Israelis who receive social security benefits from the United States had some good news a few months ago, and some even better news right now.
Even if your eyes glaze over when you hear words like “pension” and “benefits” you should pay attention to what happened, because you (or someone you know) may be eligible for a refund from the U.S. Social Security Administration.
Here’s what happened:
Americans who worked for the government are entitled to a pension and certain other benefits under the social security system. However, that pension is reduced for citizens (which may include Americans living abroad) who receive an additional pension if they also worked for a private employers and are entitled to a pension from that employment.
That reduction in pension is triggered by what is called the Windfall Elimination Provision (WEP), which became effective in September of 1994.
The WEP makes sense – when the government is calculating the amount to which one is entitled, it factors in additional “income” so that someone who only worked for the government and has no other funds from a separate pension coming in is entitled to more money than someone who does.
However, for years the Social Security Administration applied the WEP to Israeli citizens who had worked for the U.S. government, based on the amount those Israelis receive under what is called the “Old Age Benefit” from the National Insurance Institute of Israel (NII).
A class action lawsuit was brought by Israelis whose social security benefits were reduced due to the WEP, claiming their Old Age benefits from the Israeli government were not based on employment, but is instead based on residency, financial need or voluntary contributions.
That lawsuit, Greenberg v. Colvin, was brought and successfully resolved by the lawyers at Kelley Drye & Warren. In April, a U.S. federal court in Washington, D.C. approved a settlement reached between the Greenberg plaintiffs and the U.S. government.
Under the agreement reached and approved by the court, the SSA will no longer apply WEP to NII benefits, and it will refund all payments wrongly withheld under WEP, since August, 2004. In addition, class members whose Primary Insurance Amount was reduced by the WEP will be recalculated. Finally, the government will stop attempting to collect funds due under the WEP, for NII benefits.
Further information about the settlement can be found at this government website.
A story about pensions, the U.S. government and money, that ends well. Shabbat Shalom!