WEP and voluntary national insurance contributions

Scenario: Someone has worked for several years in the US and accumulated SS years but not many years in the UK.

Until April, you can make voluntary national insurance contributions to purchase years of UK pension credit back to 2006. It's a good deal from the UK perspective as you will be into profit if you survive more than 3 years past pension age.

But how does this interact with WEP calculations and a US taxes? Is it still a good deal from US-UK perspective?

Ok check me on this but I just last year went through this scenario with my cousin and as I recall WEP only applies to pension derived from earned contributions, not voluntary ones.

Ok check me on this but I just last year went through this scenario with my cousin and as I recall WEP only applies to pension derived from earned contributions, not voluntary ones.

Correct. You can fill out form SSA 308 when applying, and section 5 covers voluntary contributions. My wife and I have been this and believe voluntary contributions are a good deal since they don’t affect WEP calculations. These days the OAP is a straight line calculation so it is easy to figure out the amount due to earned contributions only.

https://www.ssa.gov/forms/ssa-308.pdf

It can get a bit tricky when you had made voluntary contributions and contributions via work in the same year. As stated voluntary class 2/3 does not affect WEP calculation.

It can get a bit tricky when you had made voluntary contributions and contributions via work in the same year. As stated voluntary class 2/3 does not affect WEP calculation.

I would think your record woud state either "Voluntary" or otherwise.  I can't say as I wasn't aware of any partial years that were later made up with some months of voluntary contributions. My wife's record also shows which years she was credited with by virtue of not working but having at least 1 child under school age at home so those years were also exempt from WEP as they did not come from employment. (7 such years)

I would think your record woud state either "Voluntary" or otherwise.  I can't say as I wasn't aware of any partial years that were later made up with some months of voluntary contributions. My wife's record also shows which years she was credited with by virtue of not working but having at least 1 child under school age at home so those years were also exempt from WEP as they did not come from employment. (7 such years)

My record shows an amount paid under work and then under voluntary. Not sure how this will drill down come SS time though. I’d expect HMRC will hold the finer details though.

I wonder what if SS take into account contributions through work once you have already had a lifetime of voluntary contributions and reached an amount for a full OAP? Say for example your’re 60, already paid a lifetime of voluntary, but decide to work in the U.K.?

My record shows an amount paid under work and then under voluntary. Not sure how this will drill down come SS time though. I’d expect HMRC will hold the finer details though.

I wonder what if SS take into account contributions through work once you have already had a lifetime of voluntary contributions and reached an amount for a full OAP? Say for example your’re 60, already paid a lifetime of voluntary, but decide to work in the U.K.?

I would hope that since 35 years of voluntary contributions is the max you can earn and working beyond that gets you zero extra money that none of your OAP would apply to WEP. I would think that scenario you describe is very rare.  Can you start making voluntary contributions before earning any years from work?

I would hope that since 35 years of voluntary contributions is the max you can earn and working beyond that gets you zero extra money that none of your OAP would apply to WEP. I would think that scenario you describe is very rare.  Can you start making voluntary contributions before earning any years from work?

It was common for those raising a family to pay VC and not work until later in life. Also a credible scenario would be anyone who had spent a lifetime overseas paying VC to return 36 years later and perhaps work.

It was common for those raising a family to pay VC and not work until later in life. Also a credible scenario would be anyone who had spent a lifetime overseas paying VC to return 36 years later and perhaps work.

Your scenario above is someone aged 60 with 35 years of VC and none from work which, as I say above, I think will be a rare situation but the person’s record on the DWP site should clearly show that. Any WEP impact when they apply for SS is going to be small even if they start working at 60.  If they claim SS at 62 then that would be best from a WEP standpoint