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2bretired Sep 22nd 2011 7:42 pm

UK state pension and USA social security
 
Just received my UK form for my UK state pension. I presently receive my USA social security and was wondering if I can also collect my UK state pension as I have been paying in my voluntary NIC over the years and have the required years for full UK state pension.

I think I can but am a little worried about putting my USA social security number on the form and opening up a can of worms. I will be claiming the UK pension on my US tax return.

Any suggestions.

Bob.

J.J Sep 22nd 2011 8:03 pm

Re: UK state pension and USA social security
 

Originally Posted by 2bretired (Post 9636738)
Just received my UK form for my UK state pension. I presently receive my USA social security and was wondering if I can also collect my UK state pension as I have been paying in my voluntary NIC over the years and have the required years for full UK state pension.

I think I can but am a little worried about putting my USA social security number on the form and opening up a can of worms. I will be claiming the UK pension on my US tax return.

Any suggestions.

Bob.

From what I have read on the subject, you will be entitled to receive in full whatever UK pension you have qualified for.

Explain to the UK Pension service that you want no Tax deducted because you are not resident, but then it is likely to be below your UK personal allowance anyway.

But be aware that US will reduce your US SS by an amount calculated on your other (in your case UK) pension, which you must tell them about.

This occurs under the ruling of Windfall Elimination Provision (WEP) and roughly will amount to $1 reduction in US SS for every $2 dollars of 'other' pension, but no greater reduction than 50%. So at worse you will receive only half of your UK pension - but half is better than none.

http://www.ssa.gov/pubs/10045.html

Here's a thought; If you defer your UK pension it will increase by a % growth until the time you take it - so you may consider doing the figures, take it now and lose part your US to WEP - or defer for a larger UK pension later and keep your full US until you eventually take your UK and consequent WEP impact..

dunroving Sep 22nd 2011 9:43 pm

Re: UK state pension and USA social security
 

Originally Posted by J.J (Post 9636772)
From what I have read on the subject, you will be entitled to receive in full whatever UK pension you have qualified for.

Explain to the UK Pension service that you want no Tax deducted because you are not resident, but then it is likely to be below your UK personal allowance anyway.

But be aware that US will reduce your US SS by an amount calculated on your other (in your case UK) pension, which you must tell them about.

This occurs under the ruling of Windfall Elimination Provision (WEP) and roughly will amount to $1 reduction in US SS for every $2 dollars of 'other' pension, but no greater reduction than 50%. So at worse you will receive only half of your UK pension - but half is better than none.

http://www.ssa.gov/pubs/10045.html

Here's a thought; If you defer your UK pension it will increase by a % growth until the time you take it - so you may consider doing the figures, take it now and lose part your US to WEP - or defer for a larger UK pension later and keep your full US until you eventually take your UK and consequent WEP impact..

Doesn't the Windfall Provision only apply to people below a certain level of SS contributions? I thoght if you had something like 30 years of SS contributions, the Windfall Provision didn't apply? Maybe I dreamt that? :confused:

2bretired Sep 22nd 2011 10:46 pm

Re: UK state pension and USA social security
 
As far as I understand I do not think the WEP effects me as I got full USA social security from work performed in the USA since 1976. My UK pension is derived from the years worked before I emigrated to the USA and the payment of voluntary NI contributions ever since to make up the difference.

I suppose the question I have is should I put my US social security number on the UK form as requested.

Bob

nun Sep 22nd 2011 11:07 pm

Re: UK state pension and USA social security
 

Originally Posted by 2bretired (Post 9637029)
As far as I understand I do not think the WEP effects me as I got full USA social security from work performed in the USA since 1976. My UK pension is derived from the years worked before I emigrated to the USA and the payment of voluntary NI contributions ever since.

Bob

You're golden. You are entitled to bothe SS and UK state pension and as you have over 30 years of US SS payments there's no WEP. Also these SS type government payments are only taxable where you reside

2bretired Sep 23rd 2011 12:11 am

Re: UK state pension and USA social security
 
Thanks Nun,
I was just concerned at putting the wrong info on the form. What is my nationality. I am a dual national British and a USA citizen. I am not a dual national as far as the US in concerned but the UK does not care. Apparently you never loose your British nationality if you were born there.
I presume the reason they want my US social security number on the form is if I did not have enough years there is some sort of reciprocal agreement.

