UK state pension and USA social security
#991
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: UK state pension and USA social security
Please check the following sections : "Benefits from the UK" and "How credits get counted". It ends with ...< Although each country may count your credits in the other country, your credits are not actually transferred from one country to the other. They remain in your record in the country where you earned them and can also be used to qualify for benefits there.....>
What are your thoughts on this?
What are your thoughts on this?
#992
Forum Regular
Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
Re: UK state pension and USA social security
Giantaxe, this is how I read it. If correct, this would help my brother. But certainly like to know why lansbury is of a different opinion. He is well read and has a good knowledge of UK pension. So is nun. Wonder what nun's opinion is.
#993
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Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
Re: UK state pension and USA social security
You can only move credits from one country to the other if you don't qualify for a pension in either. Also it must be done before claiming a pension I believe.
As your brother qualifies for SS he can't use credits from that for his UK pension. I suspect when the DWP look into improving his pension he will be told that it cannot be done.
As your brother qualifies for SS he can't use credits from that for his UK pension. I suspect when the DWP look into improving his pension he will be told that it cannot be done.
If correct, since my brother has already been claiming the US SS, that might not help him towards UK pension, even if he could have used the credits merely to help qualify for the Uk Pension.
#994
Re: UK state pension and USA social security
My wife's original UK State pension was based on 12 years, and her SS based on 27 years. We tried to use the UK pension to get a full SS pension but were not able to do so.
#995
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,865
Re: UK state pension and USA social security
Right, because she already qualified for both based on her contribution record. You can only use credits from one to qualify for the other if you don't otherwise do so.
#996
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Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
Re: UK state pension and USA social security
I used to believe as you did, that you even if you qualified for one pension you could still "transfer" credits to the other to qualify in that one. I was told on BE some time ago that was wrong and hence my comment above. It is correct the credits do not actually get moved from one pension to the other. If I am wrong happy to put my hands up to that but it goes against the advice I was given here.
My wife's original UK State pension was based on 12 years, and her SS based on 27 years. We tried to use the UK pension to get a full SS pension but were not able to do so.
My wife's original UK State pension was based on 12 years, and her SS based on 27 years. We tried to use the UK pension to get a full SS pension but were not able to do so.
So, using the Credits for purposes of meeting the minimum years/credits required in either and/or both countries is different from trying to use those credits to improve/increase your pension in either/both country.
What would be your thoughts upon reading the Totalization Agreement paragraphs I mentioned in my earlier post?
#997
Re: UK state pension and USA social security
I would like to think your interpretation is correct, and as I said above that was how I thought it worked until told I was wrong. I can't recall anyone posting on BE who has done this so the exact mechanics of how it works lacks knowledge based on experience.
Originally my wife's pension was going to be based on 9 years and that is why we started looking into using it to top up the SS. When told that wasn't possible as she qualified for SS, we considered buying some extra years which we did. We did then try to use it to top up the SS but as I said that got knocked back as well.
Originally my wife's pension was going to be based on 9 years and that is why we started looking into using it to top up the SS. When told that wasn't possible as she qualified for SS, we considered buying some extra years which we did. We did then try to use it to top up the SS but as I said that got knocked back as well.
#998
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Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
Re: UK state pension and USA social security
I would like to think your interpretation is correct, and as I said above that was how I thought it worked until told I was wrong. I can't recall anyone posting on BE who has done this so the exact mechanics of how it works lacks knowledge based on experience.
Originally my wife's pension was going to be based on 9 years and that is why we started looking into using it to top up the SS. When told that wasn't possible as she qualified for SS, we considered buying some extra years which we did. We did then try to use it to top up the SS but as I said that got knocked back as well.
Originally my wife's pension was going to be based on 9 years and that is why we started looking into using it to top up the SS. When told that wasn't possible as she qualified for SS, we considered buying some extra years which we did. We did then try to use it to top up the SS but as I said that got knocked back as well.
#999
Re: UK state pension and USA social security
In those days the minimum needed to get a pension was 10 years contributions, and she was one year short. That information was from DWP and she was told she could purchase additional years. Not sure now how we arrived at 3 years being the best for her to buy, but I know the fact that when I retired she would get 60% of my pension figured into it. Effectively we were getting her a pension for those intervening few years so not much time to recoup the extra buy in. We did all this while still in the UK, so some time ago now, hence the old memory is a bit vague especially as Mrs L was the one dealing with DWP.
