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UK state pension and USA social security

UK state pension and USA social security

Old Feb 18th 2013, 9:51 pm
  #106  
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Default Re: UK state pension and USA social security

What is WEP?

I saw this "WEP relates to pensions from work not covered by Social Security" but still not sure what WEP itself is.
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Old Feb 18th 2013, 9:51 pm
  #107  
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Default Re: UK state pension and USA social security

Thank you J. JsOH, for your information.

I used the WEP calculator and it deducted what I think is the maximum possible on entering my Teachers Pension (somewhere just over a third on my 15 years of contribution to US SS). The good news (I think) is when I add the UK state pension to the WEP calculator, the result stays the same so I must already be on the maximum possible deduction.

G
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Old Feb 18th 2013, 10:05 pm
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Default Re: UK state pension and USA social security

Originally Posted by windsong
What is WEP?

I saw this "WEP relates to pensions from work not covered by Social Security" but still not sure what WEP itself is.
WEP is the US SS "Windfall Elimination Provision" which reduces SS benefits if you receive pensions on which you didn't contribute SS tax. Basically if you get a UK pension(s) they reduce your SS benefits up to a maximum of 40% depending on your entitlements and other pensions received.

I think you don't need to worry about this for many years, assuming US SS hasn't gone broke.

For a complete description go to http://www.socialsecurity.gov/retire2/wep.htm.

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Old Feb 18th 2013, 10:46 pm
  #109  
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Default Re: UK state pension and USA social security

Originally Posted by Bog lift
Thank you J. JsOH, for your information.

I used the WEP calculator and it deducted what I think is the maximum possible on entering my Teachers Pension (somewhere just over a third on my 15 years of contribution to US SS). The good news (I think) is when I add the UK state pension to the WEP calculator, the result stays the same so I must already be on the maximum possible deduction.

G
The calculator seems the best way to predict the effect of WEP.

There are limits to maximum that can be deducted by WEP although defining the limits is rather a challenge open to interpretation, which is why these discussion get convoluted.
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Old Feb 18th 2013, 10:52 pm
  #110  
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Default Re: UK state pension and USA social security

Originally Posted by windsong
What is WEP?

I saw this "WEP relates to pensions from work not covered by Social Security" but still not sure what WEP itself is.
WEP = Windfall Elimination Provision

The windfall being the pension you get from employment that did not contribute to US SS.
So because you did not pay US SS on the salary that provided the extra pension then they claw some back by making a deduction from your US SS pension.

WEP is applied on a scale and if you paid into US SS for 30+ years then there is no WEP.
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Old Feb 18th 2013, 11:03 pm
  #111  
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Default Re: UK state pension and USA social security

Originally Posted by J.JsOH
WEP = Windfall Elimination Provision

The windfall being the pension you get from employment that did not contribute to US SS.
So because you did not pay US SS on the salary that provided the extra pension then they claw some back by making a deduction from your US SS pension.

WEP is applied on a scale and if you paid into US SS for 30+ years then there is no WEP.
Thank you. I did indeed contribute in the USA for 30+ years.

It seems from this, though, that if others have UK state or company pensions, the US IRS will get a little of that, too. Hardly seems fair but what's fair these days.
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Old Feb 18th 2013, 11:41 pm
  #112  
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Default Re: UK state pension and USA social security

Originally Posted by windsong
Thank you. I did indeed contribute in the USA for 30+ years.

It seems from this, though, that if others have UK state or company pensions, the US IRS will get a little of that, too. Hardly seems fair but what's fair these days.
WEP has nothing to do with the IRS. It is applied by the SSA.

Almost all pensions paid to US residents are taxable by the IRS. Other countries have similar policies.
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Old Feb 18th 2013, 11:49 pm
  #113  
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Default Re: UK state pension and USA social security

Originally Posted by windsong
Thank you. I did indeed contribute in the USA for 30+ years.

It seems from this, though, that if others have UK state or company pensions, the US IRS will get a little of that, too. Hardly seems fair but what's fair these days.
If contributing to US SS for under 30 years then we lose a part of US SS pension just because we have also contributed elsewhere.

No, it's not fair. I paid into US SS so I should get my due return. Just because I also happened to pay into some other system shouldn't be reason to reduce my due return of US SS.
It's like saying since I have benefit of a full head of hair in my advancing years then my teeth should fall out.

But there ya go. Of all the things I get cranked up about this isn't one of them, well, no longer, I got used to being screwed over by government.
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Old Feb 19th 2013, 1:26 am
  #114  
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Default Re: UK state pension and USA social security

Originally Posted by J.JsOH
If contributing to US SS for under 30 years then we lose a part of US SS pension just because we have also contributed elsewhere.

No, it's not fair. I paid into US SS so I should get my due return. Just because I also happened to pay into some other system shouldn't be reason to reduce my due return of US SS.
It's like saying since I have benefit of a full head of hair in my advancing years then my teeth should fall out.