I took my US social security early ( thus reduced) due to lay off and hoped that my UK pension would make up the difference.

Bob

nun Sep 24th 2011 5:37 pm

Re: UK state pension and USA social security
 

Originally Posted by 2bretired (Post 9637138)
Thanks Nun,
I was just concerned at putting the wrong info on the form. What is my nationality. I am a dual national British and a USA citizen. I am not a dual national as far as the US in concerned but the UK does not care. Apparently you never loose your British nationality if you were born there.
I presume the reason they want my US social security number on the form is if I did not have enough years there is some sort of reciprocal agreement.

I took my US social security early ( thus reduced) due to lay off and hoped that my UK pension would make up the difference.

Bob

If you have enough credits to qualify for pensions form US and UK the reciprocal agreement isn't relevant. I don't se why you need to put SS number on your UK form surely your NI number is what they want. However, where it might be relevant is in proving you are not resident in the UK. You need to get the IRS to communicate with HMRC so that no UK tax is taken out of your UK SS as it is only taxable in the US.

2bretired Sep 25th 2011 4:04 pm

Re: UK state pension and USA social security
 
Nun,
The form IPCBR1 to fill out is like a mini booklet 20 pages long.

Part 6 'About other benefits or entitlements' the question "Are you, your husband,wife getting social security benefits from another country"

Part 7 'Did you pay into the social security scheme of that country' if so they want social security reference number and address.

Part 10 Declaration. This is were you declare the information given on this form is correct and complete.

I also got form IPC1394 direct payment of pension into my USA bank.

I will be declaring my UK pension on my US tax return. I was told the UK does not tax state pensions so informing IRS is not a concern.

The only reciprocal agreement I am concerned about is any cost of living raises. Because the USA has reciprocal agreement I supposed to get any UK raises.

My concern is privacy not giving information that is not necessary to receive my UK pension. But if I do not give what I think is unnecessary information I am in effect falsifying my declaration.

I hope this helps anybody else in the same boat.

Bob

nun Sep 25th 2011 7:36 pm

Re: UK state pension and USA social security
 
If there is a place to enter SS the do it. As you live in the US you should get UK SS index linked increases. The US SS will want to know about your UK pension for WEP purposes, but if you have 30 years of SS credits there won't be any WEP, but your UK SS will be taxed by the IRS as you must enter it on your 1040

mattlmt Jun 18th 2012 9:32 pm

Re: UK state pension and USA social security
 

Originally Posted by 2bretired (Post 9637029)
As far as I understand I do not think the WEP effects me as I got full USA social security from work performed in the USA since 1976. My UK pension is derived from the years worked before I emigrated to the USA and the payment of voluntary NI contributions ever since to make up the difference.

I suppose the question I have is should I put my US social security number on the UK form as requested.

Bob

Hi Bob,

I'm actually in the same position and would appreciate any feedback you might now have on what to expect! Did you put your SS# on the UK form?

I'm taking US SS now, early at 62, and will receive a UK State Pension in 2014 of which I have made Class 3 Voluntary NI Contributions for seventeen of the thirty years required for a full pension. Thirteen years of my UK pension is calculated before my emigration to the US in December 1975 and is reported as credits.

The small amount of work I did just before emigration on the new NI system is shown as the NI Class 1 Contribution amount.

As you may know, the UK changed the system in April 1975 to a work based pension from, what I understand, a residency based pension. Although I worked in the UK before April 1975, my understanding is that any pension I receive related to pre-April 1975 is not subject to WEP. :fingerscrossed:

My understanding of the WEP is that it is based on Worked Income, not on Voluntary Class 3 NI contributions.

If you have had 30 years of Substantial Earnings in the US you will not be subject to WEP for your UK Pension under any circumstances. You can see what is meant by Substantial Earnings by following this link:

http://www.ssa.gov/pubs/10045.html#a0=3

Any feedback about your experience with the process would be greatly appreciated.

