Hi Larry,
I am a Canadian engineer who worked in Canada 8 years and currently in USA since June 2012. According to Totalization Agreement between USA and Canada I am entitled to receive retirement benefit from SSA.
I was born in June 1951.
I already get pension (CP) $180 USD monthly from Canada which is considered pension from non-covered employment and which reduces my Social Benefit under WEP law.
I applied for Retirement Benefits to start in Jan 2018.
Social Security Administration (SSA) computed my pension at $420 USD based on my earnings. I know my benefit is affected by the WEP but it seems to me their computation is wrong.
Here are the earnings history in USA SSA used:
2012 - 47,943; 2013 - 83,094; 2014 - 84,005; 2015 - 88,632; 2016 - 92,026; 2017 - 95,256
Note: All the above earnings are smaller than maximum amount of taxable earnings for each year
In my understanding the computation of my benefit should follow next steps:
1. My full retirement age (FRA) is 66
2. My Total Substantial Earnings along 35 years: TSE = $490,956
3. My Total Indexed Earnings along 35 years taking in consideration the inflation is: IE = $507,484
4. Average Indexed Monthly Earnings, AIME = 507,484/420 = $1,208
5. Standard Primary Insurance Amount (PIA) = .90 x 895 + .32 x (1,208 - 895) = $906 (without WEP reduction)
6. In my situation where the number of substantial earnings years is smaller than 20 years, according to the law the max. WEP reduction for 2018 is $447.5. The same law states the WEP reduction is limited to one-half of my pension from non-covered employment, which means the max. WEP reduction in my case is $90 (180/2 CPP) not $447.5
7. Corrected WEP formula for PIA should be: .80 x 895 + .32 x (1208 – 895) = 716 + 100.16 = 816.16
8. Adding the credit for taking benefit later than my FRA, which is 4% for a half year, PIA = 848.8
9. Rounding to the integer dollar PIA = $849
I also expect my wife who is my dependent to receive some credits under family benefits provision which states the max family benefit is MFB = 1.5 x PIA.
In this case my monthly family benefit can reach $1,274.
Larry would you like to advise who is correct regarding my retirement benefit: SSA or me?
Thank you very much for your help.
John
Hi John,
Simply put, my Social Security expertise doesn't extend to Totalization computations so I'm not able to give you a definitive answer. Although I'm a retired Social Security technical expert, I was never involved with Social Security's Division of International Operations (DIO), which is the branch responsible for processing Totalization claims including calculation of the benefit rate.
A couple things that I can tell you, though, are that it doesn't sound like WEP would be involved in your case (https://secure.ssa.gov/apps10/poms.nsf/lnx/0201701300) and the normal computation formula that you've described above doesn't apply in Totalization claims. If you had at least 40 quarters of US Social Security coverage (QC), the normal AIME computation formula would be used and the WEP provision would apply. Totalization benefits are an entirely different animal, though.
Since you apparently have fewer than 40 US QCs your work in Canada is being credited to allow you to qualify for a benefit, and your benefit rate would be determined based on the Totalization formula described in the following section of Social Security's operations manual: https://secure.ssa.gov/apps10/poms.nsf/lnx/0201701200. I'm not capable of calculating your correct benefit rate using that formula, but maybe you can decipher it.
Bottom line, if you don't believe that your benefit rate has been correctly calculated, filing an appeal would be about your only possible recourse (https://www.ssa.gov/pubs/EN-05-10041.pdf). It's extremely unlikely that you could find anyone outside of DIO who could explain how your benefit rate was calculated.
Best, Jerry
