Q & A

Ask Rusty – Will My U.K. Pension Affect My Social Security?

Dear Rusty: I lived and worked in the United Kingdom prior to coming to the US at age 45, which qualified me for a UK State Pension worth the equivalent of about $740 US dollars per month. Since moving to the US I have contributed to the US Social Security system for 14 years and my estimated US Social Security benefit is $1,643 per month. I have heard about something called “WEP” and must be honest and say I don’t fully understand. Can you provide some advice or references so I can understand what happens to these sums when I retire? I don’t have any other pension income, so understanding these numbers is important. FYI, I hold both US and UK passports and will retire in the USA. Signed: Blessed from the UK

Dear Blessed: The “WEP” provision you refer to is known as the “Windfall Elimination Provision.” It affects anyone who is eligible to collect Social Security benefits, but who also has a pension from another entity (corporation, public agency, or foreign country) which did not participate in the U.S. Social Security program (meaning that SS FICA payroll taxes weren’t paid during that employment). WEP will reduce your US Social Security benefit by using a special formula to compute your benefit amount. Generally, the WEP reduction is determined either by the number of years of substantial SS-covered earnings that you have, or the WEP maximums (one of which is that your U.S. Social Security can’t be reduced by more than half of your non-covered pension). With less than 20 years paying into the US system, you will incur one of the maximum WEP reductions.

Something else important to understand is that the current estimate you have from Social Security doesn’t include the WEP reduction. That estimate assumes that you will continue to earn at your current level until you reach your full retirement age. You haven’t shared your birthdate, but from your email I assume you are now about 60 years old. If you were born in 1959, your full retirement age (FRA) for U.S. Social Security purposes is 66 years and 10 months (if you were born after that your FRA is 67, and if you were born before that subtract 2 months for each year prior to 1959). Your FRA is when you will get your “full” SS benefit. If you claim before that (age 62 is the earliest you can claim) your benefit will be reduced (even before WEP), and if you wait beyond your FRA you’ll earn Delayed Retirement Credits (DRCs) which will increase your benefit amount. DRCs stop at age 70.

Based upon what you’ve told me, I believe that your WEP reduction will probably be limited to one of the maximums, either half of your monthly U.K. pension, or the maximum for your “eligibility year” (2022?). We don’t yet know what the standard maximum WEP reduction for 2022 will be, but for 2020 it is $480. That is the most that your Social Security benefit could normally be reduced. But if your U.K. pension is about $740 USD then your maximum reduction should be about $370, because the WEP reduction can’t be more than half of your non-covered (U.K.) pension. So, your US Social Security benefit of $1643 will most likely be reduced by about $370 to about $1303.You will need to contact the UK pension system to see if any of your UK pension will be offset by your US Social Security benefits.

 

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].

Comments On This Topic

  1. Dear Rusty, I am a US citizen and in 2022 I spent about 14000 dollars to buy 13 years of service in the UK State Pension (I already had 3 years from working in the UK in the 80’s). In my 2022 IRS 1040 married filing jointly declaration (we took the standard deduction) we did not declare this expense. Did we make a mistake? Should we file an amendment?
    I really would appreciate your response. Thank you
    Frank

    • Frank,
      I’m afraid this is a question for the IRS (here at the AMAC Foundation we are Social Security experts, but not IRS income tax experts). I suggest you engage with a qualified income tax professional (e.g., a CPA who specializes in Income Taxes) for an answer to your income tax question. If you wish to contact the IRS regarding this, the number is 1-800-829-1040.
      Sorry we can’t be of more assistance.
      Regards,
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

  2. Dear Russ,

    Now at the age of 61 I intend to collect 13 years of social security earnings from USA at the age of 62 however it will only be $422 per month according to my record due to low income, I am dual citizen and have 13 years of paid NIC to UK and have been paying class 2 voluntary NIC payments now for 15 years , (I paid 10 years back payment) to try and catch up, at present time have a total of 28 years NIC and still paying yearly.
    My question is will I be free from WEP due to a low combined number of around $1400 per month when both UK and USA are running simultaneously at age 67!, USA SS approx $422 per month @ age 62 UK approx 32 years will be paid by age 67, estimate from NIC UK is 820 british pounds, thanks in advance!

