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UK state pension and USA social security

UK state pension and USA social security

Old Feb 22nd 2017, 3:14 am
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
Yes, Pulaski .... I think I get what you say. Although it is far from clear, I think I can now see how the WEP system would apply to my circumstances; principally because I have less than 20 years of substantial earnings in the US (in fact I have 3 years).

There are some worked examples earlier in this thread (well from back in 2013) and using those I will attempt to do a rough calculation to project what, if anything, I may receive from Uncle Sam (or is it now Uncle Donald).... and post my calcs for comment/ feedback.
In case you haven't seen it here's the table of max WEP. Note the note in red under the table:

https://www.ssa.gov/planners/retire/wep-chart.html

Originally Posted by Asg123 View Post
So findthespot should get SS, but it'll be reduced by about 55% from what it would've been without WEP.
There's no set percentage it can be reduced by because there's both a maximum WEP amount and a limit of 50% of the non-SS pension.
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Old Feb 22nd 2017, 4:18 pm
  #1352  
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
I will be entitled to a full UK state pension as I have the required number of qualifying years etc.

My query relates to a 30 month period (1989-19991) when I was employed directly (on B-1 visa !?) by a US firm and I lived and paid taxes etc in the States.

Apparently, I accumulated 12 US social security credits during this period of work.
After 90 pages, all this SS/WEP confusion is becoming a bit staid, sooo, let's shake things up a bit.

There is an outside possibility that your SS benefits will not be WEPed, at all.

https://secure.ssa.gov/poms.nsf/lnx/0201701301

I emphasise this is only possible, if it is indeed possible, because the benefit is subject to a totalisation agreement and the payable benefits accrued prior to January 1995.
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Old Feb 22nd 2017, 4:48 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post
After 90 pages, all this SS/WEP confusion is becoming a bit staid, sooo, let's shake things up a bit.

There is an outside possibility that your SS benefits will not be WEPed, at all.

https://secure.ssa.gov/poms.nsf/lnx/0201701301

I emphasise this is only possible, if it is indeed possible, because the benefit is subject to a totalisation agreement and the payable benefits accrued prior to January 1995.
The plot thickens. The link appears to state that any retirement based on SS based income before 1995, as is my case, has no WEP deduction. This may be become more intriguing than my day job !

I have used an SSA guide called - " Your retirement benefit - How it is figured" - to estimate my full monthly retirement benefit to be circa $430 per month, BEFORE WEP. If WEP is not deducted, then TBH this seems to be way too generous. Are US state pensions really that lavish ?

My full UK full state pension, if not deferred, is currently estimated to be worth approx $750 per month. On that basis I may attempt to use the totalisation agreement to bulk up my US entitlement and live the good life courtesy of dictator Donald.

Last edited by findthespot; Feb 22nd 2017 at 4:52 pm.
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Old Feb 22nd 2017, 4:57 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
The plot thickens. The link appears to state that any retirement based on SS based income before 1995, as is my case, has no WEP deduction. This may be become more intriguing than my day job !
it's very interersting, but the key is both pre-1995 and the use of a totalisation agreement to qualify for benefits.

Originally Posted by findthespot View Post
My full UK full state pension, if not deferred, is currently estimated to be worth approx $750 per month. On that basis I may attempt to use the totalisation agreement to bulk up my US entitlement and live the good life courtesy of dictator Donald.
The totalisation agreement doesn't increase your benefits per se, it just makes you eligible if you weren't otherwise, as in your case.
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Old Feb 22nd 2017, 5:03 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
The plot thickens. The link appears to state that any retirement based on SS based income before 1995, as is my case, has no WEP deduction.
No it doesn't. It clearly states based on the Totalization benefit.
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Old Feb 22nd 2017, 5:07 pm
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Default Re: UK state pension and USA social security

Originally Posted by Giantaxe View Post
it's very interersting, but the key is both pre-1995 and the use of a totalisation agreement to qualify for benefits.



The totalisation agreement doesn't increase your benefits per se, it just makes you eligible if you weren't otherwise, as in your case.
I thought for example for the UK that years working in the US count towards whether get the 10 year minimum for a pension. but the amount of pension how much paid into UK pension, unless it was very low then US credits would maybe help get some pension in UK. I am sure some of posters could explain.IN my case my pension record shows several years "full payments" for time I was working in US, even years I wasn't paying NIC payments. Afraid to ask them why !