My idea was to use her UK pension to top up her SS but in one of the many pension threads we have had on BE over the years I was told that as she qualified for a SS pension that couldn't be done. Now I will admit that as the advice given on BE was from more than one person I didn't do as I normally would double check it from another source. A bit stupid in hindsight. At no time did DWP suggest using her SS record to top up her UK contributions.
My idea was to use her UK pension to top up her SS but in one of the many pension threads we have had on BE over the years I was told that as she qualified for a SS pension that couldn't be done. Now I will admit that as the advice given on BE was from more than one person I didn't do as I normally would double check it from another source. A bit stupid in hindsight. At no time did DWP suggest using her SS record to top up her UK contributions.
Last edited by lansbury; Dec 5th 2015 at 6:37 pm.
#1000
Just Joined
Joined: Dec 2015
Posts: 3
Re: UK state pension and USA social security
As a 22 year green card resident formerly of UK birth I have read with great interest about WEP which I did not even know about until this forum. Thank you for letting me know I will be getting less US SS than I thought!
I am about to get a private pension lump sum in a couple of years from a UK pension company and realized that it appears better to just leave it there to maturity. Now here is a question.... Here in the US If I close out a pension fund such as a 401k I can reinvest the funds within 90 days I think and not pay taxes/penalties etc. So when my UK private pension fund matures can I reinvest the whole amount here in a US pension fund within 90 days, defer taking the money and not pay US taxes on the lump sum until I start taking money out? (I am already UK tax exempt due to the double taxation treaty)
I have a follow up question regarding the double taxation treaty which I will post separately...
Thanks for any input,
Alan
I am about to get a private pension lump sum in a couple of years from a UK pension company and realized that it appears better to just leave it there to maturity. Now here is a question.... Here in the US If I close out a pension fund such as a 401k I can reinvest the funds within 90 days I think and not pay taxes/penalties etc. So when my UK private pension fund matures can I reinvest the whole amount here in a US pension fund within 90 days, defer taking the money and not pay US taxes on the lump sum until I start taking money out? (I am already UK tax exempt due to the double taxation treaty)
I have a follow up question regarding the double taxation treaty which I will post separately...
Thanks for any input,
Alan
#1001
Forum Regular
Joined: Mar 2015
Posts: 101
Re: UK state pension and USA social security
So when my UK private pension fund matures can I reinvest the whole amount here in a US pension fund within 90 days, defer taking the money and not pay US taxes on the lump sum until I start taking money out? (I am already UK tax exempt due to the double taxation treaty)
#1002
Re: UK state pension and USA social security
Now here is a question.... Here in the US If I close out a pension fund such as a 401k I can reinvest the funds within 90 days I think and not pay taxes/penalties etc. So when my UK private pension fund matures can I reinvest the whole amount here in a US pension fund within 90 days, defer taking the money and not pay US taxes on the lump sum until I start taking money out? (I am already UK tax exempt due to the double taxation treaty)
I have a follow up question regarding the double taxation treaty which I will post separately...
Thanks for any input,
Alan
I have a follow up question regarding the double taxation treaty which I will post separately...
Thanks for any input,
Alan
#1003
Re: UK state pension and USA social security
If you take this UK pension lump sum in a single amount there won't be any UK tax due as long as you make the correct treaty claim, but it will be fully taxable as income in the US.
#1004
Forum Regular
Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
Re: UK state pension and USA social security
In those days the minimum needed to get a pension was 10 years contributions, and she was one year short. That information was from DWP and she was told she could purchase additional years. Not sure now how we arrived at 3 years being the best for her to buy, but I know the fact that when I retired she would get 60% of my pension figured into it. Effectively we were getting her a pension for those intervening few years so not much time to recoup the extra buy in. We did all this while still in the UK, so some time ago now, hence the old memory is a bit vague especially as Mrs L was the one dealing with DWP.
My idea was to use her UK pension to top up her SS but in one of the many pension threads we have had on BE over the years I was told that as she qualified for a SS pension that couldn't be done. Now I will admit that as the advice given on BE was from more than one person I didn't do as I normally would double check it from another source. A bit stupid in hindsight. At no time did DWP suggest using her SS record to top up her UK contributions.
My idea was to use her UK pension to top up her SS but in one of the many pension threads we have had on BE over the years I was told that as she qualified for a SS pension that couldn't be done. Now I will admit that as the advice given on BE was from more than one person I didn't do as I normally would double check it from another source. A bit stupid in hindsight. At no time did DWP suggest using her SS record to top up her UK contributions.
