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UK state pension and USA social security

UK state pension and USA social security

Old Apr 10th 2014, 7:40 pm
  #301  
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Default Re: UK state pension and USA social security

Originally Posted by nearpost1 View Post
Let's say I declare a U.K. Pension of £600 a month, with £220 of it being subject to the WEP. Presumably the dept of social security will reduce my ss payment by £110 ( the maximim 50%), and then use the currency conversion rate of the day ( someday in 2019) to arrive at the sum that they will subtract from my social security check.

Let's say the number they arrive at is $170.

Will they freeze this $170 subtraction from my ss check forever, or will they come back every year and apply the WEP , meaning it will by $175 the following year, $181 the year after that, as the U.K. indexed $170 keeps growing?

FYI my age just sneaks me into the new single tier pension. i will be collecting 30/35th of the full pension.
Yes, and no, depending on how your question is interpreted, but I think I know what you are trying to find out.

Using your example as a starter ($170), let's suppose your pre-WEP SSA pension is $1670/month. WEP reduces this to $1500/month. In the first year, you will receive that $1500/month. If there is no COLA increase for the following year, you will continue to receive $1500/month. Your original WEP amount for the first year, in fact, reduces your actual pension forever. The reduced amount is your official SSA pension going forward.

If the COLA amount for the second year is 2%, for example, then your second year SSA pension would be (1500 + [1500 X 0.02]) = 1530. If the COLA amount for the third year is 1%, then the third year pension would be (1530 + [1530 X 0.01]) = 1545.30/month.

As Lansbury has said, there is no further WEP calculations after the first year, but the results of that first year WEP will follow on for all subsequent years.
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Old Apr 10th 2014, 7:59 pm
  #302  
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Default Re: UK state pension and USA social security

So depending on your WEP amount and the exchange rate. it might make sense for someone thinking of postponing their UK state pension to wait until the pound is weaker against the dollar (especially if it is unusually strong when you initially plan to start taking UK state pension)? Of course, playing currency is never easy, but I'm thinking that at times the GBP is clearly very strong in historical terms.

Last edited by dunroving; Apr 10th 2014 at 8:02 pm.
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Old Apr 10th 2014, 9:15 pm
  #303  
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Default Re: UK state pension and USA social security

Originally Posted by dunroving View Post
So depending on your WEP amount and the exchange rate. it might make sense for someone thinking of postponing their UK state pension to wait until the pound is weaker against the dollar (especially if it is unusually strong when you initially plan to start taking UK state pension)? Of course, playing currency is never easy, but I'm thinking that at times the GBP is clearly very strong in historical terms.
'Depending on your WEP amount' is probably the main consideration. If your WEP amount is over the maximum amount (?$400+ for this year) at both 1.20:1 and 2.00:1, it makes no difference. As you indicate, it's those with a WEP amount below that maximum figure who may decide to take the exchange rate into consideration.
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Old Apr 10th 2014, 9:56 pm
  #304  
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Default Re: UK state pension and USA social security

Lansbury and the OAP, many thanks for clarifying. I also meant to ask if the process is normally as simple as I described.

By that I mean does one simply obtain a letter from DWP that clearly designates which portion of your UK state pension is "involuntary" , without difficulty? Also does one then submit a copy of said letter to the dept of SS when applying for social security? And finally, does the dept of Social Security, without becoming confused, make the adjustments that I previously described?

I envisioned having to hire a social security lawyer!

Dunroving, exactly as you said, unless I felt that the usd was in some awful and temporary swoon, I would just take my chances with the exchange rate of the day.

Last edited by nearpost1; Apr 10th 2014 at 10:06 pm.
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Old Apr 10th 2014, 9:59 pm
  #305  
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Default Re: UK state pension and USA social security

I suppose I should add a caveat to the above post # 301 in case someone misunderstands.

