Originally Posted by dunroving

Hmmm, I know you are far better than I at spotting the Devil in the details but, from my reading on several threads about this:

The term "flat rate" pension is a misnomer and implies that everyone will get the same if they have 35 years' contributions, but this isn't the case (all the following AFAIK).

Originally Posted by theOAP

The current basic state pension may have two parts, it depends on the individual and how (and when) they contributed. A possibility exists for having two parts. Prior to 2002, SERPS existed as a possibility for a second element, but only those who were working could qualify. After 2002 the Second State Pension came into existence, and the number of those who could contribute increased. Those who couldn't contribute to S2P were the self employed and those who were "contracted out". Both SERPS and S2P were earnings related, but only once you earned a certain level of income.

As for the earnings, today, if you earn £150/week (and not contracted out), you will not contribute to the state pension via earnings. If you earn £160/week, you do contribute to the state pension. Earnings related???

I've checked a yearly statement for a state pension:

HOW YOUR BENEFIT IS MADE UP
basic State Pension................................ £XX.00
additional State Pension............ £ZZ.90 (not miniscule)
less contracted out deduction..... £ZZ.00
...........................Total payable £00.90 (miniscule)

......................Amount of weekly pension £XX.90

Line 1, the basic State Pension is calculated on Y/44 where Y = the number of years of contributions. Anyone with an equal Y number of years will receive the same amount, regardless of how the contributions were made. The contracted out amount is included on the company pension, increasing it by £ZZ.00.

We're back to the old question; for SS, does the SSA consider line 1 as a foreign pension subject to WEP, where in this case, it exists due to Class 1 contributions via employment (earnings), and not voluntary contributions (or other)?

Originally Posted by Giantaxe

We can argue all we like about whether the WEP should be applied to UK pensions. What we do know from postings here is that the SSA does apply it to the current UK pension. And I wouldn't hold my breath that they will cease doing so when the "new" pension is introduced. Really, what this needs is a legal challenge at some point.

Originally Posted by theOAP

I've completed both options on the page nun linked to in his previous post:
The Payments Abroad Screening Tool and Nonresident Alien Tax Screening Tool, on the Windfall Elimination Provision and Foreign Pensions page.

I answered the questions in line with a (my) company pension. I know for a fact that US SS does have WEP applied. It has been applied to the pension for the past 6 years.

The questions appear to be straightforward:

Are you entitled to or eligible for a U.S. Social Security benefit on your own Social Security number?
Straightforward, and clear.

Are you entitled to a U.S. Social Security benefit and a foreign pension that is based on employment, and were you eligible for both before January 1, 1986?
Straightforward, and clear.

Are you entitled to a foreign pension based on employment and were you eligible before January 1, 1986?
Straightforward, and clear.

Do you have 30 or more years of substantial work under the U.S. Social Security system?
Straightforward, and clear.

Are you entitled to a U.S. Social Security benefit or a foreign pension based on a totalization agreement after December 1994?
Straightforward, and clear.

Are you a U.S. citizen or resident who receives a foreign pension entirely based on the Social Security taxes you paid to both the U.S. and a foreign country on the same earnings?
Seems to be straightforward, and clear.

Do you or will you receive a foreign pension because of need, voluntary contributions, citizenship, or residency that is based in part on your earnings?
Company pension(s):
Not because of need. (was not "assistance" or a social benefit)
Wasn't voluntary, enrollment was automatic for any company employee.
It was a (British or French) pension. I was a US citizen both when contributing and when I started receiving the pension, and not British or French at the time.
Residency; I was resident in the UK for 2 of the 7 years on which the French pension is based.

Was it based on my earnings. If I answer "no" then no WEP is applied. If I answer "yes", the pension(s) are WEPed.

I believe the correct answer is "yes", the pension(s) were based on earnings. How much earnings isn't the question, it's whether it's a pension based solely on having earnings.

I agree with nun. It's the earnings related component, but the question IS NOT clear. It's the "because of" that throws you and implies that if the foreign pension is not based on one of the four options, then the answer would be "no", it's NOT paid due to one of the options.

My summation: because of the ambiguous last question, the Tool is worthless! The only point of debate as to the Tool's accuracy is whether a company pension, even with automatic enrolment, is a voluntary pension.

Originally Posted by UK2US1979

You are applying the calculator to your "company pension". I guess, the contributions you made were "earnings related" and/or voluntary contributions. However, if applied to the State pension element only, I fail to understand why the NHI contributions which were automatically deducted from one's wages each week/month could be classified as "voluntary" or "earnings related". No one asked me if I wanted to make NHI contributions! So, won't the UK state pension in this situation be treated simply as "basic" state pension? Isn't the basic state pension a flat sum of money depending solely on the number of years one has contributed to the system?

Originally Posted by fozzyb

Even the "new" state pension is earnings based in the sense that for a year to count as a contribution you must have earned over the lower earnings limit (unless you have other credits/voluntary contributions etc).

Originally Posted by nun

The "because" question asks whether you have an income related pension, the final clause is the important one, not the bits that come before.

Originally Posted by nun

Basic state pension is not subject to WEP because it is not calculated on earnings, but on number of contributions. Additional state pension or amounts you get from a private pension are WEPable.

Originally Posted by theOAP

So why the other bits at all if they're not relevant, which they seem not to be? Why isn't the question, "do you have any pension that is earnings related"? It's only if you answer in the latter context will the Tool give the right answer.


Is it too late to challenge the lady who interviewed me for SS, and asked all the details about a UK State Pension? By your logic (which could be right), my basic State Pension (or at least 95+% of it) is not based on earnings (line 1 in the example). She didn't mention that part, and only wanted to confirm that it came from Class 1 contributions. We did discuss her questions and she confirmed the detail she was taking for both the State Pension and the company pension related to the WEP calculation, IIRC.

Originally Posted by durham_lad

That is what I mean when I say that the new UK State pension is not earnings based, it is just calculated on the number of years of contributions, regardless of whether one has been working or not.

Originally Posted by fozzyb

Yes - but my point is that someone who works for 35 years earning just £1K/year and makes no other contributions/credits would get no state pension.
Whereas someone who works for 35 years earning £15K/year and makes no other contributions would get £140/week state pension.
So there is (or could be) an earnings related element even in the new state pension.