durham_lad

I wonder if US companies might deliver part of their overseas ex-pats in the US to maintain their SS record. When I came to the US on temporary assignments my UK company paid a small portion of my salary in the UK so I could maintain my private pension with them (and also NI payments).

nun

There are basic tax and residency issues that come into play when you live and work in another country, but if your company sends you to work in either the US or UK the US/UK reciprocal SS agreement allows you to keep paying SS in the other country for up to 5 years, after that you have to pay SS tax where you are working.

Eycott

I sent the SSA form SSA-308 (Modified Benefit Formula) in February 2014 just before I started receiving my UK Basic State Pension. I was a few years short of the SS annual 30 year Substantial Earnings threshold.

In August, 2014 I received a letter from SSA Service Center in California asking for a copy of the original UK Pension benefit award letter. My award letter detailed the basic pension plus two small amounts for graduated pension and 'Additional State Pension' (I have no idea what that is). My SSA-308 form showed seventeen years of Voluntary Contributions (Class 3) which I finished paying in 2013, two years of Class One, and eleven years of credits pre-1975 (of which 80% or so were paid).

In September 2014, I spoke with the SSA lady on my case to reinforce my position that the Voluntary Contributions and the Pre-1975 credits were not earnings or work related, and any WEP adjustment should based on 44 years , not thirty years.

We shall see but of today almost a year later, despite sending a letter and calling a few times (unreturned voicemail), I have had no news from SS.

When and if I do I'll let you know!

Giantaxe

The SSA is probably as confused about its WEP regulations as we all are...

durham_lad

I think you are spot on with that assessment.

dunroving

Maybe they should, under some sort of US-UK tax/totalization treaty. After all, we let foreigners pay NI in our country after they leave.

Giantaxe

I wouldn't be at all surprised to see voluntary contributions for non-residents disappear at some point.

WEBlue

Yes, this was why many overseas expat assignments were limited to (or less than) 5 years' duration.... In my husband's company, there were two kinds of expat employees, the ones who were short-term and would return within 5 years, and those who stayed on, even if it meant losing the expat package benefits and switching to a more "local" work scheme....

IRJ

I have been reading most of the pages of this thread and none of it covers my type of circumstance so here is my position.

I worked 8 years in the UK and NI contributions were paid for those years ending around 1973.
Since then I have 20 years of US SS contributions and will soon receive US SS benefits.

My UK 8 years do not appear to add up to a minimum pension. I believe I need either 10 or 11 years to qualify. But there is an agreement between the UK and US that the US will look at UK years of contributions. I see specific mention of this "top up" to 40 US SS quarters (if one falls sort of direct US contributions) to "qualify" for US SS security. As I am double the required minimum I do not need this.

Q: As I am not eligible for a UK State pension will the US look at those 8 years of NI contributions in the UK and add them to my 20 US years to make 28? (Yeah I know I am hopeful, in the extreme, but I might as well ask those in the know

Q: I believe I can "top up" the UK NI contributions and thereby likely qualify for the UK State Pension minimum..... But I wonder if this is really worth while doing in my case? First it costs me money upfront. Second I am presuming that WEP would hit me and I would see likely a 50% of the UK pension amount deducted from my US SS? Third if so this might also affect my wife's Spousal US SS benefit (derived from my contributions in the US) and her SS benefit being 50% of mine she would also feel the affect of my WEP "hit" in the calculation of her benefit. And then there is tax......If all this is so I don't see it worth the bother of topping up in the UK. Agree or disagree?
Thanks

nun

No because you qualify for US SS already on just your US SS contributions record.

You can US your US SS to top up your UK NI contributions so that you qualify fro a UK state pension. However, that pension will be calculated on your contributions...so right now 8 years of NI.

Put your circumstances into this tool to see if you'll be WEP'ed, I don't think you will be because you are using the Totalization Agreement. Also you won't be WEPed if there is no earnings related component to the pension and to find that out you should ask HMRC.

http://www.ssa.gov/international/wep_disclaimer.html

You might also think about paying extra NI to get a larger UK pension.

IRJ

Thanks for the reply.

How come my 8 years of work related contributions to NI don't go against the definition of "no earnings related component to the pension" ? What am I misunderstanding?

In the WEP tool I basically cannot fully understand the true meaning of "eligibility before 1986" in my situation.

nun

If you get the current UK pension it has tow components, a basic pension that is not related to your wages ie everyone no matter how much they earn gets the same amount, and an additional or second state pension (S2P) that depends on how much you earned. It seems highly likely that there is no WEP on the basic state pension as it is not earnings related.

If you get the UK pension after 2016 it will be flat rate and not WEPable......however, I don't think toy will be WEPed because you are using the Totalization Agreement

"eligibility before 1986" means were you able to get a pension before 1986

IRJ

Thanks for the explanations it is much appreciated. This whole subject matter is so confusing to the uninitiated.

kodokan

Nun (or anyone)... been reading about your theory that the new state pension won't be WEPable because it's not earnings-related, and had a thought.

Are defined contribution pensions WEPable? What's paid out isn't a function of earnings, it's a function of how much was contributed, and the investment choices.

But then on the other hand, if it's a work-based scheme, then the contributions are technically earnings-related, because they're usually calculated as a percentage of salary; there is therefore an earnings level connection.

How about a private pension into which someone just made contributions themselves? I, for example, have a UK pension that was nothing to do with work, but was set up and £20 a month was paid in from our bank account, whilst I was a SAHM.

Thoughts? Am I misunderstanding the meaning of 'earnings-related' somehow?

Of course, this is largely all academic - I'm planning to just take them as lumps of money anyway! But still, I wondered.

nun

I think the key is are the contributions foreign earned income and is the level of the pension in anyway dependent on the size of the contributions. If the answer is yes then WEP applies. So UK DC employer pension would be WEPable, but a. UK pension or annuity paid for with voluntary contributions from US earned income would not be WEPable.