Douglas Goldstein, CFP®, Financial Planner & Investment Advisor
Ira Kasdan and Beth Johnson are from Kelley Drye Law Office in Washington D.C.
Ira is a partner there and Beth is a senior litigation associate and they have been working
on what is now called the Greenberg Settlement.
Douglas Goldstein, financial planner & investment advisor, interviewed Kasdan & Johnson on Arutz
Sheva Radio.
Douglas Goldstein: Tell us what’s the Greenberg Settlement about and what led to it?
Ira Kasdan: The Greenberg Settlement is an agreement that we have with the social security
administration not to reduce benefits to retirees who have been receiving old age benefits from
the National Insurance Institute of Israel or better known as Bituah Leumi.
The agreement came about because we filed a class action lawsuit against the agency
to rectify what had been an erroneous policy that they had been using for the last 10 or
more years.
We won a case very similar to this one about 10 years ago on a probono basis for an individual
whose name is Jerome Berger and at that time the agency had agreed to change its policy
and not to reduce benefits as a result of people receiving Bituah Leumi and they actually
agreed to do that in writing.
Unfortunately, they continue to apply this mistaken policy so we have to sue them again.
We are watching it.
We have been contacted by Rabbi [Frank Greenberg] who lives in Israel and he agreed to act as
a plaintiff in the case on behalf of others who are affected by this bad policy.
We show it to the as a class action as opposed to just for him as an individual in order
for the agency to correct its policy and have it apply uniformly to everybody.
Douglas Goldstein: The policy you’re referring to is something called WEP (Windfall Elimination
Provision) which is supposed to stop someone from getting a windfall, meaning if he gets
a foreign pension then he shouldn’t his full social security.
So why did that not apply in this case?
Beth Johson: The WEP is a provision that essentially level the [plain field].
So someone who is a low wage earner basically gets back a higher percentage of his contributions
in the social security in retirement versus someone who is a higher wage earner gets back
a lower percentage.
So the WEP is someone who works in a system where their payments in the retirement system
are not being covered by social security and is getting a pension as not covered by social
security, social security views that as a windfall to that person.
There are a lot of countries in which the retirement system is based on a person’s
earnings in employment and that’s under the US law the windfall elimination provision
is limited to.
Social security had been operating under the assumption for years that old-age benefit
from NII where pension essentially based on employment.
Our argument in this case and one that ultimately the social security administration agreed
with is that old-age benefits through NII are not based on earnings in employment.
They are available to people in Israel regardless of whether the person work or did not work
or how much they made or paid into the system.
Douglas Goldstein There’s no relationship between how many years you pay in and how
much you earn with how much you ultimately get out?
Beth Johnson: The eligibility for NII old-age benefit is based on a residency requirement
and a certain number of contribution but it’s not based on the amount of both contributions.
Douglas Goldstein: That’s the definition of a foreign pension?
Beth Johnson: Under the statute language, it’s basically pension that is based on
earnings and employment.
So our argument was because it wasn’t ultimately paid out under NII is not based on the amount
wherein that it doesn’t count.
It’s not necessary foreign pension but as a pension based on earnings and employment.
Ira Kasdan: The key here is that Bituah Leumi is not really a pension.
It is old-age benefit that people get regardless of whether or not they work and that was the
convincing argument that the agency recognized and therefore is not going to be applying
the WEP anymore to Bituah Leumi.
Douglas Goldstein: Does that happen in other countries as well or Israel special?
Beth Johnson: There are other countries that have a retirement system where payments are
not based on earnings and employment but they are the minority.
The vast majority including the US obviously you pay in social security system based on
whatever your earnings are.
There are countries that have a two-tiered system so it’s partially based on your earnings
and partially based on residency and other factors.
So social security has sort of a three-tiered system.
There are countries where it’s not based on work at all and there are countries where
it’s completely based on work and then there are countries where it’s two-tiered, it’s
partially based on work.
Douglas Goldstein: As a
result of this decision, for years many people have had their social security
payments cut, can they go back and get the money that they weren’t paid?
Ira Kasdan: Under the agreement, there are two benefits for people.
First of all, going forward, social security administration will no longer reduce benefits
due to people receiving Bituah Leumi but under the agreement as well, they are willing to
pay back people who have been erroneously reduced all the way back to September 4, 2004.
So people will be able to get their past due benefits back to that time if they participate
in this lawsuit.
Douglas Goldstein: Do they have to do anything or will they just get a big check one day?
Ira Kasdan: They have to put in a review request form, complete that form and send that social
security administration.
SSA then will contact them to confirm that they are recipients of the Bituah Leumi but
they will also be asked whether or not they are receiving actual pension money as well
and obviously they have to reply to that question and once social security has all the information,
they’ll go back, review all the files and they’ll recalculate the benefits of people
should be getting.
Douglas Goldstein: Does this apply if someone has already passed away, can his estate apply?
Ira Kasdan: Yes, personal representatives of the estate can send us the form and they
will get the same review for people who passed away and ultimately the money goes to the
heirs.
Beth Johnson: One clarification is that the agency has agreed to paid past due benefits
back in 2004 and that includes anyone who started receiving benefits even after that
date.
So anytime someone has received the benefit between 2004 and the present, they are potentially
eligible with the settlement.
Douglas Goldstein: Let’s go into a little more of what you said which is this seems
benefit to people receiving Bituah Leumi.
Let’s give the example of someone who worked in America for 20 or 30 years then move to
Israel and worked here and has both a work pension which is often called Bituach Menahalim
as well as Bituah Leumi.
Let’s put aside the Bituah Leumi, the national insurance, how does the work pension affect
his social security payments?
Ira Kasdan: The work pension will affect the calculation that the social security administration
will make in determining what the appropriate benefits are.
There are certain foreign pensions that SSA is aware of in Israel that will affect the
calculation such as hospital pension, the pension, pension, something called manager’s
pension as well.
So those people who do receive those pensions will not automatically have their benefits
increase so to speak.
One should they do contact social security and they confirm that they have Bituah Leumi
and also these additional pensions, there will be another calculation that the agency
will be making to determine what the final appropriate amount these people should get.
Douglas Goldstein: Those other pensions you mentioned like the hospital, those would subject
the person to WEP so his social security would be lowered, is that what you’re saying?
Ira Kasdan: That’s correct.
Douglas Goldstein: If someone is looking to make aliyah now, sometimes people say if you’re
going to claim your social security, you should either claim it in the United States or in
Israel, does that matter when someone is getting set up, make plans one way or the other or
it just doesn’t make a difference where you are?
Ira Kasdan: That’s actually a difficult question for us to answer but we are aware
of a lot of people who have set up the receipt of their Social Security Administration benefits
in the United States.
I could tell you from this case that the mail system necessarily come and go from the United
States to Israel or from Israel to United States so it might be advisable for people
to make sure that they get their checks in the United States or directly deposit in bank
accounts here in the States.
Douglas Goldstein: Is there a difference in the amount you’ll ultimately get depending
on where you actually file?
Ira Kasdan: We are not tax attorneys and we’re not specialists necessarily in SSA benefits.
I would presume that it should be the same but that’s beyond our case actually.
Douglas Goldstein: How can our listeners follow you, follow your work and make sure that they
get all the benefits from the work that you thankfully have done?
Ira Kasdan: They could email us.
We set up a special email address for
the case and it is ssacase@kelleydrye.com.
We have a special phone number as well for the case and it’s 202-945-6611 here in the
states and in general, they could find information about the case if they go on to the social
security administration site.
There’s a special website I would set up for this case and that could be found at www.ssa.gov/greenberg
and you can find all the information you really need to know about this case.