WEP question

Old Jan 23rd 2023, 4:58 pm
  #1  
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Default WEP question

Hi
I know WEP has been asked about many times, but it seems that the rules can be very hard to understand.
My situation. I live in UK (UK citizen) and worked in the US for over 10 years from about 1995-2006. I do qualify for US SS and have received paper statements in the past from US Social security (even with my UK address on the statement!).
My main question concerns the NI record in the UK. I currently have 39 qualifying years in the UK and about half of them are from "Paid employment". For the 10 years I worked in the US, I paid NI contribution in the UK (about £100 per year) to get class 3 NIC (I think), and these 10 years show on NI Record as "Self-employment". The remaining years are all "National Insurance Credits" from when I was a full-time student and currently as a full-time carer for my elderly parents. If half of my years don't qualify, that means only 50% of my UK pensions will be WEP'd.

I will get full UK state pension at 67 and I have a private pension of £7.5k pa due at 65. I tried the following website to calculate my SS:-
"SSA Benefits Planner: Retirement | Windfall Elimination Provision (WEP) Online Calculator | SSA"
I could not post the actual link as I have not had 5 posts yet, but this is the official US SSA website.

The strange thing is that using this website, if I enter my details and earnings from US, and want to start claiming at 62, the lowest my WEP adjusted US SS gets to is $702 per month. My US SS pension is calculated (before WEP) at $1062 per month and no matter how much I enter into the "non-covered pension amount" (even a silly figure like $10,000 per month), the WEP adjusted pension never goes below $702 per month??!! I thought it would reduce to $531 per month (50% max WEP deduction). Any ideas or am I doing this all wrong?

PS. Am I correct in saying that (for example), if my total UK pensions per month was say £1500, that I would only be WEPed on £750 per month given that only half my NI record is from "Paid Employment".
PPS. Do only "full years" count on NI record?

Any insight would be greatly appreciated.
Cheers.

Last edited by ukmark62; Jan 23rd 2023 at 5:21 pm.
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Old Jan 23rd 2023, 5:48 pm
  #2  
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Default Re: WEP question

Is it because they calculate the WEP reduction before the reduction for taking it early? They take your amount at full retirement age, and deduct up to $557 for WEP (no more than half your WEPable pensions). If you then take it early, say 62, they will further reduce it to 70% of that new baseline amount. So, in effect, they are also reducing the % of the WEP. In the example on their page, WEP reduces the full retirement age by $557, but at 62 the reduction is "only" $390 (which is 70% of $557).
https://www.ssa.gov/benefits/retirem...anner/wep.html
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Old Jan 23rd 2023, 8:29 pm
  #3  
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Default Re: WEP question

Thanks for that, it does help a lot, but maybe my maths is slightly out as I can't get it to match what the website says will be my WEP pension at 62 ($702).
My attempt is below:-

At 62, my non-WEP pension is given as $1062
At 67, my non-WEP pension is given as $1509

$1509 x .7 = $1056 and $557 x .7 = $390
$1056 - $390 = $666 which is quite close to $702. In my case the SSA website has deducted $360 from $1062 to get $702 and it won't allow that $702 to get any lower.

Maybe I've missed something obvious.

FYI, from the SSA website, these are the figures I get for no WEP and max WEP using my details. I put in a silly $10,000 per month non-covered pension amount to ensure that maximum WEP was applied.
No WEP at 62 = $1062 - after max WEP = $702
No WEP at 63 = $1132 - after max WEP = $748
No WEP at 64 = $1207 - after max WEP = $797
No WEP at 65 = $1308 - after max WEP = $864
No WEP at 66 = $1408 - after max WEP = $930
No WEP at 67 = $1509 - after max WEP = $997
I do recall a few years back reading something about those people who just made the 40 credits in the US - I'm just over 40. I remember something about the SS system being slightly biased towards those who had 40 credits or slightly over, compared to those who have been in the system a long time?? Not sure about this, but something sticks in the back of my mind. My pay was very good in the US when I worked from 1995-2006 and maybe this also contributes to my results. I would have expected my "after WEP" figures to be slightly lower than are being quoted. I've definitely entered the correct info. It appears my max WEP is $1509 - $997 or $512.

Last edited by ukmark62; Jan 23rd 2023 at 9:19 pm.
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