Disenchanted

Wow, it appears I am giving too much credit to UK civil servants, they've always been most helpful at the international unit when I've called them. At least I get to speak with a live person in a reasonable amount of time, unlike when calling the SSA here.

Windsong - I just realized that your are already at full UK retirement age if your are a woman born in 1952, maybe that is why the DWP asked you how much UK state pension you were receiving! Again, confusing because you'd naturally think they would already know that answer. So it appears you are currently deferring your UK pension and have not taken early retirement for your US SS pension as your US SS retirement age is 66.

As far as making voluntary NIC contributions I believe you can now only pay for the last 6 years, which may not be 6 years based on your actual UK retirement date. Also, being back in the UK I'm not sure if they would be Class 2 or 3, but you do have time to "catch -up" if you have the funds.

Have you plugged any numbers in to the Pension Credit calculator? https://www.gov.uk/pension-credit-calculator If you haven't already done it go to the US SSA site and register an account, once you've done this you can get a detailed print out of your US SS pension along with a breakdown of how much you would get if you took early retirement. Armed with those numbers you can plug them in to the PC calculator and it will tell you if you will get anything. This is of course presuming the DWP uses your US SS early retirement entitlement amount, even if you don't take early retirement, to calculate your PC.

Disenchanted

Not wishing to complicate your situation more than it already is but this is only true with someone living and working in the USA, it is different if you are living and working abroad. Apparently you will be subject to the "Foreign Work Test", although I presume that if you are working then you would also not require, or be awarded, any UK pension credits anyway. Never the less, the foreign work test will still apply to you if you take early US SS retirement and not the usual reduction they apply to residents of the US.
https://americansabroad.org/issues/s...-security-faq/

I'm trying to figure out what effect becoming NRA by relinquishing citizenship or green card would have on the foreign work test. If you have a green card you may already be considered as abandoning your LTR status by the mere fact you moved to another country, intending to live there permanently.
Maintaining Permanent Residence | USCIS

windsong

Your message had me concerned for a minute, especially after reading the link you posted.

The following, however, is worrisome. It is about what happens to your US SS should you give up your green card or renounce US citizenship. It seems that if you do either you are then classified as a non-resident alien (NRA).

"As an NRA, it depends on your place of residence whether you can continue to collect Social Security in the long run. Depending on a combination of US bilateral agreements (or lack thereof), the your current citizenship, and your country of residence, it can range from only a minor tax difference to having Social Security payments discontinued after more than six months outside the US."

"If you have not been in the United States at any time during the six calendar months before your first month of entitlement, then to get your benefits started you must come to the United States and stay every hour of a full calendar month. For example, if you came to the United States on April 24, you could not leave the United States before June 1. This means that you would be present in the United States the entire month of May."

Note: after reading the link below I think US SS would still be paid because of the tax treaty between the U.S. And UK.

http://www.socialsecurity.gov/pubs/EN-05-10137.pdf

But what if that tax treaty ever ends? Those US citizens who decide to give up citizenship may not then be eligible to continue receiving US SS.

Pulaski

Given the amount of trade between Britain and the US, and the number and size of transatlantic businesses, never mind the trend towards more treaties for trade and cooperation, I would consider the risk of the US-UK Bilateral Social Security agreement being terminated or not being renewed, to be only a nominal/theoretical risk.

Giantaxe

Bilateral Social Security agreement to be more accurate. I can't see that being terminated either, but even if it were, note that there is a long list of countries with whom the US has no bilateral agreement that the US pays social security to citizens of (assuming they meet the 10 year qualification period).

In the long list of things one could worry about, this would feature fairly low on mine.

Giantaxe

I wasn't aware of that! That's a pretty draconian restriction, and makes taking social security early as a non-resident even more problematic.

windsong

Yes, I think your both right now that I think about it. Thank you!

Disenchanted

One interesting point I stumbled across was that even though the Department of Immigration (or should that be Homeland Security and Border Patrol?) may consider you've abandoned your LTR status if they believe you have left the USA permanently, and apparently even if you send back your green card and tell them to stick where the sun doesn't shine, the IRS still expects you to file a tax return.

Not until the IRS receive an "administrative order" from DoI/HS/BP stating you are now NRA will they extract their claws from your tender rear end, and even then, only after they've extracted the pound or two of flesh they tell you you owe them.

Bud the Wiser

Thanks for the link. Within the content it says....

Under the foreign work test, your monthly benefit is withheld for each calendar month that you work (or are deemed to have been available to work) more than 45 hours.

What is the definition of 'deemed to have been available to work'? I planned to take SS at 62 and taking early retirement back in the UK. I am currently classed as a NRA with the IRS.

