windsong

I have been reading about US Social Security and UK state pension and am getting more and more confused about where I stand. Here is my situation.

I am eligible for a US social security state pension since I've paid in more than 30 years. However, after enquiring, I have found out that I have only paid in seven years UK contributions which is about what I estimated since I left in 1976.

Since I am now 63 and still looking for a job it was recommended to me that I apply for pension credit. I believe pension credit is based on pension contributions.

I am not yet taking my US social security and I am trying to defer that until I am at least 65 - if I can.

In order to to receive the pension credits The Department of Works and Pensions has sent me a complete list of of all the requirements they need and quite honestly it's a wonder they don't ask for my blood type as well. It's that long! They said they also need to know how much UK pension I would receive now because the pension credit would be reduced by that amount. Does this mean they would make me begin to take my UK pension even if it is a pittance or do they merely need it for calculation purposes? Not sure how this all works. (The seven years amounts to about £27 per week.)

I do receive a small company pension from the USA and I know that will decrease the pension credit and understandably.

In addition when I do finally receive both my UK pension and U.S. social security, does one reduce the other? I have paid in a full 30 years to the U.S. but only 7 at the moment to the UK.

Also if I begin to take this small pension now can I still pay in more NI contributions, either through working or through future voluntary contributions? If the answer is no I may decide not to take it unless the DWP makes me take it.

Editha

If you defer claiming your UK state pension at the same time as claiming pension credit, then your pension credit will still be reduced by the amount of state pension you would have received if you had claimed it.

Moreover, there would be no point in deferring your state pension while claiming pension credit, because you would not get an increased pension by doing so.

If you defer your US SS while claiming pension credit, then your pension credit will be reduced by the amount you would have received if you had claimed it.

Your US SS will not reduce your UK state pension. I don't know about whether your UK state pension will reduce your US SS, but I think it unlikely.

Is it worth you claiming pension credit, given your other income? Use the pension credit calculator to work it out. Your income might disqualify you.

I think you can pay up to 6 years of class 3 contributions to increase your pension. You should ask the HMRC to check your record and let you know if you can make voluntary contributions. You say that you've found out that you only have 7 years contributions, so it sounds as if you have asked the HMRC already. Their letter to you should have provided you with the information you need.

Mummy in the foothills

The US pension isn't reduced due to claiming your UK pension as you paid in more than 30 years. So no windfall elimination, or whatever the US call it.
I'd claim both pensions now, whats the point in deferring. Dh and I will claim SS at 62, I will get UK pension at 67 he won't get one.

nun

Deferring can be advantageous as you get a bigger benefit. For US SS I think you benefit grows 8% for every year you defer.

Vadio

Go here for the chart that shows your US SS benefit ratio if you take it before full retirement age: http://www.ssa.gov/planners/retire/1943.html

scot47

"Pension Credit" is the name for a means-tested benefit for those whose income falls below a certain level. The terminology, which changes often, can be confusing.

You may be able to make payment of National Insurance to fill in the gaps for missing years. Write to Contributiions Section, Overseas Branch in Longbenton, Newcastle and ask. You will need your NI Number.

Pulaski

This is correct. Once you have paid in 30 years of SS contributions it is all yours, there is no Windfall Elimination Provision aka "WEP"
If you are in good health, have a reasonable expectation of living into your late 70's or longer, and don't need the money now, this is bad advice, as Nun said. By defering US SS and the UK state pension you can bump up the annual payment quite substantially when you do start drawing it.

Editha

But, if you claim pension credit while deferring the UK state pension, the pension will not be increased, and at the same time the pension credit will be reduced by the amount of pension you could have been drawing. The OP says she is applying for pension credit.

Pulaski

Under the OP's specific circumstances I agree, although I could argue that she falls under the exception of "needing" to claim her pension immediately.

windsong

The whole thing is I am still waiting for a job to come along and meanwhile funds are getting a bit low. I do receive a company pension from a company in the U.S. but it doesn't cover everything by any means. I didn't even consider claiming anything but the CAB brought it up when we were discussing other things. I also was not aware I can't claim JSA because I am a woman over 62; it has to be pension credit. I don't thing I would be claiming pension credit for very long but it's taken a while to find the best recruiters. They have all said my CV and experience is really outstanding; however, I think that could also imply it might take longer than expected to find a job. My expected income level is 30-40k which I think isn't too bad here. But who knows, it could take another three or four months. I said I would accept temp work too so long as it doesn't take me two hours to get there and back but nothing has come along yet.

It's demoralising because if I work I am in a pretty fair income bracket. I really would rather not retire until I am 65. I am 63 now and if I wait just another two years my US SS increases by about 500 dollars a month.

I received a letter from the DWP and the list of items they want me to send in to show I am eligible to receive pension credit is ridiculous and they want it all by the end of this month and I am not sure I can get it all by that time. For example, they want proof I have applied for a UK licence which I have but I don't have it yet so I have nothing to send re this item.

I also don't know if collecting my minute (7 years paid in) UK pension now will render me unable to make up the last five years voluntary Class 3 contributions when I eventually do start work. It's actually quite expensive. It is about £3,000 to make up the last five years. I thought it would be a lot less.

Editha

You have some difficult choices to make.

I think that you can make up the Class 3 contributions after you start work, but you should check that.

It might be helpful to know that you can start claiming your state pension and then stop when you start working. The period between stopping claiming and starting again will count as a period of deferral with the resulting uplift in your pension amount. (That I am sure of).

windsong

Yes, it's a real dilemma, Editha. But you just never know when the right job will come along. If I can stop claiming when I start work it would be great because I could then turn 7 years paid in to 14. 7 + 2 worked + 5 voluntary contributions.

Editha

I'm pretty sure you can do that. But don't rely on my advice, check with HMRC. And remember the limitations if you claim pension credit.

formula

Save yourself the bother of filling in that long form. Pension Credit is an income based benefit. As you are already of US state pension age and merley choose to defer, you won't be allowed an income based benefit like Pension Credit if the US pension would take you over a total income of £151.20 a week (the pension credit cap for single people).

A claimant of UK state pension age could not choose to defer their UK state pension and then get income based benefits like Pension Credit. They could defer their UK state pension if they wanted to, but the amount they could be getting if they didn't defer, would still be used in their benefits calculations. Many find their other income based benefits reduce when they reach state pension age.


Be aware that benefits staff aren't immigration experts and they tend to pay out and check later. They will ask for all the benefit money back, including any passported benefits PC gives, if you should not have been claiming them. At some point in the future, HMRC and income based benefits are matched and this is when these things are found out if they are not declared and there is no time limit on taking back money belonging to the welfare state.

Make it very clear to them, in writing, that you are already of US state pension age and could be claiming your US state pension of x per week, but that you wanted to defer it. Then keep a copy of that.

If your US state pension added into your other pensions brings your income to over £151.20 a week, then they will refuse you Pension Credit. If they grant you PC, then check your award letter and see if your US state pension is on there as the onus is on you to ensure that the information on your claim is correct.

Giantaxe

It won't help the OP, but the moral of the story is if you're going to pay make-up voluntary contributions, do so when you are employed abroad, as you're then eligible to pay the - much cheaper - class 2 contributions.