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UK state pension and USA social security

UK state pension and USA social security

Old Oct 8th 2015, 9:15 pm
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Default Re: UK state pension and USA social security

From a website in Canada (hat tip to Neill) : A US House of Representatives Bill to repeal WEP, with not one, but two twists in its tail.

Rep. Kevin Brady has introduced a Bill, H.R.711 - 114th Congress, to eliminate WEP.

The first twist in the tail - it's replaced by a formula which includes not only SSA covered income, but non-SSA covered income as well, for the calculations to determine the AIME (Average Indexed Monthly Earnings). Essentially, it would take effect from sometime in 2016.

A Bill proposing the elimination of WEP is not new. They have been proposed and voted down (or ignored) in previous Congressional sessions.

https://www.congress.gov/bill/114th-...-bill/711/text

Enter the second, and surprising, twist in the tail. The Bill has the support of the Social Security Advisory Board.

http://ssab.gov/Portals/0/Reports/WE...-02-104201-183

Now, how does one determine (in $US) the exact past yearly amount of each and every UK company pension contribution?

Before anyone gets too excited, the proposed legislation would be for US Public Servants only, although the SSAB recommendation doesn't appear to limit the change to public servants only.
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Old Oct 8th 2015, 11:55 pm
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Default Re: UK state pension and USA social security

Thanks for posting this. Early retirement people pushed it into politics. So no chance of getting any comments there. I asked this:

H.R.711 - Equal Treatment of Public Servants Act of 2015

Is proposing to calculate WEP using data of income to correct what is claimed to be a general over compensation of WEP.
The bill allows an employee to submit their own data. Has anyone put any though into how this would affect expats and immigrants who get WEPed?
I am assuming SSA wouldn't get the earnings data from foreign countries so you would have to somehow submit it yourself. Then again they have some exchanges of information to handle the totalization agreements.

Before anyone gets too excited, the proposed legislation would be for US Public Servants only, although the SSAB recommendation doesn't appear to limit the change to public servants only.
I don't see this in the bill. Just the title. Were do you see this being locked in like this?

Last edited by Neillc37; Oct 9th 2015 at 12:09 am.
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Old Oct 9th 2015, 1:44 am
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post

Before anyone gets too excited, the proposed legislation would be for US Public Servants only, although the SSAB recommendation doesn't appear to limit the change to public servants only.
Well as an ex US state employee I am excited by this as my state pension is my means I get WEPed to the max. If WEP goes away I'll get a nice big increase in my SS check.
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Old Oct 9th 2015, 10:37 am
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Default Re: UK state pension and USA social security

Originally Posted by Neillc37 View Post
I don't see this in the bill. Just the title. Were do you see this being locked in like this?
Fair point. I took the title of the Bill at face value, but you're right, there's nothing to prevent it being applied globally. Attached riders to the Bill opens all sorts of opportunities,... just look at the HIRE ACT.

I did notice H.R.711 also included a "Modification of windfall elimination provision for current beneficiaries", but the SSAB report said no, and quoted the now common response "due to budget constraints".

Originally Posted by nun View Post
Well as an ex US state employee I am excited by this as my state pension is my means I get WEPed to the max. If WEP goes away I'll get a nice big increase in my SS check.
I'm not sure about this. I've only had a quick scan of both the Bill and the report. The initial impression is by calculating the AIME differently, there is no WEP, but the calculations could result in a benefit that, in the end, doesn't change all that much. It seems to depend on how much your MA state income was, and I gather for someone of your talents, you're not underpaid.
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Old Oct 9th 2015, 2:11 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post

I'm not sure about this. I've only had a quick scan of both the Bill and the report. The initial impression is by calculating the AIME differently, there is no WEP, but the calculations could result in a benefit that, in the end, doesn't change all that much. It seems to depend on how much your MA state income was, and I gather for someone of your talents, you're not underpaid.
The new SS payments are calculated to reflect the fraction of your work history that was SS covered employment. Basically under HR711 everyone that was formally WEPed will get a bigger benefit.

https://www.calpers.ca.gov/docs/boar...a-attach-1.pdf
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Old Oct 9th 2015, 4:09 pm
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Default Re: UK state pension and USA social security

Originally Posted by nun View Post
The new SS payments are calculated to reflect the fraction of your work history that was SS covered employment. Basically under HR711 everyone that was formally WEPed will get a bigger benefit.

https://www.calpers.ca.gov/docs/boar...a-attach-1.pdf
Good find, nun.