As to the UK, minimum required for myself ( men ) was also 10 years. I thought for women, UK required a bit lesser credits/years. So, it is interesting that at 9 years, she was short by 1 year. That does change the entire picture a bit. If she already had US credits also and if my interpretation were accurate, she could have used 1 year of her US credits to meet the minimum requirements for UK purposes. But you are saying that DWP did not suggest that. Could it be that they didn't suggest it because she was going to buy some extra years in UK anyway and/or the claim for UK pension had not yet been filed ?
If and when I learn of DWP treatment of US credits towards my brother's minimum years requirement, I would let you know. As I mentioned earlier, their letter said something to the effect that they were contacting their US counterpart to see if his pension could be "improved". Whatever that means!
Last edited by UK2US1979; Dec 5th 2015 at 8:34 pm. Reason: spelling error
#1005
Forum Regular
Joined: Mar 2015
Posts: 101
Re: UK state pension and USA social security
http://intltax.typepad.com/894_pension_taxation_uk.pdf
Here the tax free element is said to be preserved for both lump sum and periodic. I set about trying to understand how you might reason this way.
Article 1(4):
4. Notwithstanding any provision of this Convention except paragraph 5 of this Article,
a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by
reason of citizenship may tax its citizens, as if this Convention had not come into effect.
a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by
reason of citizenship may tax its citizens, as if this Convention had not come into effect.
5. The provisions of paragraph 4 of this Article shall not affect:
a) the benefits conferred by a Contracting State under paragraph 2 of Article 9
(Associated Enterprises), sub-paragraph b) of paragraph 1 and paragraphs 3 and 5 of
Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support),
a) the benefits conferred by a Contracting State under paragraph 2 of Article 9
(Associated Enterprises), sub-paragraph b) of paragraph 1 and paragraphs 3 and 5 of
Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support),
Article 17(1):
1. a) Pensions and other similar remuneration beneficially owned by a resident of a
Contracting State shall be taxable only in that State.
b) Notwithstanding sub-paragraph a) of this paragraph, the amount of any such pension or remuneration paid from a pension scheme established in the other Contracting State
that would be exempt from taxation in that other State if the beneficial owner were a resident
thereof shall be exempt from taxation in the first-mentioned State.
Contracting State shall be taxable only in that State.
b) Notwithstanding sub-paragraph a) of this paragraph, the amount of any such pension or remuneration paid from a pension scheme established in the other Contracting State
that would be exempt from taxation in that other State if the beneficial owner were a resident
thereof shall be exempt from taxation in the first-mentioned State.
Now Article 17(2):
2. Notwithstanding the provisions of paragraph 1 of this Article, a lump-sum payment
derived from a pension scheme established in a Contracting State and beneficially owned by a
resident of the other Contracting State shall be taxable only in the first-mentioned State.
derived from a pension scheme established in a Contracting State and beneficially owned by a
resident of the other Contracting State shall be taxable only in the first-mentioned State.
Paragraph 1 provides as a general rule, in subparagraph (a), that the State of residence of
the beneficial owner has the exclusive right to tax pensions and other similar remuneration. For
this purpose, a payment is treated as a pension or other similar remuneration if it is a payment
under a pension scheme, as defined in sub-paragraph (o) of paragraph 1 of Article 3 (General
Definitions). While the term "pension" generally would include both periodic and lump-sum
payments, paragraph 2 of the Article provides specific rules to deal with lump-sum payments, so
they are not subject to the general rule of paragraph 1.
the beneficial owner has the exclusive right to tax pensions and other similar remuneration. For
this purpose, a payment is treated as a pension or other similar remuneration if it is a payment
under a pension scheme, as defined in sub-paragraph (o) of paragraph 1 of Article 3 (General
Definitions). While the term "pension" generally would include both periodic and lump-sum
payments, paragraph 2 of the Article provides specific rules to deal with lump-sum payments, so
they are not subject to the general rule of paragraph 1.
So now we leave only those bits in place that were exempted from the saving clause:
b) Notwithstanding sub-paragraph a) of this paragraph, the amount of any such
pension or remuneration paid from a pension scheme established in the other Contracting State
that would be exempt from taxation in that other State if the beneficial owner were a resident
thereof shall be exempt from taxation in the first-mentioned State.
pension or remuneration paid from a pension scheme established in the other Contracting State
that would be exempt from taxation in that other State if the beneficial owner were a resident
thereof shall be exempt from taxation in the first-mentioned State.