"The reduced amount is your official SSA pension going forward"

This is true if it is your only pension(s). If you are in receipt of a UK company pension, for example; you then apply for an SSA pension, you're WEPed, and the WEP amount is below the maximum WEP amount; but 5 years later you start taking a delayed UK State pension; you will be WEPed again.

This is the primary instance where you may be WEPed a second time.

If the UK company pension in this example is above the maximum WEP amount and continues to be above the (then) maximum amount 5 years later, you'll only be WEPed once.

Caveat, and on, and caveat, and on, and caveat, and......
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Old Apr 10th 2014, 10:05 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post
I suppose I should add a caveat to the above post # 301 in case someone misunderstands.

"The reduced amount is your official SSA pension going forward"

This is true if it is your only pension(s). If you are in receipt of a UK company pension, for example; you then apply for an SSA pension, you're WEPed, and the WEP amount is below the maximum WEP amount; but 5 years later you start taking a delayed UK State pension; you will be WEPed again.

This is the primary instance where you may be WEPed a second time.

If the UK company pension in this example is above the maximum WEP amount and continues to be above the (then) maximum amount 5 years later, you'll only be WEPed once.

Caveat, and on, and caveat, and on, and caveat, and......
Very good information, doesn't apply to me but no doubt very helpful to those with a second overseas pension. You and Nun do great work on here.
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Old Apr 10th 2014, 10:05 pm
  #307  
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Default Re: UK state pension and USA social security

Originally Posted by nearpost1 View Post
Lansbury and the OAP, many thanks for clarifying. I also meant to ask if the process is normally as simple as I described.

By that I mean does one simply obtain a letter from DWP that clearly designates which portion of your UK state pension is "involuntary" , without difficulty? Also does one then submit a copy of said letter to the dept of SS when applying for social security? And finally, does the dept of Social Security, without becoming confused, make the adjustments that I previously described?

I envisioned having to hire a social security lawyer!

Dunroving, unless I felt that the usd was in some awful and temporary swoon, I would just take my chances with the exchange rate of the day.
I'll leave this to Lansbury to answer, because I don't know the procedure where voluntary contributions are concerned. I do know when you apply, the question of any voluntary contributions should be asked by the interviewer.
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Old Apr 10th 2014, 10:26 pm
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Default Re: UK state pension and USA social security

Originally Posted by nearpost1 View Post
Lansbury and the OAP, many thanks for clarifying. I also meant to ask if the process is normally as simple as I described.

By that I mean does one simply obtain a letter from DWP that clearly designates which portion of your UK state pension is "involuntary" , without difficulty? Also does one then submit a copy of said letter to the dept of SS when applying for social security? And finally, does the dept of Social Security, without becoming confused, make the adjustments that I previously described?

I envisioned having to hire a social security lawyer!

Dunroving, exactly as you said, unless I felt that the usd was in some awful and temporary swoon, I would just take my chances with the exchange rate of the day.
Yes you will need something official which shows how your UK pension is calculated.

If you are going to be subject to WEP I would not apply online, or by phone, but make an appointment at your local office. That way questions can be asked and you can check how they are calculating the WEP. Before you go calculate the WEP yourself here http://www.ssa.gov/retire2/anyPiaWepjs04.htm, and have a printout of it to take.

I don't think you need to hire a lawyer to start with. Go and apply and only if you think they have badly miscalculated your SS pension would I think the cost of a lawyer would be worthwhile.
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Old Apr 10th 2014, 10:42 pm
  #309  
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
Yes you will need something official which shows how your UK pension is calculated.

If you are going to be subject to WEP I would not apply online, or by phone, but make an appointment at your local office. That way questions can be asked and you can check how they are calculating the WEP. Before you go calculate the WEP yourself here http://www.ssa.gov/retire2/anyPiaWepjs04.htm, and have a printout of it to take.

