WEP and voluntary WEP contributions

Hey there,

I am familiar with WEP. I believe that voluntary contributions to UK NI will reduce the amount of UK pension taken into account for WEP. So if we say my UK Pension will be 900 pounds / month, but this is based on 50% voluntary contributions, am I correct that only 450 pounds will be used in the WEP calculation, and I can only loose 50% of that? I've also got 23 years of US high income contributions so this should shave something off WEP as well.

I've been taking my US SS for 4 years already but become entitled to UK state pension later this year.

Does it matter what class of voluntary contributions were made? Mine are mostly class 2 with a couple of class 3. Will I have to account for this at some time? Because I took my US early I was not taking a UK pension when I applied so I would have said I had no other pensions, but I can't remember whether the application asked if I would get one in the future (I would have been honest).

Thanks

Rick

Hey there,

I am familiar with WEP. I believe that voluntary contributions to UK NI will reduce the amount of UK pension taken into account for WEP. So if we say my UK Pension will be 900 pounds / month, but this is based on 50% voluntary contributions, am I correct that only 450 pounds will be used in the WEP calculation, and I can only loose 50% of that? I've also got 23 years of US high income contributions so this should shave something off WEP as well.

I've been taking my US SS for 4 years already but become entitled to UK state pension later this year.

Does it matter what class of voluntary contributions were made? Mine are mostly class 2 with a couple of class 3. Will I have to account for this at some time? Because I took my US early I was not taking a UK pension when I applied so I would have said I had no other pensions, but I can't remember whether the application asked if I would get one in the future (I would have been honest).

Thanks

Rick

That all sounds about right, and it doesn’t matter what type of contributions you paid with as what counts is only those years of contributions which were paid for out of a job that didn’t also pay into SS.

You are also correct that the WEP reduction is at a maximum at 20 years SS contributions and moves down on a sliding scale to zero at 30 years.

Here is the form that you can send into the SSA to reduce that WEP. Note that question 5 is specifically about voluntary contributions

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

That all sounds about right, and it doesn’t matter what type of contributions you paid with as what counts is only those years of contributions which were paid for out of a job that didn’t also pay into SS.

You are also correct that the WEP reduction is at a maximum at 20 years SS contributions and moves down on a sliding scale to zero at 30 years.

Here is the form that you can send into the SSA to reduce that WEP. Note that question 5 is specifically about voluntary contributions

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

I think I'm going to commit pedantry, so sorry, but when you say "what counts is only those years of contributions which were paid for out of a job that didn’t also pay into SS." I don't think you are strictly correct when it comes to UK state pension. I had a US state job and did not pay into US social security, instead I had to pay into the state employee pension fund and it is that pension that will be used to calculate my WEP. I made voluntary NI payments while I had that job and those payments were not connected with employment or self-employment so any UK state pension amount due to them should not be included in any WEP calculation. Also excluded form WEP calculations will be any contributions you got when you were at Sixth Form College. UK state pension will only factor in WEP if you worked at a job where you had to pay UK NI and not US SS.

So - I logged onto my account at gov.uk. I am a bit confused RE 3 things.

1. Based on my count I have 32 full years, yet the forecast says I will get a full UK state pension and I don't need to pay anymore. I thought I needed 35? Maybe there is some transition for those of us who were closer to retirement when the laws changed (2016 maybe)?

2. I qualified for class 2 NI due to this I suppose:

<<Class 2 contributions are for those expats living and working abroad “but only if you worked in the UK immediately before leaving, and you've previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.” >>

that was me. But on my record Class 2 contributions show as being paid as self employment - and not voluntary. The couple of Class 3 contributions I had to pay for (going back to before I left the UK) are recorded as voluntary.

3. When I last worked in the UK I was  a company director of my own company. Like most people I paid myself a small salary and took the rest in dividends. The salary was enough to get a "notional" NI contribution for the year without actually paying any NI. On my record when I expand those years to look at the details nothing shows!

Will the US SS and the UK NI coordinate RE this - or will they take my word for it on the 308 form?

Cheers

R

So - I logged onto my account at gov.uk. I am a bit confused RE 3 things.

1. Based on my count I have 32 full years, yet the forecast says I will get a full UK state pension and I don't need to pay anymore. I thought I needed 35? Maybe there is some transition for those of us who were closer to retirement when the laws changed (2016 maybe)?

2. I qualified for class 2 NI due to this I suppose:

<<Class 2 contributions are for those expats living and working abroad “but only if you worked in the UK immediately before leaving, and you've previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.” >>

that was me. But on my record Class 2 contributions show as being paid as self employment - and not voluntary. The couple of Class 3 contributions I had to pay for (going back to before I left the UK) are recorded as voluntary.

3. When I last worked in the UK I was  a company director of my own company. Like most people I paid myself a small salary and took the rest in dividends. The salary was enough to get a "notional" NI contribution for the year without actually paying any NI. On my record when I expand those years to look at the details nothing shows!

Will the US SS and the UK NI coordinate RE this - or will they take my word for it on the 308 form?

Cheers

R

Pretty sure it is 35 years needed. I was born in 1955 and just 6 weeks too young to be allowed to buy make up years which is what older folks were allowed to do - they weren’t simply gifted extra years. At least that is how I recall it happening.

