dunroving

I should probably start this thread with, “Long time no see” – I used to contribute regularly to BE discussions on this and the US forum for many years, but stopped visiting BE in 2015 due to a “life event.” Anyway, that’s by the by.

I decided to log back in to BE in order to share my recent experiences with the US Windfall Elimination Provision (WEP), in case it helps anybody to anticipate the kinds of issues I have encountered. I looked at posting it in the US forum instead, but as I’m based in the UK and my experiences with US Social Security have been mainly in the UK, it is probably more relevant to people in this forum.

I’ve searched for and read the many previous posts about WEP on both forums, to see if I’m actually providing new information, and I think I am, so here goes. I’m assuming anyone who is reading this already has an idea what WEP is, so I won’t rehash information that is easily available elsewhere on BE.

Background: I lived overseas for 23 years (1983-2006), including 16 years in the US. I have 40 credits (10 years) towards US Social Security (US-SS), and have been receiving US-SS payments since I turned 62. I recently became eligible to take a partial UK state pension, which I have been receiving now for about 7 months (since April 2023). My UK state pension is based on 27 years of NI credits, of which 7 are not work-based (2 years in 6th form, and more recently 2 years Class 2 voluntary NICs, and 3 years Class 3 voluntary NICs.

I was aware of WEP and had read a lot of the forum threads and other online content, so thought I was prepared for what was to come. I was wrong. Below is a chronology of the most pertinent events.

June 2022: I received (in the UK) from US-SS in Baltimore Maryland a WEP Advance Adverse Notice letter. It was dated January 2022, and started by saying, “We previously contacted you requesting information about your entitlement” – but they hadn’t! It also said, “If you do not respond to this letter, we will impose maximum reduction based on monthly pension (SP) amount of $9,999.99” I sent to US-SS Maryland a completed form SS-308 as they requested, in which I stated that I was not due to receive UK State Pension until April 2023. SSA-308 also asks details of employment periods falling into three categories (essentially to determine years covered by FICA/US-SS, years covered by employment-based UK National Insurance contributions (NICs), and years covered by non-employment based NICs.

July 2022: I received form SSA-7162 from US-SS in Baltimore Maryland (this form asks questions about any change in citizenship status, marital status and work status). I filled this in and sent it back immediately.

August 2022: I received a Notice of Overpayment letter from US-SS in Maryland, indicating I had been overpaid since April 2022, and my payments would be reduced to claw back the overpayment. I called Federal Benefits Unit (FBU) in the US Embassy in London. They said I shouldn’t have been sending these forms to Maryland; easier to send to FBU and they will load it on the system. They suggested I fill in SSA-308 again, plus form SSA-795. Form SSA-795 is “… a multi-purpose form used to submit written requests to Social Security. The title of the form is "Statement of Claimant", and Social Security prefers to have people use the form as opposed to other types of correspondence because it contains a penalty clause for making false statements.” I completed this form to once again state that my UK State Pension wouldn’t start until April 2023. Interestingly, the woman I spoke with at FBU said that US-SS knows that UK state pensions don’t start until age 66, but they persist in initiating WEP process and deductions from age 66.

September 2022: US-SS initiated WEP deductions (and recoup of “overpayments”). This continued for 5 months, in spite of all the forms I had sent. I called FBU, and was told that “it takes some time” for forms to be processed, but that any deductions or underpayments would be refunded “eventually”

January 2023: As my SS was still being underpaid, I called FBU again. They said that “maximum WEP” had been applied to my payments. They suggested I fill in another SS-308 form and send it to FBU. This was suggested because I now had a pension confirmation letter from DWP, showing my expected 4-weekly state pension amount. I also sent an addendum letter listing the various dates of different types of employment, because there was insufficient room on the form itself.

February 2023: Deductions and underpayments were refunded in a lump sum. I have no idea whether this was as the result of the recently-sent form SSA-308, or the various previous versions of form SSA-308, SSA-795, and SSA-7162 sent to US-SS Maryland and FBU in London.

April 2023: I started receiving UK State Pension, and subsequent to this, I have not had any WEP deductions from my US-SS over the past 7 months.

May 2023: I called FBU again, and was told (again) that “it takes a long while” for the forms to be processed and I should call back in July.

November 2023: Still not being WEP’ed, so I called FBU yesterday. They checked and said my forms I sent in January had been uploaded to the system in March. She couldn’t figure out why I was still not being WEP’ed until I asked her to check that the addendum letter had been uploaded, because it contained dates of non-work-based NICs. A light bulb went on in her head and she said they would need to contact DWP to confirm dates/years of different types of NICs contributions. She sent me form PODSU 231, which essentially is a form in which I gave US-SS permission to receive the necessary information from DWP. She also suggested that I “Please include a brief cover note to explain that you have an outstanding request for your WEP offset calculation pending in the International Baltimore Office” I have put this paperwork together, have included in my cover note an explanation of my understanding of what/how much UK state pension should be used to calculate WEP (essentially 20/27ths), and included a spreadsheet showing the years of NICs, with a note at the side of each one, saying either “Paid employment”, “Paid employment (FICA also paid during this year), ” Non-work based credit (full-time education at High School)”, “Voluntary Class 2”, or “Voluntary Class 3”.