I am trying to understand US system. I have one child under 18, as I understand it when I start drawing social security she is entitled to half my regular full pension from US even if I draw early retirement. Nut then it says ,y wife if she is "caring: for child can also draw some benefits even though she is not of pension age, but I cant seem to understand how much and what is definition of "caring".
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Old Feb 22nd 2017, 6:27 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
.... I have used an SSA guide called - " Your retirement benefit - How it is figured" - to estimate my full monthly retirement benefit to be circa $430 per month, BEFORE WEP. If WEP is not deducted, then TBH this seems to be way too generous. Are US state pensions really that lavish ? ....
I am not sure I'd describe SS as "lavish", but for those on very low income and who have paid in very little by way of contributions, the percentage of pre-retirement income that is paid as SS post retirement is very high, about 90% IIRC. ...... Which is exactly why WEP was invented - to stop people with multiple pension savings benefiting from the low end of SS payments which pays a very high percentage to those assessed as being "poor".
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Old Feb 22nd 2017, 7:46 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot .... "The plot thickens. The link appears to state that any retirement based on SS based income before 1995, as is my case, has no WEP deduction."


Originally Posted by lansbury View Post
No it doesn't. It clearly states based on the Totalization benefit.
Help. Aren't the totalisation benefit and the totalisation agreement one and the same ?

Glantaxe said .... "The totalisation agreement doesn't increase your benefits per se, it just makes you eligible if you weren't otherwise, as in your case."

So does the totalisation agreement / benefit apply to me. Yes or no ? If any member is unsure, what question(s) would need to be answered.

I sense that it must apply to me as otherwise my 12 US SS credits accrued between '89 and '91 would have not have entitled me to a US retirement benefit when I reach the full retirement age.

If the totalisation agreement/ benefit does apply to me, then Lansbury could you please clarify what you were referring to in your last quote. Surely then the WEP does not apply as per GN 01701.301 !?
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Old Feb 22nd 2017, 10:37 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
Originally Posted by findthespot .... "The plot thickens. The link appears to state that any retirement based on SS based income before 1995, as is my case, has no WEP deduction."




Help. Aren't the totalisation benefit and the totalisation agreement one and the same ?

Glantaxe said .... "The totalisation agreement doesn't increase your benefits per se, it just makes you eligible if you weren't otherwise, as in your case."

So does the totalisation agreement / benefit apply to me. Yes or no ? If any member is unsure, what question(s) would need to be answered.

I sense that it must apply to me as otherwise my 12 US SS credits accrued between '89 and '91 would have not have entitled me to a US retirement benefit when I reach the full retirement age.

If the totalisation agreement/ benefit does apply to me, then Lansbury could you please clarify what you were referring to in your last quote. Surely then the WEP does not apply as per GN 01701.301 !?
I don't think the link says any retirement based SS income, it says a SS income based on a Totalization benefit. In your case your SS contributions do not meet the minimum requirement for a SS pension, therefore you are are getting a Totalization benefit.

If your SS contributions were enough for a pension in their own right even if it was based on income before 1995 it would be subject to WEP. That pension isn't a Totalization benefit.

That is my reading of that document which is of course my opinion of what it says.
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Old Feb 22nd 2017, 11:48 pm
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
I don't think the link says any retirement based SS income, it says a SS income based on a Totalization benefit. In your case your SS contributions do not meet the minimum requirement for a SS pension, therefore you are are getting a Totalization benefit.

If your SS contributions were enough for a pension in their own right even if it was based on income before 1995 it would be subject to WEP. That pension isn't a Totalization benefit.

That is my reading of that document which is of course my opinion of what it says.
Thanks. TBH I am still totally confused. My SS contributions gave me 12 credits which is NOT enough for a pension in their own right. The credits were based on income before 1995. So I presume the totalisation benefit is what gives me the right to some retirement benefit, but do you think it would be subject to WEP?

Apologies for appearing thick, but it would appear that one may need to take a PhD in order to estimate one's entitlement !

If any member fancies giving it a go my earnings were $17K in 1989, $43K in 1990 and $40K in 1991, i.e. all below the upper earnings limit foe each year. Using the SSA guide, "Retirement Benefit - How it is Figured", I calculate my monthly retirement benefit at full retirement age to be approx $470. That seems very high - I was accounting for less than £100 per month.