Not sure about your other questions but on your last point, the FBU agent told my wife to complete SSA 308 but that they would coordinate with DWP to confirm the numbers.

Pretty sure it is 35 years needed. I was born in 1955 and just 6 weeks too young to be allowed to buy make up years which is what older folks were allowed to do - they weren’t simply gifted extra years. At least that is how I recall it happening.

Not sure about your other questions but on your last point, the FBU agent told my wife to complete SSA 308 but that they would coordinate with DWP to confirm the numbers.

[For the benefit of the OP, but relevant to your last point]

My recent experience is that the communication between FBU and DWP is not exactly "efficient". FBU have had to resubmit my PODSU-231* form once already, because of no response from DWP. *PODSU-231 is a form used to get confirmation from DWP that the years of NI you say were voluntary/non-employment based were voluntary/non-employment based.

In addition to that, FBU have simply not been answering the phone for several weeks now. When I contacted them by message to ask if DWP had responded yet, I received the following reply: "The Windfall Elimination Provision is not currently applied to your benefits [I already knew that, as evidenced by my original message to them]. We have received the PODSU231 from the DWP and have provided it to the processing office for their office to determine the WEP offset going forward.Once they have completed the above actions they will notify you in writing."

- in other words, keep waiting. I received the above message from FBU 3 months ago. So far, it's now 14 months since my SSA pension should have been WEP'ed and when they eventually get around to processing things, I calculate that I'll probably receive nothing from SSA for many months, until it all "catches up."

I think recent legislation only allows them to catch up overpayments with a maximum of 10% of your payments.. My partner who is not FRA made more than she was allowed last year - but they can't just stop or make your payments 0 - just 10% per year. I hope the same applies if WEP hasn't been applied when it should have.

https://blog.ssa.gov/social-security-eliminates-overpayment-burden-for-social-security-beneficiaries-automatic-overpayment-recovery-rate-reduced-to-10-percent/#:~:text=As%20of%20March%2025%2C%202024,an%20overpayment%20resulted%20from%20fraud.

I definitely have 31 years but the forecast says I have enough for a full pension. I remain confused.com.

I definitely have 31 years but the forecast says I have enough for a full pension. I remain confused.com.

It should show how much per week and if it is £221.20 then you are good to go.

https://www.citizensadvice.org.uk/debt-and-money/pensions/types-of-pension/state-pension/#:~:text=in%20April%202016.-,The%20full%20basic%20State%20Pension%20you%20can%20get%20is%20%C2%A3,before%20or%20after%20April%202016.

yep that's what it shows...I do have some partial years - I wonder if those combine to make a full one? Anyway I'm not going to worry about it.

RE WEP / Voluntary contributions I'm going to say all the ones that do not show my paid contributions for the year are voluntary - I'll let them argue and if I'm subsequently penalised at 10% per year so be it - if they take years to figure out the WEP they'll never claim it all back at 10%.

My partner was overpaid by $15K last year but they can only reclaim 220 / month.

Here's a question for you UK residents (I'm in the US) - do you have the medicare contribution taken out?

R

Here's a question for you UK residents (I'm in the US) - do you have the medicare contribution taken out?

R

No, we have no intention of ever moving back, just visit. So when we were 65 we claimed Medicare Part A on the advice of the FBU because it is free but don’t have Medicare part B.

I didn't realise not paying medicare was an option. I've been in both healthcare systems for extended periods and I'm pleased I'm in the US at the moment for some health issues (CT scan the same day, 5 days for an MRI and results the next day etc...). I've been reading horror stories Re wait times / A & E etc. However that's another discussion...

R

I didn't realise not paying medicare was an option. I've been in both healthcare systems for extended periods and I'm pleased I'm in the US at the moment for some health issues (CT scan the same day, 5 days for an MRI and results the next day etc...). I've been reading horror stories Re wait times / A & E etc. However that's another discussion...

R

Yes, Medicare is optional, and it does not cover any services outside the country so little point in paying if live outside the USA.  If you don’t opt in and start paying then later decide you want to join Medicaid you have to pay subscriptions for the years you missed, or something like that.

We have private insurance here and recently I have seen a GP same day for a referral, consultation with a surgeon the following week and MRI same day I saw the surgeon. (Surgery on the knee was a few weeks later). The NHS is a mess these days but the private sector is still quite good.

Yes I suppose your private health care brings it up to US standards (if you have insurance or Medicare in the US). As well as Medicare I pay for a supplemental policy which covers everything and lets me go to the Mayo clinic.

I read on a Facebook group where someone was quoted a wait time of between 5 and 7 years for an MRI.

I read on a Facebook group where someone was quoted a wait time of between 5 and 7 years for an MRI.

You got it, Facebook is the new NHS.

I visited my sister yesterday who is undergoing chemotherapy for cancer, and this week her husband had just had his annual MRI on his head. He had a brain tumor removed 25 years ago and undergoes regular monitoring. Both of them sing the praises of the NHS.

This year I have 2 friends here who have had knee and hip replacements 8 weeks after being put on the waiting list, both done in local private hospitals but paid for by the NHS as the NHS trust in our area is trying to catch up. It is very post code dependent on how well the NHS is doing and that should not be the case.