Not sure that I am posting this to the right group. Please advise if I should post elsewhere. This post is about complications with US social security for long-time US residents/citizens (British expats) who are also drawing British government pensions and British company pensions.

My brother (ex Brit) has just applied for his US social security after living/working in the US for the past 28 years. He is being told that his UK pension (he also worked for about 20 years in UK) will be factored into his SS and could result in as much as a 70% reduction in his SS pension. It also appears that the same type of penalty is applied to his company pension from the UK. Consequently, his social security income will be reduced substantially because of his UK pensions.

Does anyone have personal experience with this problem?? It seems extremely unfair that a company pension from the UK should be treated differently from a US company pension.

EXACTLY what I was told!

EXACTLY what I was told! Your better off collecting your US SS living in the UK.

I could be wrong, but I have a feeling that after 30 years the UK pension becomes irrelevant. Could he wait a couple more years before claiming? (Or withdraw his current claim?)

WEP will still apply if you collect US SS in the UK.

If someone has paid SS tax for 28 years the most SS can be reduced per month in 2014 is $81. However, if $81 is more than half of the non-SS pension then the WEP would be reduced to 50% of the non-SS pension.

Sadly, it's true. It's known as WEP - Windfall Elimination Provision. In a nutshell, Social Security replaces only a portion of your US income - so, if you get money from a foreign pension fund, that money offsets what you'd get from Social Security. Result: Social Security payments are lower. I don't necessarily agree with this approach, but I certainly understand why Social Security takes that position.


I don't have personal experience with it, but I know of someone who does.


It's not just a UK issue. The WEP also affects those of us who have a pension in Canada.

Ian

Or a US pension from an employment where SS contributions were not deducted. That catches out people who have had certain Federal jobs.

It's not just UK or Canadian (i.e. foreign) employment and pensions. WEP applies to non-SS employment, which may include being a teacher or other public employee in Massachusetts, for instance, as MA public employees have their own system and don't contribute to Social Security. I believe some other US states too.

It's called Windfall Elimination Provision (WEP) but it won't impact anything like 70% of his Social Security. The most that WEP can impact is the LESSER of:

- a reduction from 90% of earnings to 40% of the first tier Social Security payment. Subsequent tiers are not impacted; OR
- 50% of the non-Social Security pension on which WEP is based.

In addition, if he has 28 years earnings, the first tier SS payment is only reduced from 90% to 80% .

http://www.ssa.gov/pubs/EN-05-10045.pdf

There is myths and exaggeration out there about WEP and even many Social Security staff often don't know how to apply the formulas correctly. So do your own research and make sure you know the (expected) answer in advance of making any application.