Author Topic: Will I lose my social security benefits?  (Read 5664 times)

Seppia

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Will I lose my social security benefits?
« on: October 27, 2015, 05:30:57 PM »
Hello forum
Here's my issue: I am an Italian who has lived in the US for five years now.
In each of these five years I have paid social security.
What happens if I go back to Europe or leave the Country?
Will I lose the right to have my benefits completely or will I get them (obviously pro rated to the fact that I only contributed 5 years)?
My understanding is that there are agreements between the Countries, and I could convert the SS benefits to Italian benefits, but I pull rather not do that at all.
While it could be easier to manage only one social security in the future, I definitely trust the United States of America much, much more than the italian administration.
Thanks a lot in advance

terran

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Re: Will I lose my social security benefits?
« Reply #1 on: October 27, 2015, 06:02:20 PM »
You need a total of 40 credits to receive benefits and you earn at most 4 credits per year (when you earn at least $4,880 in a year), so you are not currently eligible and won't be until you have worked at least 10 years total in the US. At that point I don't know what the effect of leaving the country would be. I also don't know if you can convert the credits you have earned to the Italian equivalent.   

beltim

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Re: Will I lose my social security benefits?
« Reply #2 on: October 27, 2015, 06:24:34 PM »
As terran pointed out, you would need at least 10 years of working in the US to be eligible to US-based benefits.

However, your 5 years of work here will count towards the equivalent benefits in Italy:
https://www.ssa.gov/international/Agreement_Pamphlets/italy.html

Goldielocks

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Re: Will I lose my social security benefits?
« Reply #3 on: October 27, 2015, 07:37:37 PM »
My 3 years of USA SS payments translate ( through tax agreements) into 3 years of credit towards the Canadian CPP earned credits.    I don't get any $ from usa in retirement, ( need 10 yrs of credits) but the cdn benefit is increased a bit by it.  I need to apply, when the time comes as it is not automatic and a bit involved.

Kinda sucks, as the U.S. Cost for SS to me and my employer was WAY higher, and  Canada's CPP benefit per credit is only about half. Better than nothing, though.

So check to see if there is an Italy USA agreement. They exist for quite a few countries with the USA.

Nb this is all from memory, it could be OAS and not CPP....

Cathy

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Re: Will I lose my social security benefits?
« Reply #4 on: October 27, 2015, 09:43:50 PM »
As terran pointed out, you would need at least 10 years of working in the US to be eligible to US-based benefits.

This is not correct as a general proposition (as your own secondary source also notes). There are a great many exceptions to the above rule. I don't propose to summarise them in this post, but some of them may be relevant to the OP.


My 3 years of USA SS payments translate ... into 3 years of credit towards the Canadian CPP earned credits.    I don't get any $ from usa in retirement, ... but the cdn benefit is increased a bit by it.

Unfortunately, this isn't true. I remember reading a secondary source that also made this claim, but the claim has no basis in law.

To analyse the quoted claim, we start from the proposition that, in Canada, treaties and other international agreements do not have the force of law. Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, 1999 CanLII 699, at 69. This means that we do not need to read the international agreement to analyse your claim. Instead, we can look at only Canadian domestic law.

The statutory basis for the Canada Pension Plan is a statute called the Canada Pension Plan, RSC 1985, c C-8 ("CPP Stat"). The formula for the "retirement pension" is set out in CPP Stat 46 et seq. I won't get into the details of the formula, but it suffices to say that the only earnings that are taken into account are the beneficiary's "total pensionable earnings". Through a series of statutory cross-references, we eventually find that if an employee did not actually contribute to the Canada Pension Plan in a given year, the amount of pensionable earnings taken into account for that year "shall be deemed to be zero". CPP Stat 52(2).

In other words, unless contributions to the Canada Pension Plan were withheld from your paychecks in the United States or you otherwise paid the CPP premiums through your Canadian tax returns those year, your work in the USA did not count toward the Canada Pension Plan and will have no effect on your Canada Pension Plan benefit whatsoever. Harsh, but true.
« Last Edit: October 27, 2015, 10:09:31 PM by Cathy »

beltim

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Re: Will I lose my social security benefits?
« Reply #5 on: October 27, 2015, 09:51:09 PM »
As terran pointed out, you would need at least 10 years of working in the US to be eligible to US-based benefits.

This is not correct as a general proposition (as your own secondary source also notes). There are a great many exceptions to the above rule. I don't propose to summarise them in this post, but some of them may be relevant to the OP.

It's a simplification where the more complex explanation does not matter to the OP as it will not affect him or her.

Seppia

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Re: Will I lose my social security benefits?
« Reply #6 on: October 28, 2015, 03:37:10 PM »
Thanks to all for your help so far.
It would be a little disheartening to have paid the max for 5 years and get absolutely nothing in return.
This means I'll have to come back another 5 years lol

Goldielocks

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Re: Will I lose my social security benefits?
« Reply #7 on: October 28, 2015, 04:17:24 PM »
As terran pointed out, you would need at least 10 years of working in the US to be eligible to US-based benefits.