Thank you,

Matt
[email protected]

2bretired Jun 19th 2012 6:25 pm

Re: UK state pension and USA social security
 
Matt,
Presently I am in England taking care of my parents and all my records are in the USA. From my memory, WEP did not effect me as I had 30 years USA SS payments. Yes I think I put my SS on the UK form. I had the full amount of years for full UK pension. 13 years of pre 1976 work earning the rest paid in as voluntary payments until they said I did not need to pay any more as they reduced the years required. Presently I get full UK pension which is eligible for increases. They can pay it into any bank worldwide(excluding some country's) at the prevailing exchange rate.The bonus is my wife also gets a reduced UK pension when she is 62 based on mine and she is a USA citizen.

Sorry I cannot be any more help, as I said all my record are at home in the USA. I will be here for another 3 weeks. By the way all this extra pension is taxed as ordinary income. Off the top of my head it is classed as an annuity on your 1040.

Bob

mattlmt Jun 19th 2012 6:42 pm

Re: UK state pension and USA social security
 

Originally Posted by 2bretired (Post 10127817)
Matt,
Presently I am in England taking care of my parents and all my records are in the USA. From my memory, WEP did not effect me as I had 30 years USA SS payments. Yes I think I put my SS on the UK form. I had the full amount of years for full UK pension. 13 years of pre 1976 work earning the rest paid in as voluntary payments until they said I did not need to pay any more as they reduced the years required. Presently I get full UK pension which is eligible for increases. They can pay it into any bank worldwide(excluding some country's) at the prevailing exchange rate.The bonus is my wife also gets a reduced UK pension when she is 62 based on mine and she is a USA citizen.

Sorry I cannot be any more help, as I said all my record are at home in the USA. I will be here for another 3 weeks. By the way all this extra pension is taxed as ordinary income. Off the top of my head it is classed as an annuity on your 1040.

Bob

Bob, thanks for your reply. It was very helpful. I'm also making sure my wife (who is American born) will receive some UK Pension in a couple of years when I draw UK SS.

All the best with your parents and thanks again.

Matt

hutchiebug Jun 22nd 2012 8:51 pm

Re: UK state pension and USA social security
 
Hello all - I was so glad to find this thread. I am a 63 year old expat from Scotland. I will receive a UK state pension, currently deferred, derived from a combination of work credits and voluntary NICs. I will also receive US Social Security when I retire.

Now for the sticky part - I am a FERS Federal government employee and I understand all FERS employees are exempt from WEP. Does that mean I won't be affected by WEP? Will my foreign UK pension, earned between 1972-1980 when I was a UK resident, UK citizen and UK employee, cause complications?

I have received many different answers. Any help from the audience?

mattlmt Jun 26th 2012 11:37 pm

Re: UK state pension and USA social security
 

Originally Posted by hutchiebug (Post 10133850)
Hello all - I was so glad to find this thread. I am a 63 year old expat from Scotland. I will receive a UK state pension, currently deferred, derived from a combination of work credits and voluntary NICs. I will also receive US Social Security when I retire.

Now for the sticky part - I am a FERS Federal government employee and I understand all FERS employees are exempt from WEP. Does that mean I won't be affected by WEP? Will my foreign UK pension, earned between 1972-1980 when I was a UK resident, UK citizen and UK employee, cause complications?

I have received many different answers. Any help from the audience?

Nun, will probably able to tell you for sure. It looks to me as if you will have a GPO/WEP reduction on your SS benefit - calculated from the earned part of your UK Pension - unless you have thirty years of Sustainable Earnings in the United States.

Probably best to check with Social Security directly.

Be thankful though you didn't work thirty years in Scotland because you'd have to work another thirty years here, earning at the Sustainable Earnings threshold every year, to avoid a WEP reduction to your social security benefit. By that time you probably wouldn't care!

hutchiebug Jun 27th 2012 12:46 pm

Re: UK state pension and USA social security
 
mattlmt: Thank you very much for your reply. I am not eligible to receive private posts yet, either that or it's too early in the day for me to figure it out. I was hoping my FERS status would provide immunity; however I have just a few years left to the finish line. Every year provides less WEP impact. SSA have provided fuzzy responses (mail, phone, in person) and I'm trying to get a definitive response to help with my retirement planning.

