Rainy Day

CC, I think you got the answer you wanted ...and then some My understanding is that without applying a credit to US social security it would be wasted. I believe you have to pay 9 or 11 years contributions in the UK before you can even draw a minimum pension, but you can still continue to contribute after you leave. We just managed to get my wife's up-to-date, and she now gets her pension, and I am still paying into mine.

dunroving

The other way that the Totalization Agreement works, of course, is to apply SS contributions towards UK NI (if, for example, the OP returned to the UK, especially if he doesn't have 40 quarters of US SS contributions and therefore doesn't qualify for a US SS-based pension).

Unfortunately, the "payback" at retirement from UK NI is nowhere near as good as you get from US SS (at least under current rules).

There was a lengthy discussion of some of these issues on the MBTTUK forum, if anyone is interested in further details (see link below):

http://britishexpats.com/forum/showthread.php?t=696551

It is a complicated issue.

scrubbedexpat099

I have heard both described as Ponzi Schemes.

Probably the UK more so than the US.

Do not expect it to improve.

nun

First question I have is are you UK citizens? If you are you can keep paying voluntary Class 3 NI contributions. It's a great deal, last year I paid 212 pounds. Class 3 contributions don't cover some benefits like unemployment, but you will get a basic state pension after 30 years. I've been doing this for 25 years while also paying into US SS.

As others have mentioned you can also use the US/UK Totalization Agreement to apply credits in one country to the others system if you don't have sufficient benefit credits in either.

One small issue with US SS is that if you have a UK state pension they will apply the Windfall Elimination Provision to your US SS which will reduce your benefit slightly

C_C

Thanks!

No, my husband is a USC petitioning for a CR-1 visa for me, but I'm not a UK citizen either, I'm an EU national. So the first option is probably out of question.
I don't realistically think we'll be ever returning to the UK again to live (although never say never), however it's still fair that these few qualifying years we have count towards our qualifying years in the US.

Thanks for your response

nun

If you are an EU national I'd look into whether your home country allows you to make voluntary payments into their system.

If I was 66 now (I'm no where near there yet) and retiring my SS payment would be $1450/month in today's dollars. This is not much as I've worked a lot of jobs in the US where I don't pay SS. Applying the WEP to account for my UK pension and other non-SS pensions I would receive $1100, a difference of $350. The new flat rate UK pension is $900/month so I'd be $550 a month better off in aggregate. Of course you have to account for my UK NI Class 3 contributions, but as they will be about $9k over 30 years it seems like a pretty good deal. If I'd invested my NI payments over the 30 years and got a 5% return I would have about $20k which cannot generate $550 a month for the rest of my life.

robin1234

This is useful, thanks nun..
Who is eligible to pay Class 3 NI Contributions versus Class 2? As I understand it, anyone can pay class 2 just by sending the NI a cheque, about £600+ currently. If you want to be eligible for paying class 3 (you say £212 currently), you have to send in a form which asks questions about your current employment abroad and your last job in the UK. Not sure what they are getting at?

nun

Oops sorry I got my Classes confused. They changed the rules in the late 90s, I actually pay Class 2 NI. I paid class 3 for a while, but they changed the rules and I became eligible for Class 2 NI contributions that only cost 2.70 pounds a week, they are far less expensive than Class 3. See NI38 for qualifications to pay Class 2

http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf

http://www.direct.gov.uk/en/MoneyTax...ance/DG_190048

robin1234

Yes thanks! I just found that out too.. I keep getting the two confused.
I was employed in the UK up till June 30, 1991 and went abroad on July 2, 1991 so I assume that means I'm eligible for the Class 2.

This is what the direct.gov page says; "In order to pay voluntary Class 2 contributions you must either have been:
* 'ordinarily' employed or self-employed immediately before you went abroad
* 'ordinarily' employed or self-employed but became unemployed immediately before you went abroad to work ('unemployed' means registered as unemployed with the Department for Work and Pensions and looking for work)"

nun

Yes that sounds right. I was a student immediately before I left the UK so I qualify as I'd lived the first 24 years of my life in the UK.

Now that I remember that the Class 3 contributions are so much higher than the Class 2 it's not so obvious that it was best to keep paying NI back then. When I left the UK I read a couple of good books and the general advice was to keep up NI as most people return. But the Class 2 contributions of 2.7 pounds a week that they brought in 12 years ago mak it a no brainer.