I am currently on Social Security Disability receiving about $1,600 after Medical. I work for the state of Vermont for 13 years and have a state pension which I could really use. I am 59 years old and I was told that they would take $638 from my disability benefit to receive my $900 pension. I thought that certain types of Pensions were exempt from this WEP law. Is this true? If so what types of Pensions from state government to not reduce your social security benefit? Social Security told me that because I only have 25 years with qualified SGA is the reason they will reduce my benefits. But I am a bit skeptical about this. Also what will happen when I turn 62 with my social security disability? I am currently 59 years of age

Hi,

I can't verify that the amount of reduction that Social Security told you is accurate, but assuming that your wages were exempt from Social Security taxes when you worked for the State of Vermont, then receiving a pension based on your work there would likely cause your Social Security benefits to be reduced. This is due to the Windfall Elimination Provision (WEP). For more information on WEP and the exceptions to the law, refer to this Social Security publication: https://www.ssa.gov/pubs/EN-05-10045.pdf.

State pensions that aren't based on earnings that were exempt from Social Security taxes would not cause a WEP reduction. You could also be exempt from a WEP reduction if you had at least 30 years of 'substantial earnings' on which you paid Social Security taxes. Substantial earnings are explained in the publication referenced above.

The amount of the reduction resulting from WEP is normally limited to no more than 50% of the gross amount of the non-covered pension, so it sounds like the amount of WEP reduction that Social Security quoted you may be somewhat high assuming that the $900 state pension rate you mentioned is accurate.

Nothing would necessarily change when you reach age 62. When you reach your full retirement age between ages 66 & 67 your disability benefits will convert to regular retirement benefits at the same rate. Any WEP reduction that applies to your disability benefits would apply in the same manner to your regular Social Security retirement benefits.

Best, Jerry