American - UK Resident - Social Security Benefits after retirement

Good evening. I am an American resident in the UK on a Type 2 General visa.  I have 5 - 7 years of working left and have been trying to learn about how my social security benefits in the US are affected if I retire in the UK.  I participate in the pension plan at my employer, but it is possible that I may be here until (or even after) retirement prior to moving back the US permanently.

I have researched this extensively online, and even with the accounting firm that supported us during the initial expat assignment, and have been unable to determine what the answer is.  Any help out there would be greatly appreciated!  Thanks so much!

There is a US/UK SS Totalization Agreement (http://www.ssa.gov/international/Agreement_Pamphlets/uk.html) which affects some aspects of the handling of SS benefits for those who have worked in both countries. 

Also the Windfall Elimination Provisions might apply.

http://www.ssa.gov/pubs/EN-05-10045.pdf

The amount of SS you get might be reduced by the Windfall Elimination provision if you get any income from pensions funded with non-SS earnings.....ie earnings that you didn't pay FICA on.

If you are a UK tax resident your US SS payments will not be taxable in the US and 90% of the amount will be taxable in the UK.

Some research indicates that WEP cannot apply to an unfunded pension benefit i.e. UK State Pension, so not quite, perhaps, 'any' income you don't pay FICA on. Never seen it done in practice, though.

Some research indicates that WEP cannot apply to an unfunded pension benefit i.e. UK State Pension, so not quite, perhaps, 'any' income you don't pay FICA on. Never seen it done in practice, though.

Any links to the research you mention?

I'm currently waiting to hear how much SS pension I might get, based on 14 quarters worked long ago (in the Sixties), topped up by UK credit, then WEP'd, and then taxed. 

A lot of calculating for (I imagine) a very small outcome.  But better than a kick in the teeth, as my ex keeps saying hopefully.   

Some research indicates that WEP cannot apply to an unfunded pension benefit i.e. UK State Pension, so not quite, perhaps, 'any' income you don't pay FICA on. Never seen it done in practice, though.

Apparently WEP does apply for the UK State Pension but not for any increase due to voluntary contributions.

5. Payments which cannot be used to apply WEP guarantee provision

Some foreign pensions are not based in whole or in part on work performed after 1956. Therefore, the following foreign pension payments cannot be used to apply the WEP guarantee provision:
[..]
That part of a pension based on voluntary social security contributions which some countries allow individuals to make in order to increase the amount of their pension.
EXAMPLE: Individuals in the United Kingdom may continue to make (voluntary) social insurance contributions to that system during periods they are not working in covered employment or self-employment.
[..]

From "GN 00307.290 Evidence of Foreign Pensions and the Windfall Elimination Provision (WEP)"
https://secure.ssa.gov/poms.nsf/lnx/0200307290

(Edited to correct citation)

Some research indicates that WEP cannot apply to an unfunded pension benefit i.e. UK State Pension, so not quite, perhaps, 'any' income you don't pay FICA on. Never seen it done in practice, though.

That's certain if you have been making voluntary NI contributions and for the new flat rate pension for non-work credits. See section 5. My NICs are made up of voluntary class 2 contributions and three contributions I got back in the 1970s for being at Sixth Form College.......as such none of my UK state pension contributes to WEP. See section 5 below.

https://secure.ssa.gov/poms.nsf/lnx/0200307290

Any links to the research you mention?

I'm currently waiting to hear how much SS pension I might get, based on 14 quarters worked long ago (in the Sixties), topped up by UK credit, then WEP'd, and then taxed. 

A lot of calculating for (I imagine) a very small outcome.  But better than a kick in the teeth, as my ex keeps saying hopefully.   

As you have enough quarters (ie more than 10) to qualify for US SS there is no need to "top up" your US SS contributions record.

As you have enough quarters (ie more than 10) to qualify for US SS there is no need to "top up" your US SS contributions record.

I thought it was 40 quarters (10 years)?  Maybe I'm using the wrong terminology.  Definitely haven't got enough for SS without using UK credits.

I thought it was 40 quarters (10 years)?

Yes.

Anyone born in 1929 or later needs
10 years of work (40 credits) to be eligible for retirement benefits.

(http://www.ssa.gov/pubs/EN-05-10072.pdf)

A Guardian article at http://www.theguardian.com/money/2003/mar/16/savingforretirement.pensions talks about a man who "spent two years from 1966 to 1968 doing post-doctoral research at a university in New York state.

"More than three decades later, he still has the old US social security card he was given at the time. And to his astonishment, this card has now opened the door to a regular monthly retirement pension from the US of $80, about £50 a month."

As that was for two years of work, in the same decade as my 3.5 years, and assuming it was WEP'd to the maximum, and assuming I also will get maximum WEP reduction, I'm thinking I'll probably end up with about the same as Fred, or as near as makes no difference.

I just view it as a partial rebate on the $2350 I'm about to hand over to the State Department next week in order to renounce citizenship.   

I thought it was 40 quarters (10 years)?  Maybe I'm using the wrong terminology.  Definitely haven't got enough for SS without using UK credits.

ooops, yes you are right....I was thinking years rather than quarters.....it's 10 years = 40 quarters. Yes if you only have 10 quarters you'll need another 30 from UK contributions to even qualify. then the SS will be calculated on your 10 quarters........I wonder if the amount will be worth the effort 

ooops, yes you are right....I was thinking years rather than quarters.....it's 10 years = 40 quarters. Yes if you only have 10 quarters you'll need another 30 from UK contributions to even qualify. then the SS will be calculated on your 10 quarters........I wonder if the amount will be worth the effort 

Time will tell - I reckon if I can stay alive for another eight years I'll recoup the renunciation fee.   

Any idea what my ex is likely to get, if I end up with say £50?  Do spouses get half?  Do they get WEP'd all over again?  He's not in good shape financially so I'm hoping his amount won't be totally derisory.

Time will tell - I reckon if I can stay alive for another eight years I'll recoup the renunciation fee.   

Any idea what my ex is likely to get, if I end up with say £50?  Do spouses get half?  Do they get WEP'd all over again?  He's not in good shape financially so I'm hoping his amount won't be totally derisory.

If your spouse is living in the UK, he will receive half of your post-WEP amount. No additional WEP is taken from his benefit. If you die before he does, he will then receive your full pre-WEP amount. Yes, it is strange.

If your spouse is living in the UK, he will receive half of your post-WEP amount. No additional WEP is taken from his benefit. If you die before he does, he will then receive your full pre-WEP amount. Yes, it is strange.

Yes, strange.  I suppose the logic is that the "windfall" dies with me, like sin dying with the sinner.

Another strangeness - apparently his eligibility for this spousal pension isn't affected by the fact that he's been married and divorced again since he and I split up.  The only requirements are that he's not married now and the marriage lasted at least ten years.  I'm not sure what would happen if it was me that had had another marriage and divorce in the intervening years.  Which ex would get the spousal pension, I wonder.  Or perhaps they'd each be entitled to a pension equal to 25% of my measly WEP'd fragment. 

Thanks for the info.  I'll start preparing him to expect a couple of tenners at most.  :-(