TerryGoX

I am eligible for some UK State Pension - its not huge but I'll take it but was wondering if anyone has explored the alternative options of having it paid direct into a US account (at prevailing exchange rate) or into a UK account from which it can be transferred when exchange rates are favorable. I know that adds some reporting issues with IRS and FBAR and I was thinking of a bank account at Wise as I do not have a UK address. The process is tortuous as it is impossible (or so it seems) to get full estimate of pension online (need a UK address to validate identity) and the application form to apply from US is lengthy and demands so much information (all jobs held in UK and US for ever).

I'm also conscious of the possibility of my US SecSoc impacted by UK State pension but I worked >10 years in UK and >30 in US so I think I am exempt but don't trust the various bodies to get this right as there was a period I was working in both places.

Any guidance and experience greatly appreciated.

Nutmegger

Most of us, I think, opt for having UK state pension paid directly into a US account. Mine is small, so I opted for a quarterly transfer. Sounds as if you have enough time in the US for the two pensions not to impact each other. Have a feeling you need forty quarters, but someone will be along to confirm. You do have to declare the UK pension as income on your US return.

TerryGoX

Thank you - I should pass the WEP exemption so can collect both but will only collect UK initially and push the US SS back. I wonder, the form to apply for UK state pension is very lengthy and requires US SSN etc. Did this take a very long time? I find that I can only communicate via phone to International Pension Center and with Covid they often don't answer - did you run into any issues I need to be aware of?

Nutmegger

I did this so long ago that the form had to be sent out via snail mail! Even so, I don't recall it taking particularly long -- though I basically sent it and forgot about it until the response arrived. Of course, in these Covid times, every process seems to be prolonged. I also started collecting from the UK long before I took the US SS, as you plan to do.

vespucci

I was put off by the form too; I lost the form and phoned to ask them to send me another one, but it turned out that phone call was all I needed to do- they took my application over the phone- they asked some questions and my bank details and that was it. It was surprisingly easy.

durham_lad

I can confirm that 30 qualifying years of SS contributions has WEP at zero. After 20 years the amount of the pension to be applied in the WEP calculation begins reducing until it reaches zero at 30 years and beyond.

MidAtlantic

My experience also. One phone call and they took the information they needed and that was it.

flbrit59

How long ago was that ?

lansbury

We have our UK pensions paid into a UK account and transfer them over when we decide the rate is what we like. But we have a tidy sum in 5 pensions each month so it is worth while. Being laid up from an accident New Year’s Eve I did work out for 2021 what the difference was between the rates on the dates I received the pensions, and the rate I got from Wise when I did the transfer, and it worked out several thousand dollars to my advantage.

If the sums are small it probably isn’t worth the hassle and inconvenience of messing about. You need to be able to leave the pension in the UK for as long as you want if the rate is bad.

S Folinsky

As an aside, there have been bi-partisan efforts to repeal WEP. That said, it has failed to advance in Congress.

(My wife pulls both a government pension and Social Security. The pension administrators often discuss WEP in their informational newsletters).

TerryGoX

You mention in your response - Wise - that seems to be best / only option to establish a UK sterling account - are you happy with that choice and I assume they provide sort code/acct number that UK pension can work with.

Also, when do you declare income to the IRS, when you get money from pension or when it arrives in the US?

durham_lad

I always declare income from UK pensions when the payment is made not when it arrives in my USA account and I think that is the correct procedure. I also use the exchange rate on the date it is paid, not the date I move it to the USA.

Glasgow Girl

Durham_lad is correct.

Disenchanted

As far as I recall I filed some claim information online around my retirement age in 2016 but did not provide any bank account information or make a claim as I deferred my UK pension because I wanted to collect my full SS without WEP, and also my US civil service pension would initiate WEP when I retired in 2021. When I called DWP in April 2021 to initiate collecting my pension all the information was collected over the phone as most of the information just needed to be confirmed so the process was quite painless. I opted to have the funds deposited quarterly into my USA bank account and was a little nervous that it would not be deposited, but there was no issue.

The only anomaly that caught me by surprise was the initial deposit for the first quarter. It was way more than I expected it to be, so I called them up. Turned out that for some reason the agent had registered that I wanted my pension paid from July 2020 rather than 2021 as I had stated, so I ended up with a lump sum for one year back dated, which is the maximum they can do. I just received my second payment and all looks about right.

MidAtlantic

That's what I do. You can also use the Yearly Average Currency Rate for December 31: https://www.irs.gov/individuals/inte...exchange-rates.
I check the result using both approaches and use the one that is most favorable to me. Most years the date the payment was received is better, but there have been some years when the average was better.