But there ya go. Of all the things I get cranked up about this isn't one of them, well, no longer, I got used to being screwed over by government.
I hear you - and I agree. One of the reasons I want to go home is that I hope I will get screwed a little less in the UK - but that's probably open to debate these days. No matter . . . it's home and I would rather get screwed there than here
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Old Feb 22nd 2013, 9:00 am
  #115  
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Default Re: UK state pension and USA social security

Dunroving,

I am responding to your comment (on another thread) about paying class II payments for the arrears portion. I haven't read this thread, so apologies if this has already been addressed.

OH and I applied for our pension forecasts. Received same and were advised in the same correspondence that we could apply to pay the lower rate Class II NIC rate. Promptly sent off our cheques for the arrears period (paid at the higher rate) along with letters asking if we were eligible to pay the lower class NIC rate.

I was not eligible, but OH was. He received a form that he had to complete to receive a large refund which adjusted his "arrears payment" to Class II NIC's. Hope this makes sense.
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Old Feb 22nd 2013, 11:27 am
  #116  
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Default Re: UK state pension and USA social security

Originally Posted by J.JsOH

No, it's not fair. I paid into US SS so I should get my due return. Just because I also happened to pay into some other system shouldn't be reason to reduce my due return of US SS.
I don't agree at all and I think this is a basic misunderstanding on the way SS works and is calculated. The amount of SS you get doesn't only depend on the amount you've contributed and ignoring non-SS pensions would give you an inflated SS check.
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Old Feb 22nd 2013, 2:52 pm
  #117  
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Default Re: UK state pension and USA social security

Originally Posted by nun
I don't agree at all and I think this is a basic misunderstanding on the way SS works and is calculated. The amount of SS you get doesn't only depend on the amount you've contributed and ignoring non-SS pensions would give you an inflated SS check.
The bit I don't think is fair is that someone with full SS is not WEP'd.
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Old Feb 22nd 2013, 3:10 pm
  #118  
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Default Re: UK state pension and USA social security

Originally Posted by Sally Redux
The bit I don't think is fair is that someone with full SS is not WEP'd.
... and the bit I don't think is fair is that you are WEP'd on different years from the ones you paid SS.

A lot of people who paid SS and UK NI in different years only qualify for a partial pension from each, but they get one of those partial pensions (the US SS one) reduced even further! As you say above, those with a full/bigger pension pot in SS don't get WEP'd, even if they also qualify for a full UK pension (often based on paying tiddling Class II NICs).

I think there is a lot about WEP that is unfair, but I doubt it's going to change for the fairer any time soon.
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Old Feb 22nd 2013, 4:33 pm
  #119  
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Default Re: UK state pension and USA social security



Originally Posted by nun
I don't agree at all and I think this is a basic misunderstanding on the way SS works and is calculated. The amount of SS you get doesn't only depend on the amount you've contributed and ignoring non-SS pensions would give you an inflated SS check.
Good day nun. As per normal, I will take exception to your comment. Where does this inflated SS check come from?

The SSA went to lengths to establish a progressive payout system. They created the 90%, 32%, 15% scenario which allows those with lower payouts to retain a larger portion of their payout, and those on higher incomes (above the first and second break points) to retain less of their payout. This is where the feeling of 'fairness' in the SS payout comes from.

This is calculated for every person applying for SS, and forms the amount of their basic SS entitlement.

The problem: This basic (already made fair) amount is a pre-WEP figure. Once we get to WEP, the 'fairness' has already been applied.

When Local and State employees were granted the right to not contribute to US SS, but their own scheme, WEP was introduced (let's skip Railroad Retirement). These were employees, living in the US, with US jobs, and unlike every other US employee, they were not contributing to US SS. So, in this instance, WEP may be seen as fair.

For the employee working in the UK:
They are not allowed to contribute to US SS as specified by the Totalisation Agreement (yes, they may if they will spend less than 5 years with an agreement to return to the US).
They can't contribute to US SS even if they want to. They're not allowed to!

So, for me, this is the first instance where the argument for WEP on foreign pensions breaks down. There's a big difference between choosing not to contribute to US SS, and not being allowed to.
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Old Apr 10th 2013, 1:47 am
  #120  
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Default Re: UK state pension and USA social security

You seem to be on a subject close to my heart although some time has passed since anyone posted.

I have been a resident alien since 1978 and have at least 120 credits to my name with regard to Social Security. In 2010, I was unemployed but had reached 62 and collecting SS was money coming in, so I started. Over the years since the monthly amount has risen by small increments as I have continued to work up to the limit established, $14k & change.

I have just received a letter from UK Pensions telling me I will be eligible for State Pension in July. It will be around $700/month and I'm currently collecting $1179/month from SS. I cannot get a straight answer from anyone as to whether my SS will be reduced as a result of the UK Pension.

According to WEP I have 30 years of substantial earnings which should make me exempt from WEP. However, my local SS office has told me that by their calculations, which they have not explained to me, I will have my SS reduced by about $250 + or - once my UK pension starts.

I'm still ahead of the game I suppose but as I'm fully qualified to earn the SS I receive now and the UK pension had SFA to do with SS, even if I wanted to pay it. HMG frowns on that.

Anyone had similar experiences or can offer some logical explanation as to why I can be deprived of that $250/month?
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