What the Windfall Elimination Provision Repeal Means for US Expats

This article originally appeared in the Tax Management International Tax Journal - Bloomberg Tax as "What Windfall Elimination Provision Repeal Means for US Expats."

The repeal of the Windfall Elimination Provision is one of the most significant Social Security reforms in decades and a long-awaited reform for Americans with foreign pensions, says Arielle Tucker.

For decades, the Windfall Elimination Provision (WEP) has unfairly reduced Social Security benefits for millions of US expatriates, penalizing them for contributing to foreign pension systems. (1) However, on January 5, 2025, the Social Security Fairness Act was signed into law, repealing both WEP and the Government Pension Offset (GPO) (Pub. L. No. 118–273). (2,3)

This historic reform eliminates complex benefit reductions that disproportionately affected retirees who spent part of their careers abroad. Many US expats will see higher monthly Social Security payments, a simplified claims process, and potentially significant retroactive payments.

Here’s what this repeal means for expats abroad, their retirement planning, and Social Security payments moving forward.

What Was the WEP?

Enacted in 1983, WEP was designed to reduce Social Security benefits for individuals who worked in jobs not covered by US Social Security but also qualified for a foreign or non-covered pension (Pub. L. No. 98-21 (Apr. 20, 1983)). This included:

State and local US government employees (e.g., teachers, police officers, and firefighters) who earned pensions outside of Social Security; and
US expatriates who contributed to foreign social security systems, such as Germany’s Deutsche Rentenversicherung, the UK State Pension, or Switzerland’s AHV.

For expats, WEP could reduce Social Security payments by up to 50%, even though they contributed to a government-mandated pension abroad. Critics argued that WEP misclassified foreign pensions, treating them like employer-sponsored retirement plans rather than Social Security equivalents.

Why the WEP Repeal Matters for US Expats

With WEP officially repealed, millions of Americans will see an increase in their monthly Social Security benefits.

Key Impacts for Expats:

Higher Social Security Payments: Expats with foreign pensions will no longer see reductions in their US benefits;
Simplified Retirement Planning: The repeal eliminates the uncertainty of WEP calculations, making it easier to estimate benefits; and
Retroactive Payments: Expats affected by WEP may receive lump-sum payments covering benefit increases dating back to January 2024.

What to Expect—Retroactive Payments

The Social Security Administration (SSA) has announced that retroactive payments for affected retirees will begin on February 25, 2025. (4)

Who Qualifies for Retroactive Payments?

Current retirees whose benefits were previously reduced by WEP;
Recent retirees who just started receiving benefits but saw reductions; and
Individuals who delayed claiming benefits, since their recalculated benefits could now be significantly higher.

These one-time lump sum deposits will be made directly into SSA-registered bank accounts by March 2025, covering the benefit increases back to January 2024, the month when WEP and GPO officially ended.

Since Social Security is paid one month in arrears, retirees should see higher monthly benefits starting in April 2025 (for March 2025 benefits).

Note: Some cases requiring manual review may experience delays. The SSA recommends waiting until April 2025 before inquiring about retroactive payments. Review the SSA website directly for the most up-to-date information. (5)

Totalization Agreements, the Repeal of WEP

The US has totalization agreements with over 30 countries, including Germany, France, the UK, Switzerland, and Canada, to prevent dual taxation on Social Security contributions.

While totalization agreements allow individuals to qualify for US Social Security benefits based on combined work history, WEP previously reduced benefits even for expats covered under these agreements.

With WEP repealed, expats under totalization agreements will now receive full benefits, restoring fairer treatment.

What’s Next? Implementing the WEP Repeal, Future Considerations

With WEP fully repealed, the focus now shifts to implementation and broader financial implications.

The SSA is adjusting benefits and issuing back payments, but processing could take months for complex cases;
Future Social Security reforms may impact expats, as policymakers grapple with the estimated $183 billion cost of repealing WEP and GPO over ten years; and
Retirees should review their Social Security records and monitor any new policy proposals that may affect international retirement benefits.

Final Thoughts: A Major Win for Expats

For decades, WEP unfairly penalized US expats, reducing Social Security benefits despite their full contributions to foreign pension systems.

With its long-overdue repeal, affected retirees should now:

Review their Social Security records to ensure accurate benefit calculations;
Prepare for retroactive payments and increased monthly benefits; and
Consult a cross-border advisor to optimize retirement planning.

The repeal of WEP is one of the most significant Social Security reforms in decades, finally addressing a long-standing issue for Americans abroad. While this change brings substantial financial relief, expats must continue to stay informed about future policy shifts that may impact their Social Security and retirement security.

References

Meet the Author

Arielle Tucker is a Certified Financial Planner™ and IRS Enrolled Agent. She's spent the last decade living between the US, Germany, and Switzerland. She is passionate about helping other U.S. expats and Americans living abroad achieve their dreams with the right financial and tax planning. Connected Financial Planning offers a complimentary introduction call for individuals and families seeking ongoing, comprehensive planning. You can schedule a call here.

What Windfall Elimination Provision Repeal Means for U.S. Expats