JackF Jul 4th 2012 6:21 pm

Re: UK state pension and USA social security
 
Hello all,

I a British citizen living and working as a permanent resident in the US, and have been for the last four years. I am 28, and only worked in the UK (with some gaps) from age 18 until I moved at age 24. I have not been paying into my UK pension since I left, and have been taxed for US social security etc. Obviously I have not received any pension payments either.

My question is, does the UK pension need to be reported on a US tax return before being paid to the recipient, and does the UK pension accrue interest which would be reportable before actually being paid out?

Thanks,

Jack

nun Jul 4th 2012 6:56 pm

Re: UK state pension and USA social security
 

Originally Posted by JackF (Post 10154786)
Hello all,

I a British citizen living and working as a permanent resident in the US, and have been for the last four years. I am 28, and only worked in the UK (with some gaps) from age 18 until I moved at age 24. I have not been paying into my UK pension since I left, and have been taxed for US social security etc. Obviously I have not received any pension payments either.

My question is, does the UK pension need to be reported on a US tax return before being paid to the recipient, and does the UK pension accrue interest which would be reportable before actually being paid out?

Thanks,

Jack

If you mean the UK state pension the answer is no to both questions.

If you are talking about a UK private pension covered under the US/UK tax treaty the answers are also no, although you should declare the pension for treaty purposes.

JackF Jul 5th 2012 12:22 am

Re: UK state pension and USA social security
 
Ok, good to know, thank you for your reply. It is the UK state pension I am referring to. So the US is essentially ok being unaware of this pension (neither reported or taxed) until such time as HMRC starts actually sending me money?

nun Jul 5th 2012 12:48 am

Re: UK state pension and USA social security
 

Originally Posted by JackF (Post 10155194)
Ok, good to know, thank you for your reply. It is the UK state pension I am referring to. So the US is essentially ok being unaware of this pension (neither reported or taxed) until such time as HMRC starts actually sending me money?

Yes totally. When you start getting the UK state pension, and assuming you are a US resident or US citizen, then you have to include it as income on your 1040. There is some debate as to whether the UK state pension is US taxable if you are a US citizen living in the UK though.

JackF Jul 5th 2012 1:53 am

Re: UK state pension and USA social security
 
Unless the unforeseable happens, I hope to be a citizen and still resident of the US by that point, so that shouldn't be a bridge I have to cross.

JackF Jul 5th 2012 1:59 am

Re: UK state pension and USA social security
 
oops, misread your reply. That IS a bridge I will have to cross as US resident and citizen. Boo

Incidentally, is there a nutshell version (or indeed, thread about) what the US tax differences are between being a permanent resident and US citizen?

nun Jul 5th 2012 3:10 am

Re: UK state pension and USA social security
 

Originally Posted by JackF (Post 10155294)
oops, misread your reply. That IS a bridge I will have to cross as US resident and citizen. Boo

Incidentally, is there a nutshell version (or indeed, thread about) what the US tax differences are between being a permanent resident and US citizen?

There aren't any.

Not sure I understand your first comment, as a US citizen and resident you will be taxed in the US on any UK state pension.....it will be free of UK tax.

JackF Jul 5th 2012 4:10 am

Re: UK state pension and USA social security
 
Got it, thank you :) I need only think about the Uk pension in thirty five years or so, when I actually start benefiting from it. As to the differences between citizenship and residency for tax purposes, I saw other posts that indicated this would be a big deal and that the choice to become a citizen carried a lot of 'implications', aside from the personal ones.

nun Jul 5th 2012 12:02 pm

Re: UK state pension and USA social security
 

Originally Posted by JackF (Post 10155411)
Got it, thank you :) I need only think about the Uk pension in thirty five years or so, when I actually start benefiting from it. As to the differences between citizenship and residency for tax purposes, I saw other posts that indicated this would be a big deal and that the choice to become a citizen carried a lot of 'implications', aside from the personal ones.