    • Gez,
      Since you read the article which elicited your question, you also know that your U.K pension will cause your U.S. Social Security benefit to be reduced by the Windfall Elimination Provision (WEP). If your stated/expected U.S. Social Security benefit is based on a recent estimate of same you obtained from Social Security, then that estimate does not reflect the WEP reduction. WEP will be applied when you claim. You will not “be free from WEP” due to the low amount of both your combined U.S. and U.K. benefits. Normally, the WEP reduction to your U.S. benefit would cut your U.S. benefit about in half. However, in your case the reduction to your U.S. Social Security benefit will likely be mitigated by a rule called the “WEP Guarantee,” which limits the WEP reduction of your U.S. Social Security benefit to 50% of the amount of your U.K. pension. The larger your U.K. pension, the more reduction to your U.S. Social Security benefit and, conversely, the smaller your U.K. pension the less reduction of your U.S. Social Security benefit.
      From what you’ve shared, your U.K. pension is based on 13 years actually working in the U.K. and contributing to the U.K. program from your earnings (which entitles you to reduced U.K. benefits on your own). The U.K. program also permits you to make additional Voluntary Contributions to enhance the amount of your U.K. pension when you claim it, which you have been doing. The “WEP Guarantee” which will likely govern the WEP reduction to your U.S. Social Security benefit will be based on the portion of your U.K. pension that resulted from your work contributions to the U.K. program, not on the full U.K. pension amount you will actually receive due to your added Voluntary Contributions. Thus, when you retire, you will get your full U.K. pension (820 British pounds), plus a smaller U.S. pension. The reduction to your U.S. Social Security will likely be 50% of that portion of your U.K. pension which resulted from your actual earnings and contributions while working in the U.K., and not the higher U.K. pension amount you’ll get because you made Voluntary Contributions to the U.K. program.
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

      • Hi Russ, Thank you so much for a well explained and detailed reply to my questions!, I now see a much clearer picture on WEP and where I will strand at the age of 67 when I can claim UK pension however can you inform me what you think may happen when I claim US SS retirement benefit at age 62 as I cannot nor will I receive UK pension until 67 (Minimum age according to my birthdate) therefore UK claim will be 5 years away from the US claim and as I will only be receiving US SS benefit should I declare UK benefit? or wait until UK claim age of 67 then inform US SS when actually receiving UK benefit!, Thank you again in advance..

        • Gez,
          When you submit your application for U.S. Social Security benefits, you should indicate that you will be later entitled to a “non-covered pension” from the U.K. See question 12 at this link: http://www.ssa.gov/forms/ssa-1-bk.pdf
          Essentially, you must inform Social Security when you apply for U.S. benefits that you will be entitled to your U.K. pension in the future, and you must then inform U.S. Social Security when your U.K. pension actually starts. WEP will not apply to your U.S. benefits until you start collecting your U.K. pension, so you’ll get your full SS age 62 amount until you start your U.K. benefits, after which Social Security will apply the Windfall Elimination Provision and reduce your monthly U.S. Social Security payment.
          Russell Gloor
          National Social Security Advisor
          The AMAC Foundation

      • Hi Russ, Let me rephrase that question – If I claim at 62 from US SS retirement will they immediately to the best of your knowledge put into effect WEP “Although” I cannot claim UK pension until age 67!
        Thank you to The Association of Mature American Citizens. Much appreciated your feedback

  3. Dear Rusty,

    Thank you for the very informative article on UK pension. I have a quick question. I receive two pensions from UK. One is UK state pension. Second is UK private company pension. The company pension is twice as much of state pension. Which is subjected to WEP by SSA.

    Thanks
    Bob.

