Had good news today Regarding SS & WEP

[ShokWaveRider]

History:

I have worked and paid into local "State" pension systems of a few countries. "State" in this context is the equivalent of the USA's SS system. Most notably UK and Canada. Well I found out that both these countries have "Social Security Totalization Agreements" with the USA. This means that because I contributed to them (Unlike some Teachers and some Government Employees in the US) that I am NOT subject to WEP on my USA SS Check when I decide to take the payments. So I can happily claim my Canadian CPP, UK State Pension AND US Social Security without any claw backs. Yes I am/will be subject to taxes on all, but at least I get my full SS entitlement without reductions. This is most pertinent as I only have 27 years of substantial contributions to SS. This would have been moot if I had 30 years.

Well to me that is good news, even though Canada and UK pensions are small. Every little bit counts ay?

 

[steelyman]

That is great news! WEP is going to take a big chunk from me and as a consequence I don't factor SS income in at all in my projections. Not great but I understand the reasoning behind it.

 

[Al18]

'Unlike Teachers or Government Employees in the US'


Not sure why you felt the need to swipe these groups. There are many states in the US where Teachers pay into their pension AND into SS, and they are entitled to both after they retire.

 

[ShokWaveRider]

'Unlike Teachers or Government Employees in the US'


Not sure why you felt the need to swipe these groups. There are many states in the US where Teachers pay into their pension AND into SS, and they are entitled to both after they retire.

Not a swipe at all, calm down please. That is exactly what the SS Service person told me (during a phone call). They were the 2 examples they used to clarify the point. It is simply an example of pensions that are contributed to by the employer and not the employee.

 

[38Chevy454]

Good for you Shok, as you said, every bit extra is a nice bonus! Celebrate by going out to a nice dinner and know that the bill is covered.

 

[Alan]

I don't believe the SS Totalization agreement always eliminates the WEP. (It may in the case of the OP, but with 27 years the reduction would be quite small anyway). It is primarily in place to stop one paying payroll taxes in both countries. If you paid into a foreign State pension without paying into SS then that is the same as paying into a US Government or State pension without paying paying into SS.

https://www.ssa.gov/international/Agreement_Pamphlets/uk.html

An agreement between the United States and the United Kingdom (U.K.) improves Social Security protection for people who work or have worked in both countries. It helps many people who, without the agreement, would not be eligible for monthly retirement, disability or survivors benefits under the Social Security system of one or both countries. It also helps many people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

The provisions of the agreement that eliminate double Social Security taxation became effective January 1, 1985. The provisions which permit persons who meet certain conditions to use their work in both countries to qualify for benefits became effective January 1, 1988. For purposes of the agreement, references to the United Kingdom include England; Scotland; Wales; Northern Ireland; the Isle of Man; and the Channel Islands of Jersey, Guernsey, Alderney, Herm, and Jethou.

The agreement covers Social Security taxes (including the U.S. Medicare portion) and Social Security retirement, disability and survivors insurance benefits. It doesn't cover benefits under the U.S. Medicare program or the Supplemental Security Income (SSI) program.

A U.K. pension may affect your U.K. benefit
If you qualify for Social Security benefits from both the United States and the United Kingdom and did not need the agreement to qualify for either benefit, the amount of your U.S. benefit may be reduced. This is a result of a provision in the U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. For more information, visit our website, www.socialsecurity.gov , and get a copy of our publication, Windfall Elimination Provision (Publication No. 05-10045). If you are outside the United States, you may write to us at the address shown in "For more information" section.

From the feedback from folks on US-UK expat sites who have been through the SS application process it is the feedback from members who have been through the process that UK SS does reduce US SS through the WEP rules.

 

[Chuckanut]

'Unlike Teachers or Government Employees in the US'


Not sure why you felt the need to swipe these groups. There are many states in the US where Teachers pay into their pension AND into SS, and they are entitled to both after they retire.

I to am a former teacher who paid into SS and my pension. And I am glad I did so. It varies by state.

I don't consider the remark a swipe.

 

[Al18]

OK - maybe I'm too sensitive. My wife is a retired teacher.

 

[Sue J]

Not a swipe at all, calm down please. That is exactly what the SS Service person told me (during a phone call). They were the 2 examples they used to clarify the point. It is simply an example of pensions that are contributed to by the employer and not the employee.

Eh, not quite right. DH worked for a county social service agency. He has a state pension and is subject to WEP.

His employer contributed to the pension and so did he - 10% of his salary. While employed by the county he did not contribute to SS, which is why he is subject to WEP.

Alas, he never finished getting all his SS credits so the WEP issue is moot for him. He just needs 4 more credits. He's been fully retired for 8 years so I'm thinking that's not going to happen. It would be worth it for him to finish his credits and get some of his SS but we're ok without it. He's very good at retirement!

 

[theOAP]

Perhaps I can shed some light on the point Alan makes that UK SS may cause a reduction to US SS via WEP.