Becoming a US citizen has a lot of tax implications if you ever move outside the US as the US taxes on citizenship as well as residency. If you are just a permanent resident, when you leave the US, you can leave any requirement to file US taxes behind too, you can't if you are a US citizen.

dunroving Jul 5th 2012 12:16 pm

Re: UK state pension and USA social security
 

Originally Posted by nun (Post 10156058)
Becoming a US citizen has a lot of tax implications if you ever move outside the US as the US taxes on citizenship as well as residency. If you are just a permanent resident, when you leave the US, you can leave any requirement to file US taxes behind too, you can't if you are a US citizen.

I thought there was a requirement for GC holders to file for a particular number of years after leaving the US ... or maybe it was something else I just dreamt about. :confused:

nun Jul 5th 2012 1:54 pm

Re: UK state pension and USA social security
 

Originally Posted by dunroving (Post 10156093)
I thought there was a requirement for GC holders to file for a particular number of years after leaving the US ... or maybe it was something else I just dreamt about. :confused:

Under the legislation that came in in 2008 if you expatriate as US citizen or GC holder you will have to pay an exit tax if your average net taxable income for the last 5 years was over $139k adjusted for inflation or your net worth is more than $2M or you're not up to date with your tax filing for the last 5 years. You have to file an 8854 expatriation form, but after that an ex GC holder will be a NRA and I don't think that the previous requirement to file for 10 years after expatriation still holds. If you continue to have US based accounts you'd obviously have to file with the IRS for those.

http://www.irs.gov/pub/irs-pdf/p4588.pdf

dunroving Jul 5th 2012 2:11 pm

Re: UK state pension and USA social security
 

Originally Posted by nun (Post 10156267)
Under the legislation that came in in 2008 if you expatriate as US citizen or GC holder you will have to pay an exit tax if your average net taxable income for the last 5 years was over $139k adjusted for inflation or your net worth is more than $2M or you're not up to date with your tax filing for the last 5 years. You have to file an 8854 expatriation form, but after that an ex GC holder will be a NRA and I'm not sure that the previous requirement to file for 10 years after expatriation still holds.

Heaven forbid that tax rules would be simple and stay the same ... although this new arrangement looks better for most people.

Foamy Jan 28th 2013 8:27 pm

Re: UK state pension and USA social security
 
From what I read the WEP reduction in US social security only applys if you did NOT pay into the social security system of the foreign country where you earned wages.
So, if I worked in the UK for a number of years and am entitled to a UK pension, and I paid 25 years into the USA social security system then I can receive UK Pension (Not Taxed) AND US social security without losing money due to the WEP program - Am I right??
Of course it has to be reported to the IRS I assume.

Mummy in the foothills Jan 29th 2013 1:40 am

Re: UK state pension and USA social security
 

Originally Posted by Foamy (Post 10511202)
From what I read the WEP reduction in US social security only applys if you did NOT pay into the social security system of the foreign country where you earned wages.
So, if I worked in the UK for a number of years and am entitled to a UK pension, and I paid 25 years into the USA social security system then I can receive UK Pension (Not Taxed) AND US social security without losing money due to the WEP program - Am I right??
Of course it has to be reported to the IRS I assume.

If you work in US (earning a substantial amount) paying into SS for 30 years or more you don't lose any of the pension due to the WEP, under 30 years and they will reduce your US pension as you are receiving UK pension and any other pensions you might have.

J.JsOH Jan 29th 2013 8:45 am

Re: UK state pension and USA social security
 

Originally Posted by Foamy (Post 10511202)
From what I read the WEP reduction in US social security only applys if you did NOT pay into the social security system of the foreign country where you earned wages.
So, if I worked in the UK for a number of years and am entitled to a UK pension, and I paid 25 years into the USA social security system then I can receive UK Pension (Not Taxed) AND US social security without losing money due to the WEP program - Am I right??
Of course it has to be reported to the IRS I assume.