Disenchanted

I haven't delved in to that, I posted it because of windsong, if the DWP cause her to take early US SS retirement and she get's a job then this rule will then apply rather than the reduction of the SS pension by a dollar for every two earned above the annual thresh hold.

If you go to the SSA POMS there is a wealth of information to wade through.
https://secure.ssa.gov/poms.nsf/home!readform

This is what popped up when I put "Foreign Work Test" in their search bar.
https://secure.ssa.gov/poms.nsf/poms...rt=1&count=500

EDIT: I've just breezed through the POMS section and it seems to be predominantly about a SS benefit based on Totalization Agreement, which will not usually be the case if you have enough US SS qualifying quarters. However, in reading the pertinent section on Foreign Work Test it seems it is used for retirees working abroad, I think I even saw somewhere it said it stayed in effect until 72 yo. https://secure.ssa.gov/apps10/poms.nsf/lnx/0302605005

windsong

Sitting here with a bout of the flu and reading the latest messages. I am now totally confused. Will I be quite safe in receiving my US SS should I decide to take it before age 66? That is, I won't have to return to the U.S. every six months to show some sort of residence there, will I?

I don't plan to take it before 66 but would like to hope there are no worries should I decide to do so. I do have a full 30 years of working in the U.S.

Disenchanted

Windsong,

Are you a US citizen or LTR (green card holder)?
You will not lose your US pension even if you are a USC and give up your citizenship. I presume you continue to file US tax return? If you have no intention of returning to USA to live I think you should consider giving up your USC/LTR to simplify your life. About the only negative I can think of is loss of "Medicare" but if you are not going to return to USA then it's unlikely you'll ever need it. I'm sure someone like "nun" can provide you with a more detailed insight.

Your main issue seems to be how DWP will treat your US SS pension and how it affects any UK Pension Credit. Also, bear in mind that because you may take your US SS pension early it will be reduced. If you take it early and are still working it will also be reduced based on how much you earn, however, the latter is for early retirees working in the US, it seems that early retirees working in another country endure a different type of test and reduction based on the "Foreign Work Test" rules. Reason given was that foreign currency exchange rates make far too difficult for the SSA to figure out how much your pension should be reduced.

This is why in and earlier post I posed the question - "What effect does relinquishing USC/RA status have on how US SS pension is paid out"? Becoming non-resident means you don't have to file US tax returns, you may have to pay an exit tax but only if you're worth more than $2M. If becoming non-resident negates WEP and/or Foreign Work Test then it may well be a worthwhile strategy to take.

windsong

Disenchanted, thank you for explaining.

I am a U.S. Citizen and also a UK citizen. I am not living in the U.S. any more so I would think that makes me nonresident but I am not quite sure exactly what nonresident means. Does it mean not living in the U.S. but still a citizen or does it refer to those who have given up citizenship and no longer living in U.S. I still have to file US tax returns at this point because I am a U.S. citizen. However, at some point I am considering giving up citizenship at which point I won't have to file tax returns.

I didn't know that early retirees living in another country had reduction in early pensions due to additional earnings calculated in a different way than if they lived in the U.S. I wonder if this means we lose more or gain, I wonder.

I tend to think that whether or not we give up resident status/citizenship, so long as we collect US SS "early" we would still have to deal with the Foreign Work Test.

By the way, I received a call from DWP pension credits asking for bank account information which totally surprised me because, due to the option to take US SS early, I thought I would get absolutely nothing. Tomorrow I will call and make sure they received my letter explaining the U.S. SS state pension option. I tend to think my letter has not yet filtered through to the correct party and that I will still collect zero.

windsong

Update: Receivec call from Pension Credits today asking for my banking information so they could begin to pay me. I was surprised and asked if they received my follow-up letter re US SS and she said they had. She said they had and they were still going to pay. I again stressed my letter do she said she would check with a specialist. Five minutes later I received another call and she said they do indeed take into account any eligibility to receive a U.S. SS early, although she did ask me how much tax would be withheld from it because the net amount might make me eligible to receive something. But it wouldn't. If I calculate the withholding for taxes and take the net amount the U.S. SS net would still be more than the total pension credits here. However, she told me I could still apply to the council for council tax and housing benefits.

Vadio

As you are resident in the UK, US SS benefits are ONLY taxable in the UK per the US-UK Tax Treaty. Accordingly, there should be no tax withheld by the US (or your former state of residence) from your benefit whenever you choose to receive it.

Your benefits are reportable on the foreign income pages of the UK Self-Assessment form, but as has been said many times, only 90% of your US SS benefit is subject to UK tax.