Retired Canadians with U.S. work histories may qualify for Social Security benefits, in addition to the Canadian Pension Plan (CPP/QPP) and Old Age Security (OAS) benefits. But Social Security benefits are often less than expected - by as much as one-third, courtesy of the Windfall Elimination Provision (WEP) of the Social Security Act.

For those who are new to the fiasco, the WEP was enacted to prevent double-dipping by U.S. government employees who already receive federal employee retirement benefits.

But times change and budgets tighten.

A few years ago some U.S. government examiners began applying the WEP to limit the monthly benefit received by a broader range of people - including Canadian retirees who claim both Social Security and CPP benefits. (Note: the OAS is not an earnings-based pension program, so it is not an issue here).

What was the practice of some examiners recently has become Social Security Administration (SSA) official policy. The SSA now asks broad questions about foreign government pension benefits, such as whether the applicant is currently receiving foreign benefits or expects to receive them at some future date. SSA also asks detailed questions about U.S. and foreign work history - so that SSA does not have to rely on the applicant's own opinion about future foreign benefits.

Those lucky Canadians who receive Social Security benefits with no WEP reduction are also at risk. Remember that CPP benefits are reported on U.S. tax returns and, more than ever, the Internal Revenue Service is sharing tax information with SSA. Eventually, SSA may recalculate and reduce the monthly benefit according to the WEP formula.

To add insult, SSA may dramatically reduce the benefit for months or years to recover any overpayment.

Given this development, it no longer makes sense to delay filing for CPP to avoid the WEP. The decision about when to apply for Social Security and CPP should be based on other factors such as life expectancy and the higher monthly benefit one would receive by waiting to apply.

To Canadians who have paid into the U.S. Social Security system for years, the WEP benefit reduction may feel like robbery. It is. Just because SSA applies the WEP to Canadians does not make it right or legal. The WEP is supposed to apply to retired U.S. federal employees only - not to benefits under a bi-national Social Security treaty (called a "totalization" agreement). Also, if the treaty were properly applied, many Canadians would have the 30-plus years of combined Canadian and U.S. employment that would exempt them from the WEP.

For years, my firm has been fighting this misapplication of the law, on a case-by-case basis, by helping individual clients through the SSA appeals process. Last year, Keats Connelly began working with a law firm to fight the SSA's misapplication of the statute in federal court.

We have nothing to report from the courts yet. The wheels of justice turn slowly.

Brad Flecke is a financial planner with Keats, Connelly and Associates, Inc., based in Phoenix. Keats Connelly will be holding cross-border workshops in Indian Wells, Calif. on Jan. 23, West Palm Beach, Fla. on Jan. 29, Naples, Fla. on Jan. 31 and Feb. 2 in Phoenix. See keatsconnelly.com.

NEW BRITISH PENSIONERS OUTREACH

The Canadian Association of British Pensioners has re-launched its ongoing membership drive in an effort to fortify its fight against the

British government, which pays British expatriate pensioners living in Canada a smaller state pension than residents of several other countries, including the United States. British expats in Canada find their British pensions frozen, unlike in other jurisdictions where expats receive regular upgrades.

There is a new membership application form online at britishpensions.com. The CABP sends out regular newsletters offering members updates on its pension campaign in Britain.