So … that’s where I am. I’ll update on progress, so this exists as a “lessons learned” document for future WEP-ees living I the UK. I’ll also list below (in a response) what lessons I learned, and some questions I still have.

dunroving

Lessons learned

If you are based in the UK, do everything through the Federal Benefits Unit at the US Embassy in London. Any forms you mail to them will be uploaded to the system so it is available to US-SS in Maryland – no need to send forms to Maryland, even if Maryland sends you the forms and includes an addressed envelope to send it back to them.

FBU direct phone number from within the UK is 020 7891 3926. Lines are open Tuesday to Thursday between 10 am and 1 pm, EXCEPT the last Thursday in every month, any US public holidays and any UK bank holidays. If you don’t want to sit through about 2 minutes of pre-recorded announcements every time, just press 1 to get straight through. Occasionally, you’ll reach a pre-recorded message saying all lines are full, followed by more recorded, irrelevant blurb. Just hang up, wait 5 minutes and dial again, press Option 1. You may be on hold for a while, so I just put my mobile on speaker phone and get on with something else while I am waiting. The address for mailing to FBU is: US Embassy London, Federal Benefits Unit, Box 0005, 33 Nine Elms Street, London SW11 7US.

Bear in mind that US-SS may initiate WEP from your 65th birthday. I would recommend calling FBU at least 6 months ahead and ask them how you can avoid US-SS pre-emptively initiating WEP. If necessary, fill in and send (to FBU) form SSA-308, and where it asks how much UK state pension you’ll receive, and to enclose a UK State Pension “award letter”, just state unambiguously that your UK State Pension will not start until (whatever date corresponds to your eligible age; mine was age 66 but I know things are changing). It wouldn’t hurt to also complete the personal statement form SSA-795, with a brief statement that, “I hereby confirm once again that I do not receive any foreign pension other than my US Social Security pension. On [insert date], I will be in receipt of my UK State Pension but until then, I should not be subject to WEP on my US Social Security pension.”

Send ALL forms and letters via signed-for delivery, so you have confirmation that the letter and/or forms were received.

dunroving

Outstanding questions

(These are issues I haven’t resolved yet, or things I am unsure about)

Supposedly, US-SS calculate your WEP amount from the amount of UK state pension you will receive on a particular date, usually when you first start receiving UK state pension (but see *, below). Several people have commented the pros and cons of this, mainly to do with what the currency exchange rate is. (e.g., if you receive £6,000 UK state pension and the exchange rate is $1.25, they’ll use $7,500 as the basis; if the exchange rate is $1.50, they’ll use $9,000 as the basis). I have submitted my UK state pension award letter with the various forms, but it’s now 7 months down the line. I’m assuming the exchange rate they’ll use will be whatever it is on the day they get their act together and process my forms. My concern is that they may request an updated UK state pension amount – and of course, the amount will be higher if there’s been an increase in UK state pension in the interim. If anyone has experience of how this will work in practice, I’d appreciate a heads-up on what to expect.

* (The exception is if you started receiving UK state pension BEFORE you start receiving US-SS. In this case, they use the amount of your state pension on the date you start receiving US-SS.)

As stated in many other WEP threads, if some of your NICs are based on “… voluntary contributions or other non-employment based credits” (wording used in form SSA-308), these will not be included in your WEP calculations (so if you received £6,000 state pension but 20% of the NICs are voluntary/non-employment based, they’ll use 80% of your state pension - £4,800 – in their calculations. An issue I’m anticipating is that DWP does not record my 6th form credits as being of any type – my NICs statement just says, “Our records show you have 2 full years up to 5 April 1975”. Also, my two years voluntary Class 2 NICs are listed as “You have contributions from Self-employment: 52 weeks”, so I don’t know how US-SS will interpret this. I’ve added my own explanation and hope that they will go with it.

