Ask Larry

Why Did My Canadian Pension Reduce My Social Security Benefit?

I have Americain and Canadian citizenship and worked inthe US for about 20 years before moving to Europe and then Canada. I have worked in Canada about 24 years and I am now 68. I claimed SS when I turned 65, but deferred my Canadian retirment payments unitl I turned 67 and fully retired in June 2015.

I notified the SS office of the change, and the invoked some clause and reduced my payments by $320 / month. We wrote the Vermont office and asked them how the new payment was calculated and they wrote back that it was handled at a central office and calculated by a computer and they could not help us.

We tried reaching SS administration by phone (lots of luck) and still do not understand how the reduced benefits were calculated, or if the number is correct.

I know there is an agreement (treaty) between Canada and the US that covers SS and Canadian benefits, but no one here (Montreal, Canada) seems to understand how the SS administration actually arrives at their figures.

Can you shed some light on how the SS administriaon calculates the payments?

Thks, Randy Luke

Hi Randy,

I'll try to explain. Unless you meet an exception to Social Security's Windfall Elimination Provision (WEP), receipt of a foreign pension based on your own work results in the use of a less generous formula to calculate your US Social Security retirement benefit. For more information, refer to SSA's pamphlet: https://www.ssa.gov/pubs/EN-05-10045.pdf.

Since you weren't receiving the Canadian pension when you started on Social Security, your benefit was initially calculated using the normal, more generous, formula. Once you started receiving the Canadian pension, the WEP formula kicked in.

Bottom line, the benefit that you are now receiving from Social Security is probably correct.

Best, Jerry

Category: 
Posted: 
Jul 1 2016 - 3:00pm
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