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UK state pension and USA social security

UK state pension and USA social security

Old Apr 10th 2013, 11:04 am
  #121  
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Default Re: UK state pension and USA social security

@jopavi73

If you have 30 years (120 credits) of substantial earnings from work in the US, then your SS should not be reduced by WEP due to the UK State Pension.

It is not uncommon for 'local' social security offices to make errors in regarding WEP and foreign pensions. But, hearing this over the interwebby from a stranger doesn't make one all that confident.

If you want an accurate determination, try writing:

Social Security Administration
Office of International Programs
P.O. Box 17741
Baltimore, Maryland 21235-7741
U.S.A.
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Old Apr 10th 2013, 4:32 pm
  #122  
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Default Re: UK state pension and USA social security

Originally Posted by jopavi73 View Post
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?
You need to take it higher up, if you have over 30 years you don't lose any when you claim your UK pension.
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Old Apr 10th 2013, 4:56 pm
  #123  
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Default Re: UK state pension and USA social security

Originally Posted by Mummy in the foothills View Post
You need to take it higher up, if you have over 30 years you don't lose any when you claim your UK pension.
I thought WEP only applied if you have "30 or more years of substantial
earnings under Social Security", not "more than 30 years"?

The OP has 30 yrs already ...
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Old Apr 10th 2013, 8:23 pm
  #124  
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Default Re: UK state pension and USA social security

Originally Posted by dunroving View Post
I thought WEP only applied if you have "30 or more years of substantial
earnings under Social Security", not "more than 30 years"?

The OP has 30 yrs already ...
I was reading somewhere their substantial is actually quite low. Like minimum wage in CA now but much less in years past.
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Old Apr 10th 2013, 8:31 pm
  #125  
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Default Re: UK state pension and USA social security

I had this question as well so will make whatever I do that I get over 30 years of earning in US so UK pension not reduced. i still need to start class II contributions..
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Old Apr 10th 2013, 9:42 pm
  #126  
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Default Re: UK state pension and USA social security

Found this. About substantial earnings, it has a charts showing the amounts
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Old Apr 10th 2013, 9:54 pm
  #127  
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Default Re: UK state pension and USA social security

Here's the 2013 maximum WEP table. If you have 30 years or more (not more than 30 years) of substantial earnings you don't get WEP'd.

http://www.socialsecurity.gov/retire2/wep-chart.htm
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Old Apr 11th 2013, 1:13 am
  #128  
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Default Re: UK state pension and USA social security

Originally Posted by Mummy in the foothills View Post
I was reading somewhere their substantial is actually quite low. Like minimum wage in CA now but much less in years past.
Hmm.. I'd say those numbers are quite high. Plenty of people earn less than (and live on less than) $21,000 per year in 2013.
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Old Apr 11th 2013, 1:47 am
  #129  
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Default Re: UK state pension and USA social security

Originally Posted by robin1234 View Post
Hmm.. I'd say those numbers are quite high. Plenty of people earn less than (and live on less than) $21,000 per year in 2013.
Minimum wages full time here would be just over $16,000 at $8 an hour.
We were never "high earners" but Dh has managed more than the minimum on that chart each year. I however didn't. but my SS will be based on his.
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Old Apr 11th 2013, 2:35 am
  #130  
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Default Re: UK state pension and USA social security

Thanks to all of you. I've seen the tables and the "substantial earnings" and I'm convinced that I should be exempted. Problem is when I talked to the Baltimore office I probably should have attempted to go up the ladder to someone who knew wtf was going on. The woman I spoke to passed it off to the local office and they are dumber than a bag of hammers. I truly thought I was done with this! The process of application with the Pensions Office in UK took me 4 months of wading though draconian paperwork & websites and I finally received the "official letter" two days ago,letting me know how much and when. I swear they do this to wear you down to the point where you throw up your hands and give up. I guess I'm going to have to make a Federal Case out of this and see how far up I have to go before common sense prevails.
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Old May 12th 2013, 12:03 am
  #131  
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Default Re: UK state pension and USA social security

Originally Posted by jopavi73 View Post

Anyone had similar experiences or can offer some logical explanation as to why I can be deprived of that $250/month?
You should not have any WEP reduction as a result of your UK Basic State Pension because you have thirty years of US-SS covered substantial earnings.

If you haven't already sorted it out with the local SS office before you apply for the UK State Pension it would be best to do so. Once the US-SS starts a WEP reduction on you it can take them up to two years or more to rectify their error, if you prove it is an error. Maybe best to defer until it's sorted out.

The other thing, which doesn't apply to you anyway, is about the NIC's you may have paid in to the 50 stamp flat scheme prior to April 5, 1975. Those who were employed, or who had the means, were generally considered able to pay the stamp. Those who could not were given a credit. It was a "means test" based contributory pension system, not based on employment as is the current system. Most people were inducted in to the pension system at age 15 while they were still at school. As such it should not be included in any WEP calculation.

