UK State Pension vs. Social Security

This question is different from the theme of this thread but I watched the UK Prime minister debate this afternoon and was surprised to learn something about social security in the UK.

Unlike in America where SS funds are based on how much you put into the system(pay related) especially the last ten years working on a job.The Uk SS is based on means testing? You have to show a need and even with that requirement you can still recieve as little as 60 pounds per month? That sounds scarey! Is this true? Hoping this is not true.

This question is different from the theme of this thread but I watched the UK Prime minister debate this afternoon and was surprised to learn something about social security in the UK.

Unlike in America where SS funds are based on how much you put into the system(pay related) especially the last ten years working on a job.The Uk SS is based on means testing? You have to show a need and even with that requirement you can still recieve as little as 60 pounds per month? That sounds scarey! Is this true? Hoping this is not true.

By Social Security are you meaning unemployment benefit - it's correct that government benefits are means tested rather than based on the amount you paid in.

By Social Security are you meaning unemployment benefit - it's correct that government benefits are means tested rather than based on the amount you paid in.

No,I mean state pension funds.You pay into your retirement(social security) account and you earn the right to recieve a monthly amount once retired from working at the age 65. I heard during the Prime minister debate that retirement funds are not pay related like here in the States.

For instance if you were to earn about $80,000 per year in the states and do so for many years that person by the age of retirement would net around $2500.00 per month for the remainder of his/her life. Did I hear wrong about the UK pension system? Is it based on how much you put into the system or/and is the cap amount much lower than the system in the States.

It is based on how many years you contributed to National Insurance, but not just through work. Further details here:
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_183754
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_183759

No,I mean state pension funds.You pay into your retirement(social security) account and you earn the right to recieve a monthly amount once retired from working at the age 65. I heard during the Prime minister debate that retirement funds are not pay related like here in the States.

For instance if you were to earn about $80,000 per year in the states and do so for many years that person by the age of retirement would net around $2500.00 per month for the remainder of his/her life. Did I hear wrong about the UK pension system? Is it based on how much you put into the system or/and is the cap amount much lower than the system in the States.

Yes it is basically a set figure that you receive, however it is common here for people to pay into a pension fund with their company which will increase the amount of pension. The state pension is seen as a "safety net"

Yes it is basically a set figure that you receive, however it is common here for people to pay into a pension fund with their company which will increase the amount of pension. The state pension is seen as a "safety net"

Yes, but many folk in the US will have a pension through their employer as well as the Social Security based on their work contributions. I believe I am theoretically entitled to something like 45 p per week based on my UK work history, so don't think that's much of a safety net!

Should keep in mind, the state pension isn't the only state aid to pensioners - pensioners are eligible for a lot of other benefits (winter fuel, council tax, housing, tax credit, etc..).

Should keep in mind, the state pension isn't the only state aid to pensioners - pensioners are eligible for a lot of other benefits (winter fuel, council tax, housing, tax credit, etc..).

And pension top-up via Pension Credit.

And apparently, Chrismas bonus:

http://www.adviceguide.org.uk/index/your_money/benefits/benefits_for_people_over_sixty.htm

Yes, but many folk in the US will have a pension through their employer as well as the Social Security based on their work contributions. I believe I am theoretically entitled to something like 45 p per week based on my UK work history, so don't think that's much of a safety net!

The USA pension with a company can be decent if handled correctly.For instance a friend of mine is receiving two pensions because he worked about 14 years at two different companies each.The guy is pulling in about $1100.00 from each and about $2700 from his social security.Not a bad retirement monthly take. After seeing last night's prime minister debate I wonder if UK pensions are as sizable?

also had a friend you lived in USA for 20 yrs who then came back to England, spending all her savings on transporting her furniture. The government immediately topped up her meagre pension and the counciol pay £500 a month of her £600 a month flat! Some people just know how to work the system!

