Re: WTH... WEP? Really?
 

I can confirm that in practice. My wife’s only foreign pension was the UK OAP and she enjoyed her SS until the day she hit 67 and started drawing her OAP and her SS was immediately reduced through WEP.

Re: WTH... WEP? Really?
 

Ok, thanks for the input everyone!

Re: WTH... WEP? Really?
 

My spouse was a county employee whose salary was outside of Social Security. She also had 16 years of prior earnings under Social Security. She started drawing SS as soon as she was able while working until 68 for the county. WEP kicked only when she started drawing the county pension. I was under the previous rules which allowed me to elect to receive spousal benefit while deferring my own benefit to age 70. My spousal benefit was subject her WEP when it cranked in. That said, I was only subject to WEP for one year before I withdrew the election to take spousal in lieu of my own benefit. (Again the rule I took advantage of was repealed).

Re: WTH... WEP? Really?
 

Thanks guys, I suspect I will set my UK defined contribution pension to coincide with the UK state pension at 67, then take my US SS pension at 62 to get 5 years of no WEP, possibly taking some of my 401k if need-be.

Re the 401k - will the US/UK agreement allow my to treat this like a UK defined contribution and take 25% tax-free?

Re: WTH... WEP? Really?
 

No, it is 100% taxable.

Re: WTH... WEP? Really?
 

Found this...
https://www.congress.gov/bill/118th-.../82/cosponsors

Re: WTH... WEP? Really?
 

Thanks for the first post Glasgow Girl about voluntary contributions to UK state...
I went on my account and can see an amount of GBP 981 that I would need to pay to top up...
Is that what you are talking about?
If so, any way to know what the ROI or Return On Investment would be in terms of increased benefit?

Re: WTH... WEP? Re
 

You can always backfill (or top up) the prior 6 NI years, and pay annually for future NI years (until you reach state retirement age). Most people can top up the years between 2006 and 2016 as well, but that option ends in April 2025. (It may already be too late due to extensive processing times and although they may honor applications made before April, 2025, there is no clear guidance on that).

Backfilling costs £179.40 for each backfilled year if paying Class 2, and £907.40 if paying Class 3. To qualify for Class 2 rates you need to have been employed in the year you are backfilling (overseas employment is fine) otherwise it’s Class 3 rates. Each additional NI year will buy you £6.32 a week for each backfilled year, or £328.64 a year, for every year you collect. The payback period is therefore about 6.5 months at Class 2, or about 33 months at Class 3 rates. So long, as you collect for more than the payback period it’s a pretty good investment for a guaranteed return linked to inflation (at least for now) and clearly the longer you live, the better the return. At Class 2 rates it’s the deal of the century, and even at Class 3 rates is still a very good deal.

Not sure where the £981 figure came from but I would call them and ask. You can apply online https://www.gov.uk/guidance/apply-to...en-abroad-cf83. Apply for Class 2 rates and see what happens. They should charge Class 2 when employed, and Class 3 when not employed. They will require details of employment. A lot of very useful information in this thread, start reading from the most recent comments. https://britishexpats.com/forum/usa-...utions-874408/

Re: WTH... WEP? Really?
 

Wow...
What a gem you are!
So looks like I mixed my numbers up..
I logged on, and did the questionnaire.
Its saying I am eligible for class 2 top ups back to 2006, as I've been employed or self employed here in the USA for most of those years.
But the printout i did, says Class 3 is GBP 824.20 from 2006 to 2020.. then 2020-21 is GBP 795.60, 2021-2022 is GBP 800.80, and 2023-2024 is GBP 907.40.

When you apply, for Class 2 do you have to send a payment?

Re: WTH... WEP? Really?
 

The rates are different for prior years as you have found out. The numbers I quoted are for 2024/25 which ties up with your printout. It’s been a long time since I personally started this process but I believe these days you apply and then get the information required to send a payment. Processing times for applications are currently long. Fairly recently a year or so was not unusual, don’t know the current times but given the deadline of 5 April for paying years 2006 -2016 I would get on this immediately and apply online. When you get authorization send your payment immediately.

From what you said previously it looks as if you have 22 years and therefore since you normally need 35 years to get the full pension you need 13 more years before you attain that. If you were ever contracted out of the state pension you could need up to 42 years to make up for being contracted out. (You could have been contracted out without your knowledge by being part of a company pension scheme). However, if you take what they are projecting per week subtract that from the current full weekly pension of £221.20 (in 2024) and divide by £6.32 (in 2024) that will tell you how many additional years you need. Round up the result to the next whole number.

If you can, I would apply and pay for as many historical years as you can (up to the maximum required for the full state pension). I say that because there is no guarantee that this opportunity will persist into the future given the need to control public spending. I doubt any government will tinker with the pension itself, but removing the ability for non residents to contribute voluntary contributions would be an easy way to cut spending without risking votes.

Re: WTH... WEP? Really?
 

Again, THANK YOU!
I know I was contracted out, but dont know how long...
Looking at my account, it says...

Your State Pension summary

Your forecast is £161.85 a week, £703.76 a month, £8,445.10 a year

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2024
£136.57 a week Forecast if you contribute until 5 April 2028
£161.85 a week

You can improve your forecast

You have shortfalls in your National Insurance record that you can fill and make count towards your State Pension.

The most you can increase your forecast to is
£221.20 a week


So, is it 221.20 minus 136.57 which would be 83.63 divided by 6.32 is 13.2
Or is it 221.20 minus 161.85 which would be 59.35 divided by 6.32 is 9.39

Re: WTH... WEP? Really?ou
 

Both! As it stands right now, you need 13.2 more years to reach the full state pension, which means 14 further full NI years since partial years get you nothing. That can be achieved by backfilling 10 years and contributing forward for the remaining 4 years before you reach the state pension age, or backfilling 14 years in which case you are done and should not contribute any further since you won’t get anything. The difference between the two forecasts is simply whether or not you contribute going forward, the amount is exactly 4* £6.32.

Even though you were contracted out, your data suggests that you were at or below average earnings in which case there would be no adjustment to make for being contracted out. If there were an adjustment that would be identified on your forecast as a COPE deduction and would reduce your state pension by that amount, and that is when you would need additional years beyond 35 to attain the full pension.

Re: WTH... WEP? Really?
 

Well, I worked my way through the online application...
Couldn't remember my exact dates, but did the best I could...
Got this confirmation..

HMRC received your application to pay voluntary contributions for periods living or working abroad

Re: WTH... WEP? Really?
 

A quick calculation say every NI class 2 payment of GBP179.40 buys an annual increase of GBP328.64...
If I can pay all 14 years, it would take my UK state pension from a projected GBP7701.64 to GBP11502.40...
If my calculations are correct, that would compensate for any WEP loss!

Re: WTH... WEP? Really?
 

HR-82 PASSED THE HOUSE YESTERDAY!

WE DID IT ! Just heard from our team in DC and they were down right giddy with good cause! House voted down Arrington's bill.



HR 82 PASSED with 325 voting for it, 75 Nays, 1 Present, 1 Absent. Senate vote will roll up next and fast. We will be ready for that also. Never say never!!! This group has accomplished something that did not see the light of day for 44 years!!