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USA to UK transfer Social Security to NI contributions

USA to UK transfer Social Security to NI contributions

Old Sep 5th 2020, 8:34 pm
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Default USA to UK transfer Social Security to NI contributions

Can you transfer USA Social Security contribution years to UK National Insurance contribution years. ( UK USA Social Security reciprocity agreement )
In other words, can the years worked in the USA count towards my UK NI state pension?
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Old Sep 5th 2020, 9:25 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by austin_d_powers View Post
Can you transfer USA Social Security contribution years to UK National Insurance contribution years. ( UK USA Social Security reciprocity agreement )
In other words, can the years worked in the USA count towards my UK NI state pension?
why should they?

Last edited by Jerseygirl; Sep 5th 2020 at 10:33 pm.
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Old Sep 5th 2020, 10:31 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Yes, there is a totalization agreement, but I am not at all sure how it works in practice.

You may, or may not, be better off claiming the two independently, especially if you either have close to the 35 years of contributions for a maximum state pension in the UK, or can make additonal years of contributions to reach or get close to the 35 years, especially if you are allowed to make Clas2 contributions, which cost about £145 per year of contribution. Given that US SS can be a lot more generous that a UK state pension, half a US SS payment, plus a partial UK pension may amount to more cash in your pocket than amalgamting the whole lot into a UK state pension payment. .... Though there is the matter of WEP, which is a whole other topic of discussion.
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Old Sep 6th 2020, 1:28 am
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Default Re: USA to UK transfer Social Security to NI contributions

If you have less than 10 years eligible contribution points in the UK or USA you get no state pension / social security payments in that country.
So people that have less than 10 years eligible contribution points in one country will lose all the state pension eligibility points for that country.
The only hope is to transfer the points from one country to the other via the Social Security reciprocity / totalization agreement.
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Old Sep 6th 2020, 1:31 am
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by austin_d_powers View Post
..... The only hope is to transfer the points from one country to the other via the Social Security reciprocity / totalization agreement.
That is partially correct in so far as it applies to US SS contributions, however the UK allows additional contrubutions to buy extra "years" of contributions so long as you have made a minimum of three years construibutions while working in the UK.
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Old Sep 6th 2020, 3:02 am
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Default Re: USA to UK transfer Social Security to NI contributions

OK, I worked out what the agreement does.
Example: You have 8 years eligible contributions in UK and 6 years eligible contributions in USA.
You get no pension from either country.
But you can use the agreement to combine the eligible contributions from both countries to become 14 years eligible in both countries.
You have now reached the 10 year minimum required in both countries.
UK will pay 8 years pro-rated state pension and USA will pay 6 years pro-rated social security.
It basically lets you claim a pro-rated pension amount from a country in which you would otherwise not be eligible for a pension.
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Old Sep 6th 2020, 4:40 am
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Default Re: USA to UK transfer Social Security to NI contributions

Provided you haven't yet retired you could probably turn the UK's 8 years into 15 years for a one-off payment of about £1,020, and add one more year for (currently) about £145 every year you (currently) work before retirement.

Last edited by Pulaski; Sep 6th 2020 at 5:58 am.
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Old Sep 6th 2020, 11:21 am
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by austin_d_powers View Post
OK, I worked out what the agreement does.
Example: You have 8 years eligible contributions in UK and 6 years eligible contributions in USA.
You get no pension from either country.
But you can use the agreement to combine the eligible contributions from both countries to become 14 years eligible in both countries.
You have now reached the 10 year minimum required in both countries.
UK will pay 8 years pro-rated state pension and USA will pay 6 years pro-rated social security.
It basically lets you claim a pro-rated pension amount from a country in which you would otherwise not be eligible for a pension.
That is a good summary, thanks for sharing.

When we came to check our OAP record we each had more years than we expected. In my case I had 2 full years from my part time job working for the school as a lab assistant during A levels, staying behind school for a few days a week clean up the lab, top up the bottles of acids and reagents etc. I also had 3 extra years given for my time at university. My wife similarly had 2 full years from her part time job between age 16 to 18 while doing A levels plus 3 years for university plus 6 years for all the time we had at least one child under school age and she wasn't working. It was a February the year I finally got round to making catch up contributions and I was allowed to pay for 8 years - the current year plus 7 missed years. For some reason my wife was allowed to pay for 11 years - current year plus 10 missed years. I'll start collecting OAP in February with 30 years of contributions and my wife in November with 31 years. When they increased the maximum years to 35 we were just under the age limit to be allowed to buy up to 5 years more.
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Old Sep 6th 2020, 2:19 pm
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Default Re: USA to UK transfer Social Security to NI contributions

I checked my NI record and they are letting me do voluntary payments for 13 years catch up contributions. However looks like class 3 payments for all but last year. Does anyone know how they decide between class 2 and class 3 payments?
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Old Sep 6th 2020, 3:14 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by austin_d_powers View Post
I checked my NI record and they are letting me do voluntary payments for 13 years catch up contributions. However looks like class 3 payments for all but last year. Does anyone know how they decide between class 2 and class 3 payments?
You have to "apply", which requires completing very brief form about your employment history immediately before and after you left the UK. Contact the NI International desk in Newcastle and ask them to send you a form.
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Old Sep 6th 2020, 4:47 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by Pulaski View Post
Yes, there is a totalization agreement, but I am not at all sure how it works in practice.