WEP applies to pensions received from salaries that did not contribute to US SS.
So even though a person may pay into the US SS system through US employment it does not excuse that person from WEP on the non-contributing pension - unless the 30 year rule applies as Mummy in Foothills rightly says.

dunroving Jan 29th 2013 8:57 am

Re: UK state pension and USA social security
 

Originally Posted by J.JsOH (Post 10512076)
WEP applies to pensions received from salaries that did not contribute to US SS.
So even though a person may pay into the US SS system through US employment it does not excuse that person from WEP on the non-contributing pension - unless the 30 year rule applies as Mummy in Foothills rightly says.

I've read this several times as it appears every time this question is asked - but what exactly does it mean?

During the years I worked in the UK, I paid UK NI, and for the years since I have been back (2006) until I retire (who knows when), into a separate employer pension (a university lecturer's pension scheme).

During the years I woorked in the US, I paid US SS, and also into a separate work "pension" (a 401k).

For 7 years (1983-1990) I paid neither as I was in the Bahamas, and I think from 1990 to about 1994 I paid neither (non-working student).

These years were all separate (I have never done work in the two countries at the same time).

Does this mean my US SS will get WEP'd by my UK state pension, by my UK employer pension, or by both?

And am I correct in thinking there is a "bottom line" by which my US SS won't get WEP'd any more (e.g., can only be WEP'd by up to 60%, or something similar)? Or could I lose it all?

holly_1948 Jan 30th 2013 4:50 am

Re: UK state pension and USA social security
 
If I understand you correctly, you are asking whether a UK state (DPS) old age retirement pension is considered by Uncle Sam to be "non-contributing".
My understanding is that the years that accrue to Class 1 and/or Class 2 contributions are considered to be "non-contributing". But Class 3 payments are "contributing".
And pro rata to the number of years if mixed.

dunroving Jan 31st 2013 10:34 am

Re: UK state pension and USA social security
 

Originally Posted by holly_1948 (Post 10513978)
If I understand you correctly, you are asking whether a UK state (DPS) old age retirement pension is considered by Uncle Sam to be "non-contributing".
My understanding is that the years that accrue to Class 1 and/or Class 2 contributions are considered to be "non-contributing". But Class 3 payments are "contributing".
And pro rata to the number of years if mixed.

That is helpful - though it seems strange they differentiate betwee the two types of NICs.

I was also asking whether my UK work pension (a final salary scheme for university employees) would also be counted as non-contributing, thereby reducing my SS pension even further.

I also wondered if there is a bottom line below which my SS won't be WEP'd (e.g., regardless of how much WEP-able non-contributing pension that is counted against my SS, it would never fall below X% of my full entitlement)?

Or is it possible that I could get WEP'd down to zero SS pension? :(

theOAP Jan 31st 2013 3:25 pm

Re: UK state pension and USA social security
 

Originally Posted by dunroving (Post 10516770)
I was also asking whether my UK work pension (a final salary scheme for university employees) would also be counted as non-contributing, thereby reducing my SS pension even further.

Yes, a UK works pension will be included in the WEP calculations to reduce your SS monthly payout.


Originally Posted by dunroving (Post 10516770)
I also wondered if there is a bottom line below which my SS won't be WEP'd (e.g., regardless of how much WEP-able non-contributing pension that is counted against my SS, it would never fall below X% of my full entitlement)?

Or is it possible that I could get WEP'd down to zero SS pension? :(

There is a lower limit (%) you are guaranteed.

http://www.socialsecurity.gov/retire2/wep-chart.htm

Go to the chart at the bottom of the page. If you were to retire in 2013, the maximum amount that WEP can be reduced for anyone is $395.50.

