Deferring UK Pensions To Avoid WEP

I'll be getting my UK state pension before long, which means, for the first time, my US state pension will be WEP'd.  I have other UK company pensions that I could take, but don't really need for now.  I don't believe my UK state pension will cause max WEP, but when the others are added in they will.  I've told the US that I've deferred my company pensions for a year but I'm tempted to do it again.

Which makes we wonder - how do you think the US feel about this?  I realise I'm not asking anyone in the US SSA, BTW!  Basically, they'd need to pay me less if I took the UK pensions that I'm entitled to and could take now.  Shouldn't they (whoever "they" are) be slightly miffed?  Discuss!

I’m sure no one cares. The US tax code is riddled with stuff like this and there is a large industry of accountants and advisors who help their clients legally avoid or defer paying more to the government than they should. For example, the retirement forum I’ve been a member of for a long time is full of millionaires who manage to keep their income low enough to qualify for ACA subsidies and/or avoid higher Medicare taxes through IRMAA.  Putting off WEP for a few years is small potatoes.

I’m sure no one cares. The US tax code is riddled with stuff like this and there is a large industry of accountants and advisors who help their clients legally avoid or defer paying more to the government than they should. For example, the retirement forum I’ve been a member of for a long time is full of millionaires who manage to keep their income low enough to qualify for ACA subsidies and/or avoid higher Medicare taxes through IRMAA.  Putting off WEP for a few years is small potatoes.

I daresay you're right.  I told them last year that I'd be taking my UK company pensions this year so they may be in touch with me before then asking for a SSA-308.  I need to think about it but I'm minded to defer another year, at least.

Here's my two cents worth!

I have always understood that deferring is not really an option because it's all about when you're entitled to the UK State Pension and not when you actually start taking it.

The other consderation that shouldn't be overlooked is working through the maths of deferral - although deferral increases the monthly amount you are eventually paid,  I believe you have to live well into your 90's before you actually recoup the pension that you didn't take during the period of your deferral.

I actually have the maximum WEP but oddly enough my 10 years of paying into SS generates a monthly income (post WEP) that is greater than my UK State Pension - which is based on 35 Years of NI contributions.

Here's my two cents worth!

I have always understood that deferring is not really an option because it's all about when you're entitled toi the UK State Pension and not when you actually start taking it.

The other consderation that shouldn't be overlooked is working through the maths of deferral - although deferral increases the monthly amount you are paid,  I believe you have to live well into your 90's before you actually recoup the pension that you didn't take.

I actually have the maximum WEP but oddly enough my 10 years of paying into SS generates a monthly , I'm going to income (post WEP) that is greater than my UK State Pension - which is based on 35 Years of NI contributions.

I've seen different opinions on this.  To be clear I'm going to take my UK state pension at the normal retirement age (66 for me).  But I've already deferred my 2 UK company pensions.  The question of when you're "entitled" to your company pensions is a thorny one because since the pension freedoms act (2015?) you can take them at age 55 if you want.  I tend to go with the opinions I've read that the US don't really care until you actually start taking your pension.

There is another thing to consider with company pensions though.  That is that they can be passed on to a surviving spouse, in the way that state pension can't.

I've seen different opinions on this.  To be clear I'm going to take my UK state pension at the normal retirement age (66 for me).  But I've already deferred my 2 UK company pensions.  The question of when you're "entitled" to your company pensions is a thorny one because since the pension freedoms act (2015?) you can take them at age 55 if you want.  I tend to go with the opinions I've read that the US don't really care until you actually start taking your pension.

There is another thing to consider with company pensions though.  That is that they can be passed on to a surviving spouse, in the way that state pension can't.

Exactly.  I delayed taking my UK private pension for 7 years because of this.  This is also why I'm delaying the taking of my SS until age 70, because my wife's SS is less than half of mine. Once I start taking my SS her SS will be bumped up to be half of mine.  When I die her SS will be bumped up to what mine is at time of death.

Here's my two cents worth!

I have always understood that deferring is not really an option because it's all about when you're entitled to the UK State Pension and not when you actually start taking it.

The other consderation that shouldn't be overlooked is working through the maths of deferral - although deferral increases the monthly amount you are eventually paid,  I believe you have to live well into your 90's before you actually recoup the pension that you didn't take during the period of your deferral.

I agree and had a similar conversation this week with a good friend about when to take SS.  I told him that actuarially it amounts to the same regardless of when he takes it. (by age 83(?) he will have received the same amount).  I told him that he may as well as take it at 62 but a good place to run scenarios is a site used by many planning retirement. You can run various scenarios and for accuracy you need to know your PIA which you can get from your annual Social Security statement.

The "Primary Insurance Amount" (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if they elect to begin receiving retirement benefits at their normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.

https://opensocialsecurity.com/