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sunnysideup May 23rd 2012 9:32 pm

Social Security 'Totalization'
Does anyone here have any experience of the US-UK Social Security totalization agreement? Here's my situation: I have plenty of US SS contributions (enough to qualify for SS pension, Medicare etc.) but my wife doesn't and will not have by the time we retire. I was planning to claim the spousal part of SS for her, and eventually at 66 she would claim UK state pension based on her 20 years paid up NI contributions. Now I realize there is a system whereby the SS administration can take your UK NI contributions and convert them to US SS equivalent - this system is called 'totalization' and is available for those who lack sufficient contributions to claim US SS on their own right. If we 'totalize' her NI contributions over to the US system any idea how much she would get? And could she claim a reduced amount at 62 or would they force her to wait until her normal UK qualifying age?

Bob May 24th 2012 12:33 am

Re: Social Security 'Totalization'
There's been threads in the past about this, I don't know to much about the details, but you should have some luck finding them.

Lansbury and Nun I think might be posters to look out for as I think they've posted a fair bit on this.

lansbury May 24th 2012 4:31 am

Re: Social Security 'Totalization'
The problem with this is there are a lot of ifs and buts. Reading it and trying to understand it is quite difficult. If I have understood it correctly, while you can transfer UK contributions to the US you can only do so if 1) you don't have full contributions in the US and 2) you haven't paid in enough years in the UK to qualify for a pension there. If you qualify for a UK pension you cannot transfer.

While I have looked into this please don't accept what I say without going to your local SS office and discussing it with them. Also bear in mind if she is entitled to a UK pension and SS based on your payments, her SS may well be subject to the Windfall Elimination provisions.

theOAP May 24th 2012 6:15 pm

Re: Social Security 'Totalization'
Simplified example: recipient has 6 years qualified US SSA contributions, and 20 years qualified UK State Pension contributions.

US SSA will 'allocate' 4 years of UK contributions under the totalization treaty to make 10 years US SS qualifying years. The 'allocation' is strictly a paper exercise. The recipient qualifies for US SSA.

Recipient would receive 6 years worth (value) of US SS, minus any WEPed amount (UK State pension, UK company/private pensions, etc.). WEP can not exceed 50% of US SS amount, using a maximum amount determined by year of birth and year benefits are first claimed.

Recipient would receive 20 years worth (value) of UK State pension (NO reductions). This currently (proposals to change are being studied) would equate to 2/3 of the maximum UK State Pension weekly amount.

I believe, and I could be wrong, that US SSA will also look at spouses entitlement. IF 1/2 of the spouses entitlement results in a greater amount than the WEPed amount of the recipient, they will pay the larger 1/2 of spouses entitlement.

The spouse must be claiming US SS before the larger amount can be paid to the recipient. The recipient can claim US SS at 62. If, at 62, the spouse has yet to claim US SS, the recipient would receive the reduced WEPed amount until the spouse starts claiming, and would then be granted the larger amount.


nun May 24th 2012 6:50 pm

Re: Social Security 'Totalization'
Yep, my understanding is that credits to one country's scheme can only be used to qualify for the other country's scheme, they are not counted in the calculation of the benefit, so you can end up with a pretty small check.

This is a complex situation so a call to SSA is definitely recommended.

theOAP May 24th 2012 7:59 pm

Re: Social Security 'Totalization'
Just for clarification, a person must have 6 full/individual 'quarters' of US SSA qualified contributions in order to take advantage of the totalization agreement.

Steve_ May 24th 2012 11:34 pm

Re: Social Security 'Totalization'

I think your best bet really is to call the SSA as the information on that website about the UK pension system is out-of-date.

As previously mentioned, you've got to get to 10 years total to qualify and have a minimum of 1 1/2 years. So if you've been working in the US for 1 1/2 years and contributed to SS and have contributed for 8 1/2 years in the UK you qualify for SS in the US, but based on 1 1/2 years of paying in (i.e. the payout will be tiny or nearly nil actually because of the WEP, but the point is you qualify). Whereas without the UK contributions you would get nothing, because you don't meet the minimum ten years contribution that ordinarily applies.

she would claim UK state pension based on her 20 years paid up NI contributions
She can continue to make voluntary Class 2 NI contributions (if she's working), it costs very little to do so, have a read of HMRC NI38. I think it's something like £150 a year at the moment.

I think the key point is that the totalization agreement has no bearing on Medicare, and medical expenses obviously are pretty steep. To get Medicare part A you have to have 40 quarters of qualifying contributions in the US.

sunnysideup May 25th 2012 1:53 am

Re: Social Security 'Totalization'
Thanks everyone. It is very complicated, and nun has replied to my other posts a few weeks ago about my own pension arrangements. My wife has about 3-4 years US SS in addition to her 20 years UK NI contributions so it seems totalization is a possibility but it does seem that only the SSA can give a definitve answer. We're trying to maximize our pension options on both sides of the pond to make sure we get the best deal. Once we figure it all out, I just might be able to come up with a possible retirement date (wishful thinking !)

Steve_ May 25th 2012 6:10 pm

Re: Social Security 'Totalization'
Just to add, you do get cost of living adjustments on your UK pension if you live in the US, so it definitely is worth making the voluntary contributions to NI. Personally I think it's a bit of a loophole that the UK Govt. has overlooked because I'm constantly amazed by the fact I'll get a ca. £7,000 pa payout for only paying £150 or so a year for 30 years. On that basis I'll get all my money back in the first year.

Assuming they stop moving the retirement age upwards and I actually live long enough. :thumbdown:

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