BASIC (01-06)

PR 01905.042 Pennsylvania

A. PR 06-027 Whether the Number Holder, Richard H~, is Exempt from the Windfall Elimination Provision in Determining His Primary Insurance Amount.

DATE: 12/07/05

1. SYLLABUS

The modified WEP computation is not applicable when figuring the amount of a Social Security retirement or disability benefit in cases where the worker is first eligible prior to 1986 for a pension payment based on noncovered employment . The City of Scranton requires that a worker have 25 years of service to qualify for a pension based on employment with the city. The claimant does not meet this requirement, therefore, using the WEP computation in this case is correct. The claimants contention that 12 1/2 years of employment is all that is necessary to qualify for a pension is incorrect.

That a pension may be paid after 12 1/2 years contingent upon a disability is irrelevant for purposes of determining when a worker is first eligible for the pension if no disability exists.

2. OPINION

QUESTION PRESENTED

On November 10, 2005, you asked for an opinion as to whether the Number Holder (NH) was exempt from the Windfall Elimination Provision (WEP) in determining his Primary Insurance Amount; SSN: ~.

CONCLUSION

Based on our review of the information provided and our research of the applicable law, we conclude that the NH is not exempt from the WEP.

BACKGROUND

On June 27, 1966, the NH was hired by the Scranton Police Department on reserve status. On July 29, 1967, the NH was appointed a regular police officer. On September 9, 1991, the NH retired from the police department based on his length of service, i.e., twenty-five years. The information you provided indicated that the NH's earnings from the Scranton Police Department were not covered under the Social Security system.

After retiring from the police department, the NH received earnings from several jobs covered under the Social Security system. On November 8, 2004, the NH protectively applied for disability insurance benefits (DIB). The NH alleged disability due to a back impairment as of July 3, 2003. On or about April 21, 2005, the state agency found that the NH was disabled and granted his application for DIB. However, because the NH received a pension, which was based on earnings not covered under the Social Security system, the amount of the NH's DIB was reduced pursuant to the WEP. On July 13, 2005, the NH requested that the Agency reconsider the amount of his DIB. The NH alleged that he was first eligible to receive his pension after twelve and one-half years of service, that is, December 27, 1978, and, therefore, was exempt from the WEP.

The information you provided indicated that John O~, a retired Scranton police officer, stated that a "little known" ordinance permitted police officers hired before January 1, 1987 to retire after twelve and one-half years of service, and that these officers were exempt from the WEP. In addition, Mr. O~ stated that police officers hired after January 1, 1987 needed to be at least fifty-five (55) years old to retire.

The information you provided also indicated that Conall K~, an Administrative Assistant with the City of Scranton, Human Resources Department, stated that the Police Pension Fund of Scranton, Ch. 99, Art. III, addressed police pension matters, and that he provided the Agency with a copy of the relevant provisions. According to Mr. K~, the Police Pension Fund of Scranton provides that a police officer needs twenty-five (25) years of service before he is eligible to retire. Mr. K~ also stated that the Police Pension Fund of Scranton provides for vested pension rights after twelve and one-half years of service, and that a police officer is eligible for a reduced non-service disability pension after that time.

DISCUSSION

As noted in your request for advice, DIB is subject to the WEP when: (1) a claimant becomes eligible for DIB after 1985, and (2) for the same months after 1985 that the claimant is entitled to DIB, he is also entitled to a monthly pension for which he first became eligible after 1985 based on earnings not covered under Social Security. 20 C.F.R. § 404.213(a) (2)-(3).

Here, the NH became eligible for DIB after 1985, and is entitled to a pension based on earnings not covered under Social Security. Thus, the date that the NH was first eligible to receive his pension will determine whether he is exempt from the WEP.

Based on the information provided by the City of Scranton, police pension matters are governed by the Police Pension Fund of Scranton. And, indeed, § 99-35 of the Police Pension Fund of Scranton provides that "[a]ll pensions shall be subject to the rules and regulations which make up this Article, which rules and regulations shall govern the granting of pensions."

The Police Pension Fund of Scranton § 99-41 governs when a police officer is first eligible to retire and receive a pension. Section 99-41(A) provides that a retired officer "shall receive a pension at the rate of one-half (??) of the salary currently paid . . . at the time of his retirement." See § 99-50. In relevant part, § 99-41(B) provides that "[u]pon the completion of twenty-five (25) years of continuous regular service . . . any policeman or detective may be allowed to retire upon his own request." Thus, according to the relevant provisions of the Police Pension Fund of Scranton, the NH was first eligible to voluntarily retire and receive a pension after twenty-five years of service, not twelve and one-half years, as alleged.

In addition, § 99-41(C) of the Police Pension Fund of Scranton pertains to disability pensions. Section 99-41(C) provides that "[n]o member of the Bureau of Police shall be retired on full pension until he has served twelve and one-half (12 ??) years of full and continuous service as a member of the Bureau, unless he has been disabled in the actual performance of his duty as a police officer or detective." Section 99-41(C) also provides that an officer with less than twelve and one-half years of service is eligible for a non-service disability pension at a rate of "four percent (4%) of his latest ranking salary . . . for each year since his appointment as a regular officer." Incidentally, at twelve and one-half years of service, a non-service disability pension will equal the amount of a full pension, i.e., one-half of an officer's salary at the time of retirement. See §§ 99-41(A), 99-50, and 99-55. Thus, while an officer may be eligible for a disability pension after any length of service, and after completing twelve and one-half years of service, an officer's disability pension due to a service or non-service disability will equal a full retirement pension, because eligibility is contingent upon disability, the Police Pension Fund of Scranton does not provide vested pension rights at twelve and one-half years, as alleged.

Moreover, with respect to vested pension rights, the Police Pension Fund of Scranton § 99-41(B) provides that "[a]fter such period of twenty-five years of continuous service the pension rights of a member of the Bureau of Police shall not be placed in jeopardy, nor his pension refused upon dismissal from the service for any cause whatsoever." In other words, the Police Pension Fund of Scranton provides that an officer's pension rights vest after twenty-five years of service, not after twelve and one-half years, as alleged. See § 99-54 (stating that pension benefits are "vested after twenty-five years of continuous service").

In sum, based on the relevant provisions of the Police Pension Fund of Scranton, which the City of Scranton provided, the NH was first eligible to receive his police pension after twenty-five years of service, i.e., in 1991. Thus, because the information provided showed that the NH was first eligible to receive his pension after 1985, the NH is not exempt from the WEP. Further, while there are several exceptions to the WEP (20 C.F.R. § 404.213), none apply to the NH. Therefore, we conclude that the NH is not exempt from the WEP in determining his primary insurance amount.

Donna L. C~
Regional Chief Counsel

By: __________________________

Robert W. F~
Assistant Regional Counsel


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PR 01905.042 - Pennsylvania - 01/13/2006
Batch run: 01/27/2009
Rev:01/13/2006