ShockWaveRider mentions in the OP the UK and Canadian pensions are small. I can't comment on Canada, but for the UK, 10 years of contributions are required to enable a benefit. Under the US/UK tot. agreement, if the beneficiary has less than 10 years in the UK system, but over 10 in the US system, the agreement allows the UK SS benefit to proceed albeit with payments commensurate to the limited number of years. If that occurs, then WEP is not applied when the tot. agreement has enabled the payment. If the beneficiary has over 10 years in the UK system, and the tot. agreement is not needed, WEP will be applied to the US SS benefit.

If the OP had over 10 years contributing to the UK system, the example of an individual at a local US SS office making an inaccurate decision is not unique. We see it occasionally on the expat sites. If need be, I will find the relevant rules in the SSA manual (I don't have it at hand at the moment).

Nonetheless, I don't intend to rain on the OPs parade. Go for it! , but get any determination in writing.

 

[teej1985]

Eh, not quite right. DH worked for a county social service agency. He has a state pension and is subject to WEP.

His employer contributed to the pension and so did he - 10% of his salary. While employed by the county he did not contribute to SS, which is why he is subject to WEP.

Alas, he never finished getting all his SS credits so the WEP issue is moot for him. He just needs 4 more credits. He's been fully retired for 8 years so I'm thinking that's not going to happen. It would be worth it for him to finish his credits and get some of his SS but we're ok without it. He's very good at retirement!

4 credits should be easy! About $5k of self employment income. Can you pay him to do some yardwork for you or something?

 

[Sue J]

Had good news today Regarding SS & WEP

4 credits should be easy! About $5k of self employment income. Can you pay him to do some yardwork for you or something? [emoji3]

Yeah......he talks about getting it done. I’m just not going to count on it happening. He’s enjoying being retired and he’s really good at it!

I needed 7 credits and got it done working as a school crossing guard. They always need more guards here but he’s not about to start getting up at 6:30 am 5 days a week.

 

[I was misinformed]

History:

I have worked and paid into local "State" pension systems of a few countries. "State" in this context is the equivalent of the USA's SS system. Most notably UK and Canada. Well I found out that both these countries have "Social Security Totalization Agreements" with the USA. This means that because I contributed to them (Unlike some Teachers and some Government Employees in the US) that I am NOT subject to WEP on my USA SS Check when I decide to take the payments. So I can happily claim my Canadian CPP, UK State Pension AND US Social Security without any claw backs. Yes I am/will be subject to taxes on all, but at least I get my full SS entitlement without reductions. This is most pertinent as I only have 27 years of substantial contributions to SS. This would have been moot if I had 30 years.

Well to me that is good news, even though Canada and UK pensions are small. Every little bit counts ay?

I am in the same boat - 27 years of US SSA contributions and a few years in Canada contributing to CPP. I have just finished the SSA application process and am about to get my first benefit payment. Unfortunately I do not believe your understanding is correct at least for CPP. My SSA is being WEP'd with a nearly 50% clawback of what I am getting from CPP

Quoting from

https://mcacrossborder.com/blog/col...ecurity-the-canadau-s-totalization-agreement/

"The only catch affects someone who has contributed sufficiently to the pension plans of both countries without needing to resort to totalization, i.e. someone who has accumulated the required ten years of Social Security contributions in the U.S. and who has also contributed sufficiently to CPP/QPP. Such an individual with a work history spanning earnings in both countries might hope to “double dip” by collecting both Canadian and U.S. retirement benefits. On the one hand, he or she is entitled to do so having contributed to the public pension regimes of both countries, but the catch is that a provision in U.S. law known as the Windfall Elimination Provision (WEP) will curtail this double dipping. Under the WEP, Social Security recipients with less than 30 years of “substantial earnings” in the U.S. who also at the same time receive pension benefits earned outside of the Social Security system (such as under CPP/QPP) face a clawback on their Social Security benefits to compensate for the “windfall” of their foreign benefits. "

 

[Sunset]

I am in the same boat - 27 years of US SSA contributions and a few years in Canada contributing to CPP. I have just finished the SSA application process and am about to get my first benefit payment. Unfortunately I do not believe your understanding is correct at least for CPP. My SSA is being WEP'd with a nearly 50% clawback of what I am getting from CPP

Quoting from

https://mcacrossborder.com/blog/col...ecurity-the-canadau-s-totalization-agreement/

"The only catch affects someone who has contributed sufficiently to the pension plans of both countries without needing to resort to totalization, i.e. someone who has accumulated the required ten years of Social Security contributions in the U.S. and who has also contributed sufficiently to CPP/QPP. Such an individual with a work history spanning earnings in both countries might hope to “double dip” by collecting both Canadian and U.S. retirement benefits. On the one hand, he or she is entitled to do so having contributed to the public pension regimes of both countries, but the catch is that a provision in U.S. law known as the Windfall Elimination Provision (WEP) will curtail this double dipping. Under the WEP, Social Security recipients with less than 30 years of “substantial earnings” in the U.S. who also at the same time receive pension benefits earned outside of the Social Security system (such as under CPP/QPP) face a clawback on their Social Security benefits to compensate for the “windfall” of their foreign benefits. "

Look on the bright side, the CDN $ is only worth 0.75 USD.

How do they account for the fluctuation in the dollar value monthly ?