    • Bob,
      It’s not whether either/both of your UK pensions will be affected by WEP (they won’t), but rather how the WEP provision will affect your U.S. Social Security benefit in light of you having two U.K. pensions. For starters, it’s not only a U.K. state pension which causes WEP to apply to your U.S. Social Security benefit; your private company U.K. pension also causes WEP to apply. WEP, however, usually doesn’t use your U.K. pension amount to compute your U.S. Social Security “primary insurance amount” or PIA (your PIA is the SS benefit you get if you claim at your full retirement age). Rather, the WEP formula considers the number of years you contributed to U.S. Social Security from “substantial earnings.” If you have 20 or fewer years contributing to SS from substantial U.S. earnings then the maximum WEP reduction for your “eligibility year” will apply. If you have more than 20 years of substantial SS-covered U.S. earnings, the WEP reduction is less (your SS benefit would be more), but the WEP reduction amounts are tied to your eligibility year (normally, the year to turn 62). So, your WEP reduction will depend on the number of years you contributed to U.S. Social Security from substantial earnings, and the WEP factors for your eligibility year. FYI, if you have 30 or more years contributing to U.S. Social Security from substantial earnings, WEP does not apply.
      There is, however, one other WEP rule (known as the “WEP Guarantee Provision”) which may apply: Despite the formula calculation I just described, the WEP Guarantee Provision says that the WEP reduction cannot be any more than 50% of your non-covered (U.K.) pension. In your case, I believe Social Security would use your higher (private) U.K. pension for this provision, meaning that your WEP reduction will be either 50% of your private U.K. pension, or the amount computed using the standard WEP formula, whichever is more beneficial to you.
      Bob, I hope this answers your question, but please feel free to contact us directly at [email protected], or at 1.888.750.2622 if you need any further clarification.
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

  4. Dear Rusty
    I currently receive a reduced SSA survivors benefit from my late husbands contributions. I was a teacher and do not qualify for SSA myself. In September I will start to collect my UK state pension. I worked 22 years in the UK and have been paying voluntary contributions since 2002 when I relocated to US. I will get almost a full state pension. Under the rules of the 2016 new pension in the UK I am not eligible to any survivors pension from my late husband!
    Will my state pension be subject to WEP rules on my husbands survivors SSA?

    • Susan,
      I assume from what you’ve shared that you cannot receive US Social Security retirement benefits on your own US earnings record because you worked for for a US state employer which did not withhold US Social Security FICA taxes from your US earnings (thus you don’t have enough credits to be eligible for US SS retirement benefits); you are, however, currently receiving a US Social Security survivor benefit based on your deceased husband’s US Social Security entitlement.
      When you start your UK state pension in September, your US Social Security survivor benefit will not be affected by WEP – WEP (Windfall Elimination Provision) applies only to your personally earned SS retirement benefits (which you do not have), but does not apply to any spousal or survivor benefits you are entitled to. Neither will your UK state pension, when you start collecting it, because foreign pensions do not affect US spousal/survivor benefits. Nevertheless, assuming you have (or will have) a “non-covered” US pension from the US school district you taught at, and you did not contribute to Social Security while earning that US teacher’s pension, when your US teacher’s pension starts, Social Security’s Government Pension Offset (GPO) will affect your US survivor benefit from your husband. So although your UK pension won’t cause the GPO to apply, your US teacher’s pension will.
      When you start your US teacher’s pension, the GPO will reduce your US survivor benefit from your husband by 2/3rds of the amount of your US teacher’s pension (which may even eliminate your survivor benefit). Although we are not experts on the UK pension system, on the question of whether your UK state pension will be affected by WEP, I believe the answer is no. Your UK pension will be based solely on your UK contributions, not on contributions you made, or didn’t make, to the US Social Security program.
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

  5. Sir, I was born and raised in UK; spent 25 years in HMRN and retired in 1985. Permanently moved to the US in 1985. Presently collecting my US SS. I am also collecting my pension from the HMRN. Would it benefit me to collect my State pension from UK; I have never applied for it. I am now 77 yrs old. I have always felt it would basically be a “wash” and simply complicate things.

    • As is explained in the posted article, if you are eligible for a UK state pension you can collect that and also collect your US Social Security benefit, but doing so may result in the US Windfall Elimination Provision (WEP) reducing your current US benefit amount. If you have at least 30 years of substantial US earnings from which you contributed to US Social Security, then WEP will not apply and you can collect the full amount of both your UK state pension and your full US Social Security. But if you have less than 30 years contributing to US Social Security from your work earnings, then WEP will reduce your US Social Security benefit by an amount related to how many years you have contributed to Social Security from substantial US earnings. The WEP reduction formula is fairly complicated, but WEP can only reduce your US benefit – it cannot eliminate it. Thus, it would be to your financial advantage to claim your UK state pension even if your US benefit is reduced as a result – the total amount you receive from both pensions will be more than you are currently getting from your US benefit only. So it wouldn’t be “basically a wash” – you would get more in combined US/UK retirement benefits by claiming the UK pension you are entitled to. For more information about how the WEP reduction is computed, please refer to this: https://socialsecurityreport.org/ask-rusty-computing-benefits-when-wep-applies/
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