I don't think you need to hire a lawyer to start with. Go and apply and only if you think they have badly miscalculated your SS pension would I think the cost of a lawyer would be worthwhile.
I just printed out your advise and filed it away for use in 2019. Thank you again for such invaluable, impossible to find anywhere else, advise!
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Old Apr 11th 2014, 12:08 am
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Default Re: UK state pension and USA social security

Originally Posted by dunroving View Post
Just in case people get too excited, this is restricted to people who will retire before the flat rate pension comes in (i.e., people who will reach state retirement age before April 2016). I think it is ostensibly to give a chance for those folks to make up somewhat for missing out on the higher flat rate pension.

It would have been a logistical nightmare, but I'd have thought they would have graduated the introduction of this rather than having people with birth dates within a few weeks of each other getting such a drastically different pension.

There seem to have been some very drastic changes in pensions in such a short time (three changes in how many years of contributions needed for full pension, change in retirement age, and a change from the dual-band pension to the flat rate pension). Some unfortunate people are getting stuck in the middle of it all.
I was shocked that the Telegraph printed this information without ridiculing it.

This offer, relative to pension deferment, is a very bad investment. You give the Govt £891, and in return they give you £52 more per year in return. Or for the sake of this comparison, £5791 get's you £338 per year


One would be way better served to defer collecting the state pension for a year. £5876 (this years Pension annualized) get's you £611 (10.4%)

EDIT:

I have just realized the article I quoted is actually a very desirable "Top Up" plan suggested last year. Unfortunately it has morphed into the rip off I described above.

Last edited by nearpost1; Apr 11th 2014 at 12:18 am.
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Old Apr 13th 2014, 5:01 am
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Default Re: UK state pension and USA social security

Originally Posted by amos141 View Post
Can US social security look at my US tax return
It's all intertwined - an eternal ensnarement web
Listen to a piece on NPR this morning with Scott Simon and a reporter from the Washington Post:

http://wcqs.org/post/irs-chasing-chi...-parents-debts
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Old Apr 13th 2014, 6:00 pm
  #312  
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Default Re: UK state pension and USA social security

I saw this article today and thought it might be relevant in this thread http://www.statecollege.com/news/col...imple,1458734/
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Old Apr 23rd 2014, 7:05 pm
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Default Re: UK state pension and USA social security

Hi,
I am about to start receiving my UK state pension which amounts to a total 20 years paid up, 6 of these years were by way of a recent after tax payment to HMRC of some 980 GB pounds (class 2), I have also received a letter from DWP that due to the rule changes I can pay up a further 7 years but these are expensive as they are at class 3 rather than class 2.
My question is as I have to pay USA income tax on this pension can the 980.00 GB pounds be taken as a deduction on my US tax return (rather like a 401k) as this was an investment to further increase my total UK pension?
The answer is probably no but I thought it was worth asking on this board.
Thanks in advance for any responses.
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Old Apr 23rd 2014, 7:39 pm
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Default Re: UK state pension and USA social security

Originally Posted by Westham View Post
My question is as I have to pay USA income tax on this pension can the 980.00 GB pounds be taken as a deduction on my US tax return (rather like a 401k) as this was an investment to further increase my total UK pension?
The answer is probably no but I thought it was worth asking on this board.
Thanks in advance for any responses.
The 980 GBP can't be taken as a tax deduction, but I think it is possible to calculate the tax free portion of your monthly payments like you would any non-qualified annuity or pension. (with a qualified plan the 1099-R each year shows the portion of the payments that is tax free, i.e. the payback of after-tax contributions that had been made into the plan)

http://www.irs.gov/publications/p575...link1000226762
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Old May 5th 2014, 5:38 pm
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Default Re: UK state pension and USA social security

British citizen living in the UK... 65 years old with guaranteed employment till 70 + years old. In very good health ( don't strike me down now Lord.)

Fully vested in UK state pension & 40 points ( 20 years) with US Fed pension.

Healthy 401K plan in mutual funds.

US Company pension... ( a few bob a month)

I like to work. ???

Don't need any other sources of income right now...I'll only pi$$ it away ( see prior health statement)

Take my pensions ? If so, in what order ? When do I start spending my money ?

Thanking you in advance...
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