So, an example:
You apply for US SS in 2013.
You have 15 years of substantial earnings for US SS contributions, and as a result, your monthly benefit (for your particular work history) is $1000.
You have 21 years of NIC Class 1 contributions to the UK State Pension, and 18 years contribution to a UK company pension plan. The monthly amount of the two combined is £800 ($1200 - there is no set exchange rate for when you apply, it varies day to day. But once calculated, the US SS amount in dollars stays the same forever. If the payment is made in the UK, the exchange rate on the date of each individual payment for the 'set' US dollar amount will be used for each month.).
The WEP calculation is:
You have over $791.00 (the maximum first break point) a month of foreign non-contributing pensions.
(Where did I get $791.00 from? See here:
http://www.socialsecurity.gov/pubs/10045.html#a0=3 )

Your US SS payment would be $1000 minus $395.50 (the maximun amount, 50%, since you had less than 20 years), or $604.50 a month. Your UK pensions remain at $1200 a month. So, your total pension from both US and UK sources would be $1,804.50 a month.

If you have between 20 and 29 years of substantial earning (US SS), the percentage maximum for reduction will change according to the chart. If your US SS monthly payout (before WEP) is below $791 (for 2013), and your years of substantial earnings is below 20, the maximum your SS payout can be reduced by is 50%. Therefore, if the US amount before WEP was $500, and the UK amount was $1200, the US SS would only be reduced to $250 by WEP.

mariettajohn Feb 6th 2013 11:51 am

Re: UK state pension and USA social security
 
The first thing I want to say this is a minefield is it not.
Every one seems to have a different set of circumstances, these are mine, I worked in the UK for roughly 18 years, I have got a projection of a UK pension that I will receive starting this August. I have checked my substantial earnings in the US for the thirty year period, so the WEP will not apply to me.
I also started to receive a occupational pension which is fairly small and I have paid directly into a bank account I have in the UK, my parents are still alive and living in the UK so I use their address on that bank account, I am aware of the Tax limits ETC on foreign accounts.
My question is this, my understanding is that three months before I become eligible for my UK pension the HRMC will send me a form to apply for it and on that form it will ask if i will be getting SS from another country, and it may if the UK as an agreement with that country go towards my SS payment in that country. I think the UK and US have such an agreement but I was wondering if it will increase my SS payments in the US, what i wanted to do was to get my UK pension paid directly into my Bank account in the UK, and keep my two payments apart. Any input would be gratefully appreciated.

nun Feb 6th 2013 1:58 pm

Re: UK state pension and USA social security
 

Originally Posted by mariettajohn (Post 10528403)
My question is this, my understanding is that three months before I become eligible for my UK pension the HRMC will send me a form to apply for it and on that form it will ask if i will be getting SS from another country, and it may if the UK as an agreement with that country go towards my SS payment in that country. I think the UK and US have such an agreement but I was wondering if it will increase my SS payments in the US, what i wanted to do was to get my UK pension paid directly into my Bank account in the UK, and keep my two payments apart. Any input would be gratefully appreciated.

As you qualify for both US and UK state pension on the basis of your contributions into each individual scheme there is no need to apply contributions in one scheme to the other. Any US SS you get will have no effect of your UK state pension, but your UK state pension might reduce your US SS through WEP, if you don't have a complete SS contributions record of 30 years.

If you do have your UK state pension paid into a UK bank make sure HMRC has your tax code correct and that no UK tax is withheld at source!

theOAP Feb 6th 2013 2:00 pm

Re: UK state pension and USA social security
 

Originally Posted by mariettajohn (Post 10528403)
..... I worked in the UK for roughly 18 years, I have got a projection of a UK pension that I will receive starting this August. I have checked my substantial earnings in the US for the thirty year period, so the WEP will not apply to me.

My question is this, my understanding is that three months before I become eligible for my UK pension the HRMC will send me a form to apply for it and on that form it will ask if i will be getting SS from another country, and it may if the UK as an agreement with that country go towards my SS payment in that country. I think the UK and US have such an agreement but I was wondering if it will increase my SS payments in the US, what i wanted to do was to get my UK pension paid directly into my Bank account in the UK, and keep my two payments apart. Any input would be gratefully appreciated.

As you mention, if you have 30 years of substantial earnings in the US you will not be WEPed due to any UK pension. You will receive your full SSA entitlement.

For the UK: 18 years will qualify you for your UK State Pension. You will receive an amount based on 18 years, but the amount may vary depending upon which set of rules are in force for the UK State Pension at the time of applying.