I may be reading the charts wrong, but it seems not everyone who is currently WEPed will get an increase. Check Chart 3 for the high earners. If I’m reading it correctly, their newly calculated benefit would go down. I like this, since one of my criticisms of WEP in the past is the high earners are (unfairly) treated overly favourably.

No one receives an amount that would be equal to their current benefit plus the WEP deduction, but low and average earners do receive an increased benefit, so certainly not bad at all.

It will be interesting to see if this goes anywhere. It would be politically popular since it’s an increase, but so many have said (and wrongly?) that at current levels of benefits, the SSA will go broke. There will need to be some new “spin” if this is to go forward.
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Old Oct 9th 2015, 5:34 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post
It will be interesting to see if this goes anywhere. It would be politically popular since it’s an increase, but so many have said (and wrongly?) that at current levels of benefits, the SSA will go broke. There will need to be some new “spin” if this is to go forward.
"Spin" indeed will be needed to increase the burden on SS at this time.

I don't see it being possible to apply to Expats. I'm receiving one UK private pension now and will begin receiving a 2nd in 16 months from jobs I worked at 2 different companies between 1979 and 1992. One of the companies went out of business in 2001 so there is zero chance I can find out or even guess at my earnings or pension contributions during those years, unless HMRC and/or DWP keeps those figures and is prepared to release them.
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Old Oct 9th 2015, 7:11 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post
Good find, nun.

I may be reading the charts wrong, but it seems not everyone who is currently WEPed will get an increase. Check Chart 3 for the high earners. If I’m reading it correctly, their newly calculated benefit would go down. I like this, since one of my criticisms of WEP in the past is the high earners are (unfairly) treated overly favourably.

No one receives an amount that would be equal to their current benefit plus the WEP deduction, but low and average earners do receive an increased benefit, so certainly not bad at all.

It will be interesting to see if this goes anywhere. It would be politically popular since it’s an increase, but so many have said (and wrongly?) that at current levels of benefits, the SSA will go broke. There will need to be some new “spin” if this is to go forward.
Yes you're correct. I was looking at the benefit if WEP was repealed, not the new benefit under HR 771 which is indeed less. This might hurt me a bit, but I'm ok with that as there are a lot of low paid public employees with small pensions that probably need the money more than me. I think the average MA state pension was around $28k last time I looked.
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Old Oct 9th 2015, 8:34 pm
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Default Re: UK state pension and USA social security

Originally Posted by durham_lad View Post
"Spin" indeed will be needed to increase the burden on SS at this time.

I don't see it being possible to apply to Expats. I'm receiving one UK private pension now and will begin receiving a 2nd in 16 months from jobs I worked at 2 different companies between 1979 and 1992. One of the companies went out of business in 2001 so there is zero chance I can find out or even guess at my earnings or pension contributions during those years, unless HMRC and/or DWP keeps those figures and is prepared to release them.
Correct, and that is a point worth discussing. Within the SSAB report, nowhere are pensions from abroad specifically mentioned, everything is confined to “non-covered income” with the assumption those earnings are now a matter of record. The report states the change of calculation is now possible due to the fact the “SSA will have 35 years of earnings data so that it can accurately calculate benefits for people who have worked both in employment covered by Social Security and in employment not covered by Social Security.” One has to assume that means taking the gross employment income for each year worked abroad, and that’s provided only yearly gross income is required for the calculation.

Reading further on the link nun provided, there’s another interesting turn. For low and average earners with 30 years of covered (SSA) earnings, and therefore WEP exempt, any worker with 5 years of additional non-covered work (making the total of 35 years), would also have their benefit reduced in comparison to the current WEP benefit. There may be a mechanism in the new calculation to prevent the SSA burden from increasing by reducing benefits for all categories (low, average, and high) versus the current WEP calculations. Of course, everything would depend on the income levels of covered income against non-covered income.

Anyway, the whole thing is hypothetical for now.