  6. Hi Rusty,

    I lived in the US for 17.5 years and qualify for a small SS pension of – according to today’s calculation – $1,190 per month. I have lived in the UK since 1996 and have worked variously though that period – although a lot of the time I was doing charitable pursuits without a salary. It appears I am applicable – JUST – for a very small UK state pension. At MOST this would be about £50 per week or £200/$278 per month. (It will probably be less.) In the letter I received from the (UK) Department of Works and Pensions it clearly stated that I don’t need to apply for this if I don’t wish. I will be 66 in mid July and that is the date I could start receiving that small UK state pension payment. I can receive the full SS pension payment in September when I am 66 years and two months. I don’t really understand about WEP … but I’m thinking it may be best just NOT to take the UK pension at all. If I leave it would I be able to take the full SS pension payment? That is what I had planned on as I didn’t think I would get anything from the UK. OR … will the SS Authorities take a WEP figure from me even if I do not action the UK pension (i.e., receive no income from it whatsoever). Much thanks for your brilliant service.

    • The “WEP” (Windfall Elimination Provision) will only apply if you actually claim your UK benefits – if you don’t, your SS benefit will not be reduced by WEP and that, of course, is a decision only you can make. But I would offer you this additional information for consideration: the maximum reduction that WEP would inflict to your US SS benefit is 50% of your UK pension amount. Thus, if you take your UK pension, your SS benefit will be reduced by somewhere between $138 – $187 USD (depending on conversion rate). However, if you do take your UK pension you’ll gain the full amount of your UK pension (somewhere between $277 & $385 USD), which will offset your US SS benefit by half of that amount. In other words, your net gain will be about half of your UK pension amount. The bottom line is this: if you don’t take your UK pension then you’ll get your full US SS benefit (WEP won’t apply); if you do take your UK pension WEP will apply, but the offset to your US benefit will only be half of the full amount of your UK pension, yielding you a net gain.
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

  7. Dear Rusty, I have 17 or 18 years of substantial earnings. I have reached FRA and receive a UK pension calculated by Social Security (exchange rate on 1/4/2021) of $770. Am I correct in thinking the most they can apply to WEP is 50% of this amount? Thanks in advance

    • Yes, the maximum WEP reduction to your U.S. Social Security benefit will be 50% of your UK pension amount, or $385 (using your number). The WEP reduction to your SS benefit is computed using a special formula based upon the number of years of substantial SS earnings you have, but the reduction cannot be more than half of your “non-covered pension” (your UK pension).
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

      • I was told by an advisor that the 50% was actually taken from your number at age 62. Then, your final amount was based on how many months you worked after that before claiming.

        • The actual computation of your WEP reduction isn’t done until you claim, but when it’s done it will use factors (known as “bend points”) from the year you turned 62 to figure your WEP reduction. Just like if WEP didn’t apply, the longer you wait to claim the higher your benefit will be, but the WEP reduction will use “bend points” from your “eligibility year” (the year you turn 62) to compute the reduction applied when you claim.
          Russell Gloor
          National Social Security Advisor
          The AMAC Foundation

  8. Dear Rusty: As I prepare to file with US Social Security for retirement I too am researching the impact of WEP. My situation is as follows: (a) – I left the UK in 1975 (age 24) for US graduate school. I had no meaningful employment history in the UK (permanent student) but my family insisted I make minimum voluntary UK national insurance contributions (post-tax, no employer contribution, not employment-related) which over the years since have qualified me to receive the UK “Basic” state pension of circa $750 per month. Is this pension WEP-relevant? (b) Following graduate school in the US, I lived and worked in Australia 1980-1991 where I was a participant in employment-related superannuation schemes. Departing Australia, I received lump-sum payouts “rolled over” into tax-advantaged superannuation accounts. Are these payouts WEP-relevant, and if so at what point? When received, or now, after circa 30 years accumulation? (c) Since 1/1/92 I have been in continuous employment in the US without any employment elsewhere. I have been planning to file in April 2021 (when I turn 70) but will continue in full-time employment for a period of years beyond that date. Given the circumstances I have reported under (a) and (b) above, should I delay filing until I have reached the 30-year US Social Security threshold when, as I understand it, the circumstances of employment history elsewhere no longer apply, or would that make no difference in my case? I apologize for the length of this query. If it is too specialized, I would appreciate your suggestions where I should seek advice.