In your particular case, your UK pensions will not alter or add to your US SS. Your US SS or other US pensions will not alter or add to your UK State Pension amount. Due to meeting the required qualification for each they will be handled as normal, and there will be no interaction between the two. Neither will be adjusted due to the other.

The situation is handled differently if you do not have sufficient contributions to qualify for either the US SS or UK State Pension. The Totalization Treaty can come into play. This may be the cause of confusion for many.

The information regards pensions from other countries on the UK State Pension application is to ensure those who may not qualify for a pension in either the UK or the other country, may in fact receive a relevant pension by way of treaties/agreements.

For example, I had more than 10, but less than 20 substantial years in the US; 18 years NIC in the UK plus company pensions; and 5 years State contributions and company pensions in another EU country. The calculations were as follows:

US: US SS was WEPed due to the UK and other EU State and company pensions. The US SS was reduced by about 30%.

UK: The UK State pension was calculated at 18/45ths (or 43rds, I forget which). Those were the rules for calculation when I applied. All other UK or foreign pensions, including US SS, had (and will have in the future) no consequence if you qualify for the UK State Pension based on sufficient contributions.

Other EU country: Because I had insufficient years of contributions to this State pension, I would not have qualified. BUT, due to an EU treaty/agreement, my years of UK contributions were considered, and I was granted the State Pension for the other EU country. This only occurred due to a ruling that the application for the other EU country must be submitted by the UK DWP. I now receive a State Pension from the other EU country, but for 5 years only (of course, every little bit helps).

On the application for the UK State pension, I noted both US and EU pensions, but I did note that I would make an application to the US SSA directly, and for the UK DWP to stay away (I contacted the Federal Benefits Unit at the US Embassy in London directly). As mentioned before, it was imperative for the UK DWP to be involved in obtaining the other EU country State pension.

dunroving Feb 6th 2013 3:41 pm

Re: UK state pension and USA social security
 
This stuff still really does my head in.

I have been looking at the US SS Web site, specifically regarding being WEP'd and there appear to be three separate criteria as to how much you will get WEP'd by (I can't be *rsed to pull up the information right now but will do so later).

I need to figure this out because it looks like I may be about 8-10 years short of my 35 qualifying years (under the new rules) for a full UK pension.

I need to figure out whether I would receive more (in total) by either (a) receiving US SS (subject to a WEP reduction and the vagaries of the USD/GBP exchange rate) plus my reduced (26/35ths) UK state pension, or (b) using the Totalisation agreement to put my 10 years of US SS towards my UK state pension qualification (and thereby forego receiving US SS pension).

I'm assuming that 10 years US SS would count 10 years towards my UK state pension, but maybe it isn't as simple as that?

dunroving Feb 6th 2013 3:44 pm

Re: UK state pension and USA social security
 
Does anyone know the answer to the following:

If you are unemployed in the UK (e.g. made redundant, take early retirement, or return from overseas and can't get a job), do you get NICs while you are unemployed? I realise if you are on benefits (including JSA), you qualify for NIC credits while you are unemployed - but what if you decide you don't want to claim benefits (e.g., you are determined to get by on savings or redundancy pay while you are trying to get a job)?

nun Feb 6th 2013 4:16 pm

Re: UK state pension and USA social security
 

Originally Posted by dunroving (Post 10528765)

I need to figure out whether I would receive more (in total) by either (a) receiving US SS (subject to a WEP reduction and the vagaries of the USD/GBP exchange rate) plus my reduced (26/35ths) UK state pension, or (b) using the Totalisation agreement to put my 10 years of US SS towards my UK state pension qualification (and thereby forego receiving US SS pension).

I'm assuming that 10 years US SS would count 10 years towards my UK state pension, but maybe it isn't as simple as that?

Your understanding of the Totalization Agreement isn't correct. It's basically irrelevant in your situation as you qualify for US SS and UK state pension based on your contributions to each individual system. The calculation you should be doing is seeing how deferring US SS or UK state pension will interact with WEP and your total life time expected benefits.


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