Last edited by theOAP; Oct 9th 2015 at 8:41 pm.
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Old Oct 11th 2015, 10:24 pm
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Default Re: UK state pension and USA social security

Greetings,
I've just found and joined this forum.
I have a question.
I have lived and worked here in the USA for the past 21 years, having spent 23 years in HM Forces before that. I currently get my Pension and will hit retirement age in October 2016.
Can anyone please tell me whether I will be eligible for a UK State Pension, and will it effect my Forces Pension. Plus how will this effect my Social Security payments, having worked here for 21 years.
Any and all help is greatly appreciated.
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Old Oct 12th 2015, 2:42 am
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Default Re: UK state pension and USA social security

Originally Posted by Arthurt View Post
Greetings,
I've just found and joined this forum.
I have a question.
I have lived and worked here in the USA for the past 21 years, having spent 23 years in HM Forces before that. I currently get my Pension and will hit retirement age in October 2016.
Can anyone please tell me whether I will be eligible for a UK State Pension, and will it effect my Forces Pension. Plus how will this effect my Social Security payments, having worked here for 21 years.
Any and all help is greatly appreciated.
You will get UK state pension in accordance with your NIC record. You should contact HMRC for a pension forecast. Your UK Armed forces pension and your UK state pension will be used when calculating the WEP of your US SS payment.
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Old Oct 17th 2015, 8:55 pm
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Default Re: UK state pension and USA social security

Worked in U.K. From 1969 through 1979 paid up with 11 units of NIC
Lived in U.S. From 1979 to present, so far sent 16 years of voluntary NIC's back to U.K.
Age 62, will collect U.K. State pension in 2018 and will claim 23 years of SS in 2019


I have been reading through this thread, and there are some interesting comments regarding what part, if any of the U.K. State pension is subject to WEP. I will be claiming SS in 2019, when I'm 66, and will start my U.K. State pension in 2018. Presumably, by that time, we should have sufficient hard evidence from folks on here claiming U.K. State pension after April 2016, that the dept of S.S. Considers 100% of the new state pension NON wepable.

Am I right in thinking that until that first post April 2016 pensioner goes to collect social security, and because dept. of social security are the ultimate authority, we are in "wait and see" mode?

2nd item

This may be a mute point as it relates to my situation, as per above, I may have my U.K. Pension 100% excluded from WEP, but some of my NIC's were paid before 1975. Has anyone on here, applied for social security, and successfully excluded such years from being subject to WEP? Or are we once again in "wait and see" mode. Apologies if I've overlooked a post from someone saying they were successful in excluding the pre 1975 portion of their state pension from WEP

I realize it's possible to act first, and apologize later with the dept. of S.S. by only disclosing part of ones U.K. state pension to them, but I'm looking for data on somebody who disclosed ALL their U.K. State pension first, and then successfully explained that pre 1975 contributions are not subject to WEP.

3rd item

I was delighted to read that the portion of our U.K. Pension that comes from Voluntary NIC is not taxable in the U.S.A. Would someone be kind enough to restate how that is reported on a 1040? Does one include a work sheet separating the taxable portion from the non taxable? Or is there an official form, or does one "act first, and apologize later". By that I mean only disclose to the IRS the portion of your U.K. State pension that was not from voluntary contributions?

Many thanks to all who have contributed to this thread.

Tony
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Old Oct 17th 2015, 9:08 pm
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Where did you read that the part of the UK State pension down to voluntary peyments is not taxable in the US? Part of Mrs Ls current UK Pension is from voluntary payments and that is having US tax paid on it
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Old Oct 17th 2015, 9:35 pm
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Default Re: UK state pension and USA social security

Hi Lansbury
posts 344,345, 347,348 and 349 from Nun and Polaski
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Old Oct 18th 2015, 3:04 am
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Default Re: UK state pension and USA social security

Editing posts is not allowed after ten minutes, so new post.

Post # 15 from Durham Lad in this closed thread has some interesting support language in bold:

http://britishexpats.com/forum/usa-5...ension-817330/


Also further down in Post 30, the OAP reassuringly reminds us that box 16a (depending what form you file) allows you to disclose the gross amount of your pension, before you provide the lower number in box 16b. Given that the IRS are close to the top of my list of people not to upset, box 16a provides comfort. They can't accuse you of hiding something.

Edit:

Okay, well this is depressing. In my case I'll have 11 units from working in U.K. and 19 units from voluntary NIC's .All class2 ranging from about uk pounds 105 up to ukp145 approx.I was under the illusion for a moment there that 19/30th of my U.K. Pension would be tax free. But as I reexamine the thread linked above, it appears that only my actual payments that I sent to Newcastle every year, are tax deductible. :-(

Last edited by nearpost1; Oct 18th 2015 at 4:07 am.
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