You may, or may not, be better off claiming the two independently, especially if you either have close to the 35 years of contributions for a maximum state pension in the UK, or can make additonal years of contributions to reach or get close to the 35 years, especially if you are allowed to make Clas2 contributions, which cost about £145 per year of contribution. Given that US SS can be a lot more generous that a UK state pension, half a US SS payment, plus a partial UK pension may amount to more cash in your pocket than amalgamting the whole lot into a UK state pension payment. .... Though there is the matter of WEP, which is a whole other topic of discussion.
I have 10+ years of US and 8 years of UK contributions. If I make two years UK catch-up Class 2 (only £3.05/week approx!) voluntary contributions can I then in future independently claim UK and US SS?

HMRC online site with my pension record indicates I can make up the shortfall by paying a voluntary contribution of approx £700 for each missing year. How is this different to Class 2 catchups above? The amount is a lot more than £150/year but still a bargain to avoid WEP.

I had completely resigned myself to WEP and so this could make my sunday :-)
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Old Sep 6th 2020, 4:55 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by Fionn View Post
..... How is this different to Class 2 catchups above? The amount is a lot more than £150/year but still a bargain to avoid WEP. .....
See post #10, my last post immediately above yours. ^

I believe that the criteria for Class 2 is ostensibly that you have to have been working in the UK "immediately" before you left and then "immediately" on arrival in your new home country, but people have reported being approved for Class 2 contributions despite not working for months after they arrive.

I am not sure that WEP is affected much either way, but if you only have modest UK pension income then it won't affect you as much anyway. At the moment I would focus mostly on maximizing your pension income and worry about WEP later. .... Depending on your circumstances, you can game the system a bit by only claiming one pension first, and deferring the other, so there could be no WEP until you claim the second one.
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Old Sep 6th 2020, 5:14 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by Pulaski View Post
See post #10, my last post immediately above yours. ^

I believe that the criteria for Class 2 is ostensibly that you have to have been working in the UK "immediately" before you left and then "immediately" on arrival in your new home country, but people have reported being approved for Class 2 contributions despite not working for months after they arrive.

I am not sure that WEP is affected much either way, but if you only have modest UK pension income then it won't affect you as much anyway. At the moment I would focus mostly on maximizing your pension income and worry about WEP later. .... Depending on your circumstances, you can game the system a bit by only claiming one pension first, and deferring the other, so there could be no WEP until you claim the second one.
I meet all the Class 2 qualification criteria and, in fact, I have that very form from Newcastle HMRC team in front of me now. So once I have responded with that form I should expect to see those missing year catch-up amounts decrease to £150/year, is that right?

Agreed re maximising pension income but as I understand it WEP can cost me up to 50% of my eventual UK SS amount, which may not be a lot, but it's the principle.


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Old Sep 6th 2020, 5:38 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by Fionn View Post
I meet all the Class 2 qualification criteria and, in fact, I have that very form from Newcastle HMRC team in front of me now. So once I have responded with that form I should expect to see those missing year catch-up amounts decrease to £150/year, is that right? ....
Correct
..... Agreed re maximising pension income but as I understand it WEP can cost me up to 50% of my eventual UK SS amount, which may not be a lot, but it's the principle.
I understand and I am totally sympathetic, but so far as the "years" element of WEP goes there it nothing you can do about it, it is what it is. I am right on the cusp of being impacted/ not impacted (I have done the calculation several times and get slightly different answers depending on interpretation of the arcane rules for applying WEP), and I will be p!$$ed off if it affects me even though it won't be by much.

It won't help with the annoyance aspect, but the reason for WEP is that US SS is skewed to provide the most income for those on the lowest income, but rather than fix the underlying formula for how SS eligibility is calculated (those with a lifetime of conribnutions who only earned $12k/yr when they retired is where the help should be focussed, not on those who only have low elibiity because they only contributed for ten years) instead the SS Administration apply a bandaid to the problem, clawing back the excessive generosity using WEP as a blunt tool.
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Old Sep 6th 2020, 11:59 pm
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Default Re: USA to UK transfer Social Security to NI contributions

Originally Posted by Pulaski View Post
Correct
Thank you, this is really helpful. I spent some time with SSA WEP calculator today and confirmed that estimated 50% deduction.

I'm assuming WEP only applies to social security pension(s) from any non-US employments. I would then just have to update US SSA each time I commenced taking social security benefits from non-US countries which would be a fixed amount.

Or does WEP deduction also consider my private pensions as well?! That would mean taking account of potentially variable distribution amounts from private pension funds each year.
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