Read more: http://www.dailymail.co.uk/news/article-1268354/Penniless-British-grandmother-denied-benefits-council-classes-asylum-seekers.html#ixzz0m3HILvos

Both the US and the UK state pension (Social Security, National Insurance respectively) systems are skewed (although in different ways) to benefit the low paid. In addition, both systems have means-tested supplements for retirees in hardship (SSDi in the US; Pension Credit in the UK). The non-means tested benefits in the UK are listed here:http://www.newcastle.gov.uk/core.nsf/a/wr_thebenefits_nonmeans and the official Web site is here: http://www.direct.gov.uk/en/pensionsandretirementplanning/statepension/dg_183759

One can "game" the two systems: indeed it is possible to buy credits in the UK (Class 3 voluntary contributions) although the cost has risen substantially recently. For the very low paid, and for those on State benefit, NI pension credits are free, or nearly so.

US residents abroad should try to get at least ten years' (40 quarters) of Social Security credits before reaching age 65 to become eligible for Medicare. There are several ways to do that, one is to waive the exemption provided by the Social Security Totalization Agreement for at least the minimum earnings required to get such credits. Google: 'quarters of coverage' for current figures. But the actual pension received from the SSA for persons also receiving a foreign pension may be limited by the Windfall Elimination Provision http://www.ssa.gov/retire2/wep.htm This reduces US a social security pension by part of the foreign one to compensate for the low-paid skewing.

Those who do not have enough years of credits (10 or 11 as the case may be) to get a pension from the US or the UK may have their credits "totalized" into the other scheme (and/or other European/Canadian/etc. schemes) for calculation of that pension. But one can't get credit for the same year through totalization (the double contribution is lost); and for that and other reasons it's better to qualify for separate pensions from the two (or more) countries if you can. As I said, some strategy and "gaming" can be undertaken through self-employment, voluntary payments, trivial work for a friend, and so on -- depending on the rules in the particular country.

also had a friend you lived in USA for 20 yrs who then came back to England, spending all her savings on transporting her furniture. The government immediately topped up her meagre pension and the counciol pay £500 a month of her £600 a month flat! Some people just know how to work the system!

Read more: http://www.dailymail.co.uk/news/article-1268354/Penniless-British-grandmother-denied-benefits-council-classes-asylum-seekers.html#ixzz0m3HILvos

There is a residency requirement for benefits / tax credits, even if you are British, for those coming to the UK: the habitual residence test...

http://www.parliament.uk/commons/lib/research/briefings/snsp-00416.pdf

http://www.cpag.org.uk/cro/wrb/wrb155/habitual.htm

http://www.ageconcern.org.uk/AgeConcern/Documents/HRT_FINAL.pdf

http://www.dwp.gov.uk/docs/dmgch0703.pdf

The Habitual Residence Test has been around a long time, and has been the object of contention. Here's one further (simplified) explanatory link: http://www.multikulti.org.uk/en/immigration/habitual-residence-test-and-right-to-reside/index.html [nofollow]

It pushes the envelope of European Union law legality, and is overlaid with EU rights that often make it unenforceable. One problem is that for EU/EEA/Swiss citizens there is no clear proof of entry (other than Home Office port of entry data) and many British and EU/EEA citizens maintain a foothold in the UK while living abroad. If someone is dual resident for tax purposes it is hard for the UK to claim that s/he is not habitually resident for another purpose. Also, the kind of proofs used for residence (voter registration, utility and credit card bills, bank statements, HMRC letters) do not achieve the level of certainty that a French, German, Belgian, Swiss, etc. registration of domicile at the town hall would do.

Much of what is on Government web sites is politically motivated. In real life those with genuine entitlement often get shunted aside (or give up after continuous harassment) whereas those without such rights benefit from street wisdom and persistence. And in the end the wrong people get the money.

US residents abroad should try to get at least ten years' (40 quarters) of Social Security credits before reaching age 65 to become eligible for Medicare.

?? I understood that Medicare was not applicable overseas. You can collect your SS but cannot use Medicare except in the US. Do you mean it can serve as a fall-back should one return to the US to live?