My calcs were as follows - Steps 1-3 ; total earnings - $100K x index factor of 2.21 (used 1990 factor as average) = $221K - my indexed earnings. Then divide by 420 (35 years of months) and this gives me an average indexed monthly earnings of $526 - Step 5. Then Step 6 guides me to multiply this sum x 90% = $473. This is my estimated monthly retirement benefit at age 66. Now I recognise that the guide is based on a person who is 4 years older than myself, but the $473 will only increase over the next 4 years due to cost of living increases. Are my calculations correct ? As to WEP well if GN 01701.301applies to me then there may be no deduction !? ...but I doubt it. If it did apply my UK state pension at 66, if I took it, would be worth circa $800 per month based on current low exchange rate. If that were reduced by 50% max WEP reduction for non-covered employment then that would leave me with $73 per month. That said, if WEP were to apply then I could simply elect to defer my UK state pension entitlement (many UK residents with substantial assets and savings do that) and the benefit value will increase every year until I elect to have it paid (along with any company pension entitlement) ... so for say 5 years could I draw a full US retirement benefit as I will not be in receipt of any other benefit arising from "non-covered employment". i.e. 50% of nothing .. is nothing. Simple !

Last edited by findthespot; Feb 23rd 2017 at 12:30 am.
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Old Feb 23rd 2017, 1:22 am
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Default Re: UK state pension and USA social security

The way I read the document, in your circumstances your SS pension would not be subject to WEP.
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Old Feb 23rd 2017, 3:47 am
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
If that were reduced by 50% max WEP reduction for non-covered employment then that would leave me with $73 per month.
I once entered numbers on an online calculator and what came up was consistent with the SS payment being the higher of this and a payment using around 40% (around 55% WEP reduction) instead of your 90% figure. That's if WEP applies, but OAP's post has put a question mark over whether WEP applies at all.
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Old Feb 23rd 2017, 9:10 am
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post

Using the SSA guide, "Retirement Benefit - How it is Figured !
You cannot use that calculator, it is for those with 35 years (420 months) of substantial earnings.

You must use the "Detailed Calculator" from the SSA site. It is the only calculator which can handle your particular situation. Even then, it may allow for WEP. If so, the calculations will indicate a pre-WEP PIA. If the above allowance (totalisation plus pre-1995) is allowed, then the pre-WEP PIA figure should be your benefit.
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Old Feb 23rd 2017, 4:42 pm
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Default Re: UK state pension and USA social security

Originally Posted by theOAP View Post
You cannot use that calculator, it is for those with 35 years (420 months) of substantial earnings.

You must use the "Detailed Calculator" from the SSA site. It is the only calculator which can handle your particular situation. Even then, it may allow for WEP. If so, the calculations will indicate a pre-WEP PIA. If the above allowance (totalisation plus pre-1995) is allowed, then the pre-WEP PIA figure should be your benefit.
Thanks. I downloaded the "detailed calculator", but it appeared to be totally user unfriendly .... I filled in the relevant forms, but at no stage did it seem to want to give me a future projection of my retirement benefit at full retirement age.

Where do I go from here ?

I could call, or most likely email, the SSA team at US London Embassy, and they will hopefully get back to me. I could call the SSA office in the US on 410-965-2356. Alternatively, does anybody know of a firm in the UK who offer guidance re US retirement benefits and the US social security system.

I had at the outset assumed my query may have been a simple one to answer. I appear to have been mistaken. Thankfully, I am tenacious and will get to the bottom of this.

Cheers

Last edited by findthespot; Feb 23rd 2017 at 4:49 pm.
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Old Feb 23rd 2017, 5:14 pm
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Default Re: UK state pension and USA social security

Originally Posted by findthespot View Post
Thanks. I downloaded the "detailed calculator", but it appeared to be totally user unfriendly .... I filled in the relevant forms, but at no stage did it seem to want to give me a future projection of my retirement benefit at full retirement age.
Keep working with it and make sure you have used all the relevant drop downs. All relevant drop downs must be completed accurately. Make sure each year has the correct figures (in your case that will be only 3 years with the rest at $0). It does work. Have you hit the activation button?

Originally Posted by findthespot View Post
I could call the SSA office in the US on 410-965-2356. Alternatively, does anybody know of a firm in the UK who offer guidance re US retirement benefits and the US social security system.
Keep trying the FBU at the US Embassy in London. Check the website, it may give hours when it can be reached.

Originally Posted by findthespot View Post
I had at the outset assumed my query may have been a simple one to answer. I appear to have been mistaken. Thankfully, I am tenacious and will get to the bottom of this.
Your particular situation is very simple.

You have 3 years of US SS contributions and you want to apply the totalisation agreement with the UK, using your basis in a UK State pension with more than 7 years contributions(?), to achieve the 10 years required to qualify for a US SS benefit. The US benefit, once allowed, will be for only the 3 years to which you contributed; the benefits of your UK State pension will remain unaffected by these actions. You will receive a UK State pension benefit dependent on the total number of years of your contributions.

You will have 2 pensions, the limited US SS and the UK State pension. If you remain in the UK, the US SS benefit can be deposited directly into your UK bank account.
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