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State Pension From from the UK to USA

State Pension From from the UK to USA

Old Jun 13th 2017, 1:51 am
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Default State Pension From from the UK to USA

Many questions, so please bear with me. Was sent from the UK.... International Pension Direct Payment Forms and State Pension Claim Forms for my wife and I. We left the UK in 1994, myself having worked for about 25 years in the UK and entitled to a UK Pension of around £153.00 per week.

The forms are complex, even asking for all the people we worked for whilst in the UK, all the holidays and trips we took in the UK and everywhere we lived, with exact dates required and quite frankly my memory is not what it was...up to 50 years ago!!!! Surely by having our NI numbers they should have a record anyway?

My wife only worked for about 5 years in the UK but regardless of this fact it appears that I can also claim for her on my working records and she might be entitled up to 60% of my pension? However, there are conflicting reports and articles written about this?

They want to know where to send the payment. USA or UK Bank. I have a bank account in the UK and still pay taxes there on rental income. UK would be fairly simple but would have to then go through currency exchange variations(really bad at present) and go through the business of wiring it over with all that involves including wire transfer costs both ends and the bank screwing us on the rate. Or just have it transferred directly here every 13 weeks or so and be done with the charges, whatever they are....I live here, so it makes sense to have it here..just wondering what others have done or what you think?

Again, depending on who you believe on the articles written, will drawing a UK pension affect the amount I eventually will receive in my USA pension? I am 65 and entitled to it now as retiring shortly but will delay it until I'm 70, although my wife is entitled over here to claim on my earnings a portion.

Appreciate the replies and guidance.
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Old Jun 13th 2017, 2:31 am
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Default Re: State Pension From from the UK to USA

Here is another epic thread covering pensions that covers much of what you're asking.

How many years did you work in the US and pay into the Social Security scheme? (If you had a government job the two things might not be the same number). If you paid in for less than thirty years then you will likely be subject to WEP - the windfall elimination provision, which reduces SS payments on a complex formula, based on pensions paid for with income not subject to SS deductions - meaning US government pensions, British state pension other than paid for with additional voluntary contributions, and private and company pensions paid for while outside the US.

Certainly having the UK state pension sent directly would be easiest, but some people accumulate their pension in a British bank account and then move it across only when they need it and/or when the exchange rate is (more) favourable. Using a bank to exchange your pounds for dollars transfer the money is a recipe for paying high wires fees, and getting a lousy exchange rate, so using an on-line FX broker/ remitter is the way to go. Transferwise is most often recommended at the moment as a low cost FX broker, but there are others providing similar services, such as Xe, Xoom, currencyfair and others.

Last edited by Pulaski; Jun 13th 2017 at 2:34 am.
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Old Jun 13th 2017, 3:49 am
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Default Re: State Pension From from the UK to USA

Thx Pulaski

EPIC, isn't even the word..my head is spinning......worked about 22 years paying into the system in the US. Just spent the last few hours pouring over as many posts as possible and its still going....greatly appreciate your reply.

As mentioned previously, UK pension amounts to around £153.00 per week. I will defer if possible taking my US pension for another 5 years. They estimate if I take it now, I will receive around $1300.00 per month. When I'm 70, should be 30% more or so(not quite sure on this)

Maths was never my strong point and reading up on this WEP business, if for example I did indeed take my US pension now, what would the amount be to include both pensions and in dollars using the exchange rate now?

My main question also was is my wife entitled to 60% of my UK pension even though she probably could only claim 5 years of work in the UK?

Again, many thx.
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Old Jun 13th 2017, 3:53 am
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Default Re: State Pension From from the UK to USA

Forgot to mention.............also have 2 other private pensions that I can take now or in the next 5 years, 25% tax free or the whole amount. Implications there as well please?

Never knew as I got older, this would all become so worrying and a basic minefield one can step into.
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Old Jun 13th 2017, 4:11 am
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Default Re: State Pension From from the UK to USA

If I am remembering correctly when the new pension started they stopped the spouse pension of 60%. As to your private pensions there has been a lot of discussion on the forum that the 25% is in fact taxable in the US. Some say it is, some say there is a workaround. There is a letter in the public domain written by the IRS which says it is taxable. You may wish to consider taking professional advice before collecting your UK private pensions.

If you have UK pensions and less than 30 years US Social Security contributions, your US SS will be subject to WEP.
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Old Jun 13th 2017, 4:14 am
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Default Re: State Pension From from the UK to USA

Originally Posted by lansbury View Post
If I am remembering correctly when the new pension started they stopped the spouse pension of 60%. As to your private pensions there has been a lot of discussion on the forum that the 25% is in fact taxable in the US. Some say it is, some say there is a workaround. There is a letter in the public domain written by the IRS which says it is taxable. .....
I think the waters have been further muddied by the recent concession that the tax free 25% can be drawn in increments over a number of years, moving it even further away from the US concept of a lump sum.
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Old Jun 13th 2017, 4:24 am
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Default Re: State Pension From from the UK to USA

Originally Posted by branmin View Post
Thx Pulaski

EPIC, isn't even the word..my head is spinning......worked about 22 years paying into the system in the US. Just spent the last few hours pouring over as many posts as possible and its still going....greatly appreciate your reply.

