What does the ‘Windfall Elimination Provision’ specifically impact?

The Windfall Elimination Provision (WEP) specifically impacts pensions from employment that are not covered by Social Security. This provision is designed to adjust the Social Security benefits of individuals who receive a pension from non-covered employment, such as certain government jobs or some private sector jobs where Social Security taxes were not paid.

The rationale behind WEP is to ensure that individuals who have both Social Security-covered earnings and non-covered pensions do not receive disproportionately high benefits compared to those who have paid into the Social Security system for their entire career. By reducing the Social Security benefit formula for these individuals, it helps create a more equitable balance in the distribution of benefits in relation to the contributions made towards Social Security.

Understanding this is crucial, as it highlights the importance of the connection between employment types and the funding of Social Security benefits, emphasizing how non-covered employment can lead to modifications in benefits received.