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Understanding How Social Security Integrates with your Canada Pension Plan

The Windfall Elimination Provision (WEP) is a federal law that affects the Social Security benefits of individuals who receive pensions from jobs that were not covered by Social Security. Similarly, the Canada Pension Plan (CPP) is a government-run pension plan that provides benefits to workers who have contributed to it during their working years. If you have worked in both the United States and Canada, it is important to understand how the WEP provision integrates with CPP.


How the Windfall Elimination Provision Works


Under the WEP, a worker’s Social Security benefit is calculated by a different formula than the standard formula used for workers who do not receive pensions from non-Social Security covered jobs. If you receive a pension from a non-Social Security covered job, your Social Security benefit may be reduced. The WEP reduces the percentage of your earnings that are used to calculate your Social Security benefit, and the reduction is greater for those with fewer years of substantial earnings under Social Security.



How the Canada Pension Plan Works


The Canada Pension Plan (CPP) is a government-run pension plan that provides retirement, disability, and survivor benefits to eligible individuals. If you have worked in Canada and have contributed to the CPP during your working years, you may be eligible to receive CPP benefits.

The amount of your CPP benefit is based on the number of years you have contributed to the plan and the amount of your contributions. The CPP uses a formula to calculate your retirement benefit, which takes into account your average earnings during your working years and the number of years you have contributed to the plan.


How the Windfall Elimination Provision Integrates with CPP


If you have worked in both the United States and Canada and are eligible for both Social Security benefits and CPP benefits, the WEP provision can impact your Social Security benefit, but it does not affect your CPP benefit.

This means that if you receive a CPP benefit and a Social Security benefit, your CPP benefit will not be reduced by the WEP provision. However, your Social Security benefit may be reduced if you receive a pension from a non-Social Security covered job.


If you have an estimate of your future CPP benefits and your statement of contributions from Social Security, you can estimate the impact of the WEP provision on your Social Security income here.


Conclusion


In conclusion, the Windfall Elimination Provision (WEP) is a federal law that can affect the Social Security benefits of individuals who receive pensions from jobs that were not covered by Social Security. If you are eligible for both Social Security benefits and Canada Pension Plan (CPP) benefits, it is important to understand how the WEP provision integrates with CPP. The WEP provision can impact your Social Security benefit, but it does not affect your CPP benefit. If you have questions about how the WEP provision may impact your Social Security benefit or your CPP benefit, we are happy to discuss this with you, or contact a Social Security representative.


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