Dear Rusty: How can a foreign company pay into the US Social Security system? I worked in Barbados before I immigrated to the USA and earned a pension there. Now my US Social Security benefits are reduced because I receive a pension from Barbados. One has nothing to do with the other and I want my money back! Signed: Angry ImmigrantDear Angry: Foreign companies don’t pay into the U.S. Social Security system, and neither do residents of other countries working in their home country. But a resident of a foreign country who earns a pension in their home country, and who later moves to the U.S. and earns an additional U.S. Social Security pension, will have their U.S. Social Security benefit reduced by a provision of U.S. law called the Windfall Elimination Provision (WEP). WEP was enacted by Congress in 1983 to eliminate what was viewed as “double dipping” – where someone with an extra pension (such as your Barbados pension earned without contributing to US Social Security) had their US Social Security (SS) benefit computed in the same way as a US resident who had no such extra “noncovered” pension. The 1983 WEP rule created a special formula for those entitled to both a U.S. Social Security benefit (earned by contributing to the US program) and another pension earned without contributing to Social Security.Though you are adamant that one has nothing to do with the other, US law says otherwise. WEP reduces the US Social Security benefit of anyone with a “non-covered” (e.g., foreign) pension so that their US Social Security benefit is more consistent with benefits provided to others without an extra non-covered pension. US Social Security is designed to provide a higher percentage of replacement income to lower income workers, and those with an extra non-covered pension enjoy an unfair advantage because their income artificially appears lower than it truly is. WEP was implemented by Congress to correct that unfair advantage. However, like you, almost everyone affected by WEP (which, by the way, includes many public service employees in 27 U.S. states) believes it to be unfair and often complain about it to their Congressional Representatives. For information, there is a legislative bill now before Congress which proposes to eliminate WEP (H.R. 82 – The Social Security Fairness Act of 2021). I must, however, let you know that a bill to either eliminate or reform WEP has ...