    • a) If your U.K. pension is (or was) based entirely on your voluntary contributions to the U.K. program, your U.K. pension will not cause the Windfall Elimination Provision (WEP) to apply to your U.S. Social Security benefits.
      b) Since your Australia “pension” is employment-based, those lump sum pension deposits by your Australian employer into tax-advantaged annuities will be considered a pension for WEP purposes. U.S. Social Security will make a determination of how to convert the lump sum payouts to a monthly pension equivalent for WEP purposes, but I believe they will use the original deposited amounts, not the higher amounts those accounts now hold due to growth. You will need to contact U.S. Social Security to find out how they will convert your lump sum Australian pension deposits into a monthly equivalent to be used for WEP purposes. FYI, a residence-based (non-employment) Australian Social Security pension does not cause WEP to be invoked for your U.S. Social Security benefit.
      c) Assuming that all of your 29 years of employment in the U.S. have been for an employer (or employers) who participated in the U.S. Social Security program (both you and your employer(s) contributed to the Social Security program), if you claim U.S. Social Security benefits in April 2021 the WEP effect (reduction) would be minimal. WEP does not apply at all if you have at least 30 years of SS-covered substantial earnings, and with 29 years your reduction would be small compared to what you would get if WEP didn’t apply. At age 70 in April 2021, your U.S. Social Security benefit will reach maximum (which will be about 32% more than your benefit would have been at your full retirement age). If you claim your maximum SS at 70, WEP will still apply (because you don’t yet have the full 30 years) and initially reduce your maximum benefit by about $39. But, when you finally achieve your full 30 years of contributing to the U.S. Social Security program through your substantial earnings, WEP will no longer apply and your benefit amount will be recomputed without WEP.
      I hope this answers your questions, but if you need additional information please contact us via email to [email protected] (or by phone at 1.888.750.2622).
      Russell Gloor
      National Social Security Advisor
      The AMAC Foundation

      • Dear Rusty, my situation is similar to Sirintegra but different in that some of my UK pension years will be based on UK employment (9 years) and others based on voluntary contributions (23 years) while working overseas.
        I assume the pension payment will be prorated (9/34) for WEP purposes??

        Thanks

        • FYI, we have been trying to find a definitive answer to your question through researching the SSA’s vast Program Operations Manual and other SSA resources, as well as having discussions with long-time SSA retirees we often collaborate with. We had hoped to be able to refer you directly to SSA’s own documentation which defines how situations such as yours should be processed by SSA, but have been unsuccessful finding such SSA documentation to do so. Our hope was that you would be able to have that SSA documentation in hand to deal with the SSA. Alas, we have not yet been able to find SSA documentation which addresses your specific situation.
          Nevertheless, our research found other non-SSA sources who believe that your entire UK pension would be used to determine your WEP reduction (not only the part of your UK pension based on your UK employment). I’m passing this non-SSA opinion along now, but we are still attempting to find chapter/verse definition from within the Social Security Administration which addresses your specific situation. Rest assured we are still seeking a definitive SSA answer to your question, and will forward that as soon as we are able to provide it.
          Thank you for your patience.
          Russell Gloor
          National Social Security Advisor
          The AMAC Foundation

  9. Dear Rusty, my question is similar to the previous question re UK/US retirement benefits.
    I turned 66 years of age in September sadly that was the month I lost my job due to the restrictions put on my employer because of the Covid virus.
    I have worked here in the USA for the past 31 years and have been notified I qualify for full retirement here in the USA. I also qualified for a small UK pension roughly $350, my question is how will the WEP reduction affect my UK/US retirement benefits if I sign on to Social Security benefits.

    • Since you turned 66 in September, you have already reached your full retirement age (FRA) and your SS benefit will be the full (100%) amount you’ve earned by contributing to the U.S. Social Security program. If at least 30 of your years of U.S. earnings while contributing to Social Security have been “substantial” then you will not be subject to the WEP reduction as a result of your U.K. pension. Social Security’s definition of “substantial” is a bit different for each year, but if you were working full time for at least 30 years, each year would almost certainly qualify as substantial. But just so you have it, here is a link to what SS considers substantial earnings for each year. As long as you earned at least the base substantial amount for 30 years, WEP won’t apply to you. Here is the link to Social Security’s Substantial Earnings chart: https://www.ssa.gov/pubs/EN-05-10045.pdf
      Russell “Rusty” Gloor
      National Social Security Advisor
      The AMAC Foundation

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