Prior to 1983, many government employees were not covered by Social Security. Most government employers had their own pension programs. Since then, many government employers opted into Social Security, but according to the Government Accountability Office, upwards of six million government and railroad employees are not covered by Social Security. Furthermore, wage earners who had substantial periods of employment in other countries may draw pensions apart from Social Security. Foreign employment and non-Social Security pensions present both opportunities and pitfalls for retirees.
The opportunity for wage earners with foreign work history derives from “Totalization” Agreements between many countries and the United States. They may receive credit for work performed abroad. To qualify for Social Security disability or retirement benefits, a wage earner needs a certain number of work quarters – 40 at age 62, but a lesser number for younger wage earners, 20 of which must have been earned in the 10 years preceding disability or retirement. A wage earner may augment work history in the United States with qualifying work history from specified other countries. Totalization treaties cover most countries in Europe, the Western Hemisphere, and Australia. The SSA website lists and explains the agreements.
The pitfalls are created by the Windfall Elimination Provision added to the Social Security Act by the Social Security Amendment Act of 1983. If a wage-earner has less than 30 years of covered employment and receives a pension from non-covered employment, the Social Security benefit may be offset by that pension. This is called the Government Pension Offset. If the retiree collects Social Security benefits without declaring the other pension, the Social Security Administration will find out through computer matching and demand repayment. The retiree — and the retiree’s offspring — may be pursued for reimbursement for 10 years or more. See “A Little Sanity at Social Security Administration?.”
There is a Social Security pamphlet explaining the Windfall Elimination Provision. For answers to your Social Security questions, please call.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2015 John B. Payne, Attorney