I’ve also got some odd results from the WEP calculator. Again, from many other threads, WEP has two limits: not more than 50% of your state pension amount, and never reduced by more than 50% of your US-SS amount. However, I get results from the WEP calculator that indicate my US-SS would be reduced by more than 50% (of my US-SS amount). So, I’m a bit puzzled. I wonder if it’s got something to do with the fact I took US-SS “early” at age 62). Does the “never reduced by more than 50% of your US-SS amount” actually mean “never reduced by more than 50% of what your US-SS amount would have been if you’d taken it at age 66”?

durham_lad

Thanks for this thread, really good information. When my wife applied for SS a couple of years ago she did everything through the FBU and we thought they were very good, and said they would contact DWP to confirm details of her OAP

i will be requesting my own SS to start in about 16 months time and will go through the FBU as well. In my case my private pension of £10.5k probably takes me over the limit so I expect to hit max WEP for 24 years of FICA contributions.

Derrygal

This thread doesn't really apply to me at all - I just wanted to say hello to Dunroving and welcome back! I used to enjoy reading all your posts. Hope life is treating you well!

Cape Blue

Great posts dunroving, many thanks for taking the trouble to post them, doubtless will help a lot pf people out in the future.

Can I ask why you chose to take SS at age 62 - obviously if it's personal then ignore, I am just wondering about doing the same myself in the future as the calculation seemed to break-even at age 84 for me.

dunroving

Hello right back at you! I was in your area of the world this summer - I rode the length of Ireland/NI over a week, saw some absolutely breathtaking views and met some very friendly people. I'm now retired and trying to enjoy my cycling as much as I can, while I can. Lots of long-distance tours in the UK. Also volunteering, in a number of different ways. I don't regret retiring one bit.

dunroving

I took SS at 62 for a couple of reasons. The most important two were that I didn't really need the higher income I'd get if I waited until age 66, 70 or 72, plus male life expectancy in my family isn't especially high. The thought of waiting on SS and then dying shortly after starting to take it annoyed me! The probability of me not making the break-even date was higher than the probability of me living beyond the break-even date. Plus, in 2015, I had a near-death experience with a drunk driver that only served to reinforce my thinking - you can't benefit from Social Security once you're dead..

The second reason linked to the above, was that taking it at age 62 meant I'd avoid WEP for 4 years. That's worth around $20k or more, which pushed the break-even date back even further.

durham_lad

That’s a very common and difficult question. Here is a very useful website calculator that is very popular on the early retirement site that I frequent.

https://opensocialsecurity.com/

FWIW I am planning on waiting until age 70 as sort of life insurance for my wife. Her SS is much less than half mine and will be boosted when I start to draw SS plus when I die her SS will be increased to match mine at the time of my death. She is a little younger and much fitter than I am so I expect to die well before her. She will get no boost to her OAP when I lose my OAP plus she will lose half of my private US pension.

dunroving

I wish I had thought of going through FBU from the start (hence my advice to people in the UK to do exactly that). I was thrown a bit by the the fact that the first letter came from Maryland, and the implication (by providing me with an addressed envelope) that I should correspond with them. As you experienced, FBU staff have been very friendly in all my interactions with them. Although I left some details out of my earlier account, I got the impression sometimes that the FBU staff were a bit frustrated at the actions of the Maryland office. They (FBU) are also much more familiar with the UK context.

As you note, a pension of £10.5k may well push you to the max-WEP threshold (I'm assuming you have used the WEP calculator), which simplifies things somewhat. I just ran it through the WEP calculator for my scenario and it came up with a max WEP amount - obviously, my situation is different from yours, but it's interesting that I got the same outcome.

My situation, already confused by US-SS Maryland WEP-ing me a year earlier, is now further complicated by my request that they calculate WEP with voluntary NICs years deducted. In my case, this will make a difference of about $840 pcm, so it's worth persevering.

durham_lad

$840 pcm is huge, I wish you all the best in your endeavours to get this put right.

I have used the SSA WEP calculator, which works great as long as you have your latest SS statement to enter all the years contributions. I expect to be hit by about $436 pcm reduction due to WEP. When I enter $13,125 for my UK pensions (£10.5k) this is the figure I get and it doesn't increase when I add my OAP so I'm sure that I have hit the max.

https://www.ssa.gov/benefits/retirem...iaWepjs04.html

dunroving

Argh, brain fade - that should have said $840 per annum - still enough to persevere, though! I blame spreadsheet fatigue.

durham_lad

No worries.

$70 pcm is much more reasonable

Cape Blue

The second reason was what I was wondering - i have the UK NI state pension at age 67 plus I have two private pensions, one USA and one UK.

I wasn’t sure if I delayed the private pensions till 67 whether I would get the full non-wep’d SS for the five years from age 62 - it sounds like I will from what you are saying.

That would definitely push my break even date back as well - likely well beyond a realistic life expectancy. I’ll be printing and saving this thread!

Cape Blue

One other question - does the SS pay directly into a UK sterling bank account?

To-date I’ve been keeping a US bank account live for future SS and Fidelity pension payments, plus of course keeping a cheap US eSIM number for two factor authentication.