On April 6, 1975, the UK changed the Pension system to one based on earnings (with upper and lower level contributions), different classes, work credits, and voluntary contributions. Any UK state pension received that was derived strictly from class 1 contributions in particular is subject to WEP unless you have thirty years US-SS substantial earnings.

Not sure that helps or confuses!

Last edited by Eycott; May 12th 2013 at 12:45 am.
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Old May 12th 2013, 12:36 am
  #132  
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Default Re: UK state pension and USA social security

Originally Posted by Sally Redux View Post
The bit I don't think is fair is that someone with full SS is not WEP'd.
Consider two American citizens, one born in the US and one born in the UK. They both work identical jobs for twenty years, each one contributing the same dollar amount to US Social Security.

At age 66, both are entitled to $1,000 per month (a guess!).

The UK born citizen worked for ten years before emigration for which he is entitled to a third of a UK pension - £40 per week or about $260 per month. So for thirty years work in both countries he could receive $1,260 per month.

WEP (estimate 50% reduction with WEP guarantee) is around $130 per month, so his net pension for thirty years work is $1,130 per month. This just a demonstration - the WEP deduction amount could be less.

The US born citizen is not subject to WEP keeps his $1,000 per month intact for his twenty years of work!

That's not only unfair it's contrary perhaps to US law governing discrimination based on origin!
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Old Jun 4th 2013, 6:48 am
  #133  
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Default Re: UK state pension and USA social security

Originally Posted by nun View Post
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.
Nun,

Actually, it DOES depend on the amount you've contributed, by extension. Simply put, your SS contributions are a percentage (the going rate, just changed for both employee and employer) of your salary up to the maximumwhich changes every year. Your SS is calculated by taking your SS wages over the past 35 years (or best 35 years actually), even if some years were zero, summing them, dividing them by 35, dividing again by 12 then applying the 90%, 32% and 15% formula. The key thing to note here is that these are wages you paid SS on, which, if you made a million a year, were not a million. For 2013 the magic number is $113,700. Since your contribution is a percentage of your wages, capped by that upper limit, your SS is most definitely dependent on the amount you've paid. Non-SS pensions have zero impact on your SS entitlement one way or the other.

It seems to me that WEP is one of those things put in place with good intentions that has inadvertently snared people such as ourselves it was never intended to capture. Like most social programs the high ideal of that 90% figure reveals traps the originators never considered and, as usual, the fix is rather messy and creates more traps in itself.

I worked in the UK and got 23 pension credits before coming to the US in 1987, paying SS up to the max until 2008. I get about $1520 in SS (took it early) and with my UK pension of about $660 (I bought the extra 7 years) I wondered if I had worked in the US those years I'd be better off. Before anyone screams "obviously" stop and think. It's not so obvious, because it is reasonable to assume that my pre-1987 earnings would not have made that much difference to the magic monthly average since wages were much lower (in 1966 for sure!). So, I plugged the max numbers into the calculator going back to 1966 and my pension (early again) comes to $1799, about $250 more but $400 less than I get from my UK pension. Also, it ain't real, cos I sure as shit was not making $6600 in 1966! Then again, those early numbers are so small it doesn't really make much difference one way or the other. I don't like WEP any more than any of you but a few calculations on the back of a napkin shows that we're probably still better off than if we'd worked in the US all those years.

If you want a bit of fun use that SSA WEP calculator and throw in some silly numbers. You'll be surprised at how little difference they make and you'll see that no matter how much non-SS pension you make you will never lose more than 50% of $791.

Where you do need to be careful is with supplemental payments. If you have kids under 18 for example their payments will be impacted too. More research needed on that one.

I've decided to not claim my UK pension for the time being. It's not as if you lose it after all.

Oh, E&O accepted (not excepted) so pick me up on any mistakes!
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Old Jun 4th 2013, 12:26 pm
  #134  
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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.
Originally Posted by Basher7 View Post
Nun,

Actually, it DOES depend on the amount you've contributed, by extension.
You haven't noticed the "only" in my statement. The amount of SS you receive depends on several factors; one of those is your contribution history.

FYI if you delay either US SS or UK state pension both of them will be increased.

Last edited by nun; Jun 4th 2013 at 12:29 pm.
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Old Jun 4th 2013, 2:35 pm
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Default Re: UK state pension and USA social security

Originally Posted by nun View Post
You haven't noticed the "only" in my statement. The amount of SS you receive depends on several factors; one of those is your contribution history.

FYI if you delay either US SS or UK state pension both of them will be increased.
Nun,

Sorry, I did not miss the "only" but I did create that impression in my phrasing. My mistake.

However, I still maintain that since SS is calculated using your SS wages and your contributions are based on those SS wages, your SS is effectively based upon your contributions. You can't seperate the two. Is there another calculation factor I am missing? A quick look at the SS calculation tool indicates no other factors contributing to your entitlement. Where am I going wrong?

Yes, agree on deferment, though in the UK surely that only applies if you keep working and contributing. My (mis?)understanding is that if you don't claim the UK pension at 65 when you are no longer contributing it accumulates at some interest rate over base until you do claim it. It doesn't go up though, other than cost of living increases? Right or wrong?
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