I took my CPP early so it would be smaller as no use waiting for it to grow by delaying since 1/2 of the delay growth would be taken away.

For all their talk, I figured they would take away 50% which is the max allowed to be [-]stolen[/-] removed.

For all this talk of double dipping, my total benefits (even if the CDN dollar was worth more than 75 cents USD) is still FAR below my DW. So mine is still LOW.

 

[theOAP]

From POMS - the US Social Security Administrations operation manual:


For the general policy under Foreign Pensions and WEP,

(Under: Policy, C.2, Foreign pensions):
"Generally, pensions based on noncovered work include social security or private pensions from foreign countries." [my bold]
https://secure.ssa.gov/poms.nsf/lnx/0200307290


Exclusion of certain Totalization benefits from WEP,

Under: Policy - General
"WEP will not apply where the number holder is:
entitled to a regular U.S. benefit, as well as a foreign benefit which is based on a totalization agreement with the U.S., and not receiving any other pension based on non-covered work." [my bold]
https://secure.ssa.gov/poms.nsf/lnx/0300605386


Consider the following for the UK:

Person A has 19 years under US SSA and 9 years under the UK State Pension system. They are not eligible for a UK SP since the minimum requirement is 10 years. The US/UK Tot. Agreement will be used to entitle receipt of the UK SP, but Person A will not be WEPed on their US SSA benefit.

Person B has 19 years under US SSA and the 10 required years under the UK State Pension system. They qualify automatically to receive both pensions and the US/UK Tot. Agreement is not needed. Person B will be WEPed on their US SSA benefit.

For Person B, those additional 12 months may be expensive.

 

[I was misinformed]

Look on the bright side, the CDN $ is only worth 0.75 USD.

How do they account for the fluctuation in the dollar value monthly ?

As far as I can tell the monthly USD dollar amount of the clawback will be fixed for at least the first year, but I am just starting to get my benefit so I can't be sure.

BTW in my case my local SS office wanted to see some documentation of how much my CPP benefit is. As far as I can tell CPP doesn't actually send me a letter each year announcing the rate they are paying after COLA adjustment, so the best I could do was show them a tax form from 2017. Of course I imagine that US SSA could access my actual CPP files directly.

 

[I was misinformed]

.....[DH is] very good at retirement!

Good for him! With RE I also have finally found something I excel at!

 

[theOAP]

As far as I can tell the monthly USD dollar amount of the clawback will be fixed for at least the first year, but I am just starting to get my benefit so I can't be sure.

For those resident in the US:
When you applied, SSA asked for the monthly amount of your CPP in Cn$. The amount was converted to US$ at that time and the WEP and final US SS benefit was calculated on that amount. That becomes your 'forever' WEP calculation regardless of any future variance to the exchange rate. The calculation for WEP is not adjusted at any time in the future, no matter what happens with exchange rates.

Timing of the application becomes a significant factor if WEP will be applied. If the exchange rate at time of application is US$1=Cn$0.75, and the Cn$ strengthens to US$1=Cn$1.25, you will have 'won' in relation to the WEP calculation. If the Cn$ weakens to US$1=Cn$0.50, you will have 'lost' in relation to the WEP calculation.

For those resident outside the US:
All of the above applies equally, plus, if they elect to have the US SS benefit deposited in their foreign bank account monthly (SSA uses the best rate available on the day), any monthly variances in exchange rates will affect the amount they receive each month. Over the years, my SSA benefit has varied by as much as UK£100/month into my UK bank account, due strictly to daily exchange rate variances, and my US SS benefit is below the average for SS benefits.

On a side note, I have 2 foreign (to the US) State pensions. In neither case was any reduction made to award amounts by those foreign systems due to the US SSA pension. Foreign pensions (to those countries) are never a factor, although some countries (Australia, I believe for one) do make reductions based on foreign pensions.

@I was misinformed
I have a question. According to research on CPP, it seems as though any (1) contribution will qualify the individual for a benefit. There seems to be no minimum amount of contributions made in order to receive a CPP benefit.

Is this correct?

If so, then for someone with above 10 years in the US SSA system, no Tot. Agreement would ever be needed to secure the CPP.

 

[I was misinformed]

@I was misinformed
I have a question. According to research on CPP, it seems as though any (1) contribution will qualify the individual for a benefit. There seems to be no minimum amount of contributions made in order to receive a CPP benefit.

Is this correct?

If so, then for someone with above 10 years in the US SSA system, no Tot. Agreement would ever be needed to secure the CPP.

I believe what you say here is correct. The official CPP website gives one of the
eligibility requirements as:

"have worked in Canada and made at least one valid contribution to the CPP"

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/eligibility.html

 

[theOAP]

I believe what you say here is correct. The official CPP website gives one of the
eligibility requirements as:

"have worked in Canada and made at least one valid contribution to the CPP"

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/eligibility.html

Thanks for the link. Several of the pages make for interesting reading. It's always enlightening to see how different countries have developed numerous ways of contributing to, and paying, old age retirement, and none are really similar.

Although I can find no further contradicting info on the minimum contributions for retirement, there does seem to be a 10 year minimum for disability, child, and survivor benefits for CPP/QPP as well as OAS.