As mentioned previously, UK pension amounts to around £153.00 per week. I will defer if possible taking my US pension for another 5 years. They estimate if I take it now, I will receive around $1300.00 per month. When I'm 70, should be 30% more or so(not quite sure on this)

Maths was never my strong point and reading up on this WEP business, if for example I did indeed take my US pension now, what would the amount be to include both pensions and in dollars using the exchange rate now? .....
I must confess that my knowledge and experience is entirely theoretical and vicarious as I am a long way from retirement, and I am glad that I will likely work enough years in the US to escape WE entirely. But I think that you disclose the non-US pensions you are receiving at the current exchange rate, but when/if/how the numbers are recalculated when your non-US pensions stop, increase or decrease, is confusing to me.

The problem is that WEP was designed to deal with US government employees drawing non-SS pensions, which (i) are in USD so don't float up and down in USD value, and (ii) don't start at deferred dates or stop after x years - so WEP was designed as a "calculate once" arrangement, but that clearly doesn't work, but how and when it is recalculated, I am not sure.
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Old Jun 13th 2017, 3:32 pm
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Default Re: State Pension From from the UK to USA

"If I am remembering correctly when the new pension started they stopped the spouse pension of 60%."

Thanks for all the replies...................Just called the International Pension line and it appears my wife got lucky. They changed the rules backdating to May 1950 where they scrapped this, but since she was born before that, she does indeed qualify. Its not a huge amount but its better than nothing.
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Old Jun 13th 2017, 3:43 pm
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Default Re: State Pension From from the UK to USA

Hi Lansbury............

"If you have UK pensions and less than 30 years US Social Security contributions, your US SS will be subject to WEP."

Understand this. I have recently stopped working at present. But if I payed say another 7/8 years into the system, similar to paying your stamps in the UK even if one is not working, can one therefore not be subject to WEP as I will have paid 30 years. Just a hypothetical question and not sure if one can do this here anyway and then would it really be worth it?
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Old Jun 13th 2017, 3:54 pm
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Default Re: State Pension From from the UK to USA

Originally Posted by branmin View Post
Hi Lansbury............

"If you have UK pensions and less than 30 years US Social Security contributions, your US SS will be subject to WEP."

Understand this. I have recently stopped working at present. But if I payed say another 7/8 years into the system, similar to paying your stamps in the UK even if one is not working, can one therefore not be subject to WEP as I will have paid 30 years. Just a hypothetical question and not sure if one can do this here anyway and then would it really be worth it?
You would need to be working, and have "substantial earnings" each year (currently around $14k IIRC) subject to SS deductions to obtain each additional year of SS credit. You cannot just "buy additional years" of SS eligibility.

You also have to accrue your years before you start claiming SS, and I don't think you can defer claiming beyond the age of seventy. So, in short, I don't believe it would be possible for you to accrue enough years even if you wanted to work for another 7+ years.
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Old Jun 13th 2017, 4:08 pm
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Default Re: State Pension From from the UK to USA

thx........makes sense.
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Old Jun 13th 2017, 4:16 pm
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Default Re: State Pension From from the UK to USA

One more question for today, perhaps

Have a private pension I took out in 1988 worth around £35,000.00 of which 25% is tax free. I rang them up and said I would take it all in cash. They told me that I would be taxed after the tax free amount at 40% of the balance. I asked them why it wouldn't be at 20% and they said HMRC sets a ruling at this higher rate. However since I'm a non resident I could give HMRC a call and discuss uncrystalised funds to see if this would be completely accepted as tax free but pay the taxes in the States? Any comments on this?
Sorry for all the posts...just want to do it right and again thx for all the great advice on this board.
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Old Jun 13th 2017, 4:32 pm
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Default Re: State Pension From from the UK to USA

There are 2 forms to fill out out for HMRC and one for the IRS. Send both to the IRS who will forward the other to HMRC. Your UK pensions will then be exempted from UK tax and you will pay tax in the US.

I can never remember the form numbers, they have been mentioned many times on BE so a search should find an old post.

ETA: Forms and instructions here https://www.gov.uk/government/public...ndividual-2002
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Old Jun 13th 2017, 4:41 pm
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Default Re: State Pension From from the UK to USA

Originally Posted by Pulaski View Post
I think the waters have been further muddied by the recent concession that the tax free 25% can be drawn in increments over a number of years, moving it even further away from the US concept of a lump sum.
Very true. Never let it be said that any changes either country make should help to clear the waters.
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Old Jun 13th 2017, 7:00 pm
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Default Re: State Pension From from the UK to USA

The whole WEP is a minefield. I have read and re read about it but other than learning that a pensions in the UK will end up reducing the US pension, I could not find the answers to my questions.

Hubby and I came to the US in 1995 and since that time both of us have worked. If we decide to retire at 62 we will both have worked 27 years. In calculating what percentage they reduce your SS taking into account other pensions, is it a sliding scale percentage i.e. is the amount they reduce it by less than if you had only worked 20 years? Also, in declaring your other pensions is that pension that you are claiming from others at the same time you start to claim your US pension. If so, then you would be correct in saying that at 62 the only pension you would be claiming would be your US SS as you can't claim (I believe) your UK pension until you are 65.

Also, my hubby received a letter recently from one of his pensions to say he can elect a lump sum. If you do that, will the US SS take that into account.

If you do have your US pension reduced due to other pensions do you have to notify the US SS of any pension increases from the UK. Boy is all this complicated. Its probably better to work those extra three years and be done with it.
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