Shalina Schaefer Quoted in Indiana Lawyer: "Southern District Case Challenges Reduction of U.S. Social Security Benefits for Canadians"

Ice Miller of counsel Shalina Schaefer was quoted in the Indiana Lawyer article, "Southern District Case Challenges Reduction of U.S. Social Security Benefits for Canadians."

The article included:

The WEP is a component of Social Security designed to reduce a worker’s Social Security benefits by up to 50 percent because the worker is paying into a noncovered pension plan, said Shalina Schaefer, of counsel in Ice Miller LLP’s Indianapolis office.

Schaefer gave the example of a teacher paying into a state teacher’s retirement fund, which is noncovered because it does not pay directly into Social Security. Noncovered positions are also found in state and local government, she said.

According to Dehner, the WEP cannot apply based on Beeler’s Canadian pension because of a U.S.-Canada totalization agreement. The United States has executed totalization agreements with 26 countries, each of which is designed to eliminate dual social security taxation, Schaefer said. Additionally, totalization agreements can allow workers to receive retirement benefits, even if they would not be entitled to benefits without the agreement, she said.

Under the Social Security Program Operations Manual System, or POMS, Schaefer said the guidance is that workers who receive totalization benefits are not subject to the WEP. Instead, their benefits may be prorated to reflect the number of U.S. credits earned. Further, the online guidance notes that receipt of the OAS pension — which is based only on Canadian residence — won’t affect the way U.S. benefits are calculated.

Schaefer pointed to one situation in which Beeler’s benefits might have been rightly reduced: if she had earned the full 40 credits in America. In that case, the supplemental part of the totalization agreement would not have kicked in, which would mean the agreement might not protect her from the WEP.

Click here to read the full article.