This is not correct as a general proposition (as your own secondary source also notes). There are a great many exceptions to the above rule. I don't propose to summarise them in this post, but some of them may be relevant to the OP.


My 3 years of USA SS payments translate ... into 3 years of credit towards the Canadian CPP earned credits.    I don't get any $ from usa in retirement, ... but the cdn benefit is increased a bit by it.

Unfortunately, this isn't true. I remember reading a secondary source that also made this claim, but the claim has no basis in law.

To analyse the quoted claim, we start from the proposition that, in Canada, treaties and other international agreements do not have the force of law. Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, 1999 CanLII 699, at 69. This means that we do not need to read the international agreement to analyse your claim. Instead, we can look at only Canadian domestic law.

The statutory basis for the Canada Pension Plan is a statute called the Canada Pension Plan, RSC 1985, c C-8 ("CPP Stat"). The formula for the "retirement pension" is set out in CPP Stat 46 et seq. I won't get into the details of the formula, but it suffices to say that the only earnings that are taken into account are the beneficiary's "total pensionable earnings". Through a series of statutory cross-references, we eventually find that if an employee did not actually contribute to the Canada Pension Plan in a given year, the amount of pensionable earnings taken into account for that year "shall be deemed to be zero". CPP Stat 52(2).

In other words, unless contributions to the Canada Pension Plan were withheld from your paychecks in the United States or you otherwise paid the CPP premiums through your Canadian tax returns those year, your work in the USA did not count toward the Canada Pension Plan and will have no effect on your Canada Pension Plan benefit whatsoever. Harsh, but true.

Hi Cathy, that is what I thought for a few years too, until I found out differently from a CFP.

Moustachienne

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Re: Will I lose my social security benefits?
« Reply #8 on: October 28, 2015, 04:47:20 PM »

Cathy

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Re: Will I lose my social security benefits?
« Reply #9 on: October 28, 2015, 04:55:02 PM »
Hi Cathy, that is what I thought for a few years too, until I found out differently from a CFP.

Professional designations do not convey access to special laws or regulations. Moreover, administrative agencies (such as the agency tasked with administering the Canada Pension Plan) do not apply different laws based on the identity of the parties or their representatives. If they did so, it would be "in tension with the most elementary conception of the rule of law what Aristotle called 'corrective justice', which means judging the case rather than the parties [or their representatives]". Schmude v. Tricam Industries, 556 F3d 624, 627 (7th Cir 2009) (Posner, J). Indeed, "the law is supreme over officials of the government as well as private individuals, and thereby preclusive of the influence of arbitrary power". Re Manitoba Language Rights, [1985] 1 SCR 721, 1985 CanLII 33 at 59. Courts are therefore not in the business of applying secret laws: it is "the hallmark of a democratic society" that "court proceedings [including the law applied] ... be open and accessible to the public". A.B. v. Bragg Communications Inc., 2012 SCC 46 at 11 (citation and internal quotation marks omitted).

The Canada Pension Plan is purely a creature of statute. Government administrators can only do what the law authorises them to do. If the administration of a government program were "dictated by ... the arbitrary likes, dislikes and irrelevant purposes of public officers ... [it] would signalize the beginning of disintegration of the rule of law". Roncarelli v. Duplessis, [1959] SCR 121, 142 (Rand and Judson, JJ, concurring). As explained in my previous post, there is no basis in law for the claim that I analysed. Notwithstanding what a "CFP" may have said, the government can only apply the law.
« Last Edit: October 28, 2015, 04:57:29 PM by Cathy »

Goldielocks

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Re: Will I lose my social security benefits?
« Reply #10 on: October 28, 2015, 05:11:10 PM »
Hi Cathy, that is what I thought for a few years too, until I found out differently from a CFP.

Professional designations do not convey access to special laws or regulations. Moreover, administrative agencies (such as the agency tasked with administering the Canada Pension Plan) do not apply different laws based on the identity of the parties or their representatives. If they did so, it would be "in tension with the most elementary conception of the rule of law what Aristotle called 'corrective justice', which means judging the case rather than the parties [or their representatives]". Schmude v. Tricam Industries, 556 F3d 624, 627 (7th Cir 2009) (Posner, J). Indeed, "the law is supreme over officials of the government as well as private individuals, and thereby preclusive of the influence of arbitrary power". Re Manitoba Language Rights, [1985] 1 SCR 721, 1985 CanLII 33 at 59. Courts are therefore not in the business of applying secret laws: it is "the hallmark of a democratic society" that "court proceedings [including the law applied] ... be open and accessible to the public". A.B. v. Bragg Communications Inc., 2012 SCC 46 at 11 (citation and internal quotation marks omitted).

The Canada Pension Plan is purely a creature of statute. Government administrators can only do what the law authorises them to do. If the administration of a government program were "dictated by ... the arbitrary likes, dislikes and irrelevant purposes of public officers ... [it] would signalize the beginning of disintegration of the rule of law". Roncarelli v. Duplessis, [1959] SCR 121, 142 (Rand and Judson, JJ, concurring). As explained in my previous post, there is no basis in law for the claim that I analysed. Notwithstanding what a "CFP" may have said, the government can only apply the law.

Given the number of years to go before I apