State pension award letter - include statement of voluntary years and "credit" years?

dunroving

Brief summary of my situation: Age 65, retirement date next April. Currently have 24 years of NICs from 1973 to 2020, with several gaps from working overseas and studying for my undergraduate degree. 1973-1975 NICs are credits for being in sixth form, but my online NI record just says, "Our records show you have 2 full years up to 5 April 1975". I plan to pay Class 3 Voluntary NICs for the three years from 2020 to 2023. So, I will eventually have 27 years NICs, of which 5 years will be from non-employment based years (2 years 6th form and 3 years Class 3 NICs).

My question relates to the US Windfall Elimination Provision (WEP). I have a modest US "state pension", and when I start receiving UK state pension, my US pension will be reduced in relation to the proportion of my UK state pension that is from work-based contributions (i.e., 22 of the 27 years of NICs).

US Federal government requires the pension award letter, which seems pretty straightforward, but I'll also need to provide evidence of NICs years that were not employment-based. Does the standard award letter included detail of the NICs record, so that it will be straightforward to identify that years 1973-1975 were for education credits and years 2020-2023 were from Voluntary NICs (Class 3)?

molerat

No.  The award letter simply states you will get £xxx.xx from dd/mm/yy.

dunroving

molerat said:

No.  The award letter simply states you will get £xxx.xx from dd/mm/yy.

OK, thanks. I guess I'll need to call HMRC and the US Federal Benefits Unit to see how I can get round this.

dunroving

Just a brief update of my findings so far, in case anybody else has a similar question (I often find threads on MSE where the OP asks a question, gets helpful advice, but does not follow up with a conclusion of what was learned).

I called FBU in London and they confirmed my understanding of the situation (WEP only applies to employment-based NICs years). However, they did not know, or have experience of, how this might be demonstrated by the recipient. So, on to HMRC ...

... the person at HMRC said that I can get a "statement of account", which is an official HMRC letter stating what years/how many years I have contributions for, and what type of contribution. He is going to send me one currently, so I can confirm what it says for the voluntary contribution years. He was less able to help in regard to two years of NICs credits I have for attending 6th form back in the 1970s - even on his system, there was no additional information other than to say I was "paid up" for those two years, so to speak.

He then talked with a supervisor and called me back to say that it is possible to request a breakdown for the pre-1975 years. I guess I'll know what that looks like when I get the statement of account I'll post back here when I receive it. But, in the meantime it looks like the answer to my primary question is that I will need an award letter (to say how much UK state pension I will receive), and a statement of account (to document the proportion of that amount that is due to non-employment based contributions).

dunroving

On a separate, and unrelated note, I also learned from HMRC that I can pay voluntary NICs (Class 3) for the "partial year" in which I retire. (I reach retirement age in late April 2023.)

I can therefore pay Class 3 for the year 2023-2024, even though I'm of retirement age just a couple of weeks after that financial year begins. That's good news, as it means I can get an additional year towards my state pension.

p00hsticks

dunroving said:

On a separate, and unrelated note, I also learned from HMRC that I can pay voluntary NICs (Class 3) for the "partial year" in which I retire. (I reach retirement age in late April 2023.)

I can therefore pay Class 3 for the year 2023-2024, even though I'm of retirement age just a couple of weeks after that financial year begins. That's good news, as it means I can get an additional year towards my state pension.

Sorry, I dont' believe that's true - you may have misunderstood (or possibly the HMRC rep isn't familiar with the rules that the Pension Service used when calculating your State Pension entitlement). 

Whilst you may indeed be able to pay voluntary NIs for April 2023 (tax year 2023-24), I don't believe that they'll count as an extra year towards your state pension amount. It's my firm understanding (often repeated by others on this board) that the tax-year in whcih you reach state pension age is not included when working out your state pension entitlement.

molerat

The financial year in which you reach state retirement does not count, a simple fact, so there must have been some sort of misunderstanding.

Marcon

dunroving said:

Just a brief update of my findings so far, in case anybody else has a similar question (I often find threads on MSE where the OP asks a question, gets helpful advice, but does not follow up with a conclusion of what was learned).

I called FBU in London and they confirmed my understanding of the situation (WEP only applies to employment-based NICs years). However, they did not know, or have experience of, how this might be demonstrated by the recipient. So, on to HMRC ...

... the person at HMRC said that I can get a "statement of account", which is an official HMRC letter stating what years/how many years I have contributions for, and what type of contribution. He is going to send me one currently, so I can confirm what it says for the voluntary contribution years. He was less able to help in regard to two years of NICs credits I have for attending 6th form back in the 1970s - even on his system, there was no additional information other than to say I was "paid up" for those two years, so to speak.

He then talked with a supervisor and called me back to say that it is possible to request a breakdown for the pre-1975 years. I guess I'll know what that looks like when I get the statement of account I'll post back here when I receive it. But, in the meantime it looks like the answer to my primary question is that I will need an award letter (to say how much UK state pension I will receive), and a statement of account (to document the proportion of that amount that is due to non-employment based contributions).

Thank you for making time to post that information. Interesting reading.

Try this: https://www.tax.service.gov.uk/shortforms/form/DPU_SAR_NI?_ga=2.230026460.1544670040.1621021753-1315656139.1609178084 and indicate on your request that you require the pre-75 tax years. You'll then get a response to the effect that it will 'take ages' but you may find it takes only a couple of weeks, depending on their workload at the time. I'd get on and make your request now, in case what you get as a result of your conversation with HMRC isn't quite what you expected.  If you make a SAR, what you get for pre-75 looks like this (which with luck will be what you need, since your two years in sixth form will show 'No employers recorded' unless you had a Saturday job or similar which paid enough to nudge you into graduated pension territory - unlikely, given your age/earnings for teenagers in the 1970s.

Dazed_and_C0nfused

dunroving said:

On a separate, and unrelated note, I also learned from HMRC that I can pay voluntary NICs (Class 3) for the "partial year" in which I retire. (I reach retirement age in late April 2023.)

I can therefore pay Class 3 for the year 2023-2024, even though I'm of retirement age just a couple of weeks after that financial year begins. That's good news, as it means I can get an additional year towards my state pension.

Assuming that by "retirement age" you mean your State Pension age then someone has misunderstood something as that's not possible.

You cannot get a qualifying year for the tax year you reach State Pension age in. 

So the final year you could add is 2022:23.

dunroving

p00hsticks said:

dunroving said:

On a separate, and unrelated note, I also learned from HMRC that I can pay voluntary NICs (Class 3) for the "partial year" in which I retire. (I reach retirement age in late April 2023.)

I can therefore pay Class 3 for the year 2023-2024, even though I'm of retirement age just a couple of weeks after that financial year begins. That's good news, as it means I can get an additional year towards my state pension.

Sorry, I dont' believe that's true - you may have misunderstood (or possibly the HMRC rep isn't familiar with the rules that the Pension Service used when calculating your State Pension entitlement). 

Whilst you may indeed be able to pay voluntary NIs for April 2023 (tax year 2023-24), I don't believe that they'll count as an extra year towards your state pension amount. It's my firm understanding (often repeated by others on this board) that the tax-year in whcih you reach state pension age is not included when working out your state pension entitlement.

Thanks, P00hsticks. My brother had a similar conversation with HMRC, but of course HMRC can only comment on whether it's possible to pay voluntary NICs for the "retirement year", so to speak. I'll call Future Pensions to confirm whether or not it will increase my state pension amount. 

It seems rather strange (perverse, almost) to allow someone to pay for something they don't need, and that won't benefit them. (But that doesn't mean it doesn't happen!) I'll post back here when I find further information, for future readers of the thread.
 

dunroving

Marcon said:

dunroving said:

Just a brief update of my findings so far, in case anybody else has a similar question (I often find threads on MSE where the OP asks a question, gets helpful advice, but does not follow up with a conclusion of what was learned).

I called FBU in London and they confirmed my understanding of the situation (WEP only applies to employment-based NICs years). However, they did not know, or have experience of, how this might be demonstrated by the recipient. So, on to HMRC ...

... the person at HMRC said that I can get a "statement of account", which is an official HMRC letter stating what years/how many years I have contributions for, and what type of contribution. He is going to send me one currently, so I can confirm what it says for the voluntary contribution years. He was less able to help in regard to two years of NICs credits I have for attending 6th form back in the 1970s - even on his system, there was no additional information other than to say I was "paid up" for those two years, so to speak.

He then talked with a supervisor and called me back to say that it is possible to request a breakdown for the pre-1975 years. I guess I'll know what that looks like when I get the statement of account I'll post back here when I receive it. But, in the meantime it looks like the answer to my primary question is that I will need an award letter (to say how much UK state pension I will receive), and a statement of account (to document the proportion of that amount that is due to non-employment based contributions).

Thank you for making time to post that information. Interesting reading.

Try this: https://www.tax.service.gov.uk/shortforms/form/DPU_SAR_NI?_ga=2.230026460.1544670040.1621021753-1315656139.1609178084 and indicate on your request that you require the pre-75 tax years. You'll then get a response to the effect that it will 'take ages' but you may find it takes only a couple of weeks, depending on their workload at the time. I'd get on and make your request now, in case what you get as a result of your conversation with HMRC isn't quite what you expected.  If you make a SAR, what you get for pre-75 looks like this (which with luck will be what you need, since your two years in sixth form will show 'No employers recorded' unless you had a Saturday job or similar which paid enough to nudge you into graduated pension territory - unlikely, given your age/earnings for teenagers in the 1970s.

Thanks, Marcon. I'm *hoping* that whatever I receive as a result of my last conversation with HMRC (whenever I receive it) will be something like the above. It's only been a week so far, but hopefully will arrive soon. As you say, I'm chasing it down now in case I need to follow up before I reach my state pension retirement age.