235 -7769

G. Procedure for when a beneficiary reports a pension based on non-covered earnings

Apply WEP in accordance with GN 03001.020 if the NH reports entitlement to a pension based on non-covered earnings. See GN 03001.005 if the report comes from a third party.

Do not apply WEP for months after December 1994, if the NH receiving a regular U.S. Social Security benefit reports receipt of a totalization benefit based on an agreement with the U.S. See GN 01701.310 and GN 01701.305 for how to exclude certain totalization benefits from WEP. See GN 01701.303 if the foreign totalization benefit is payable for months before January 1995.


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GN 00307.290 - Evidence of Foreign Pensions and the Windfall Elimination Provision (WEP) - 10/19/2022
Batch run: 10/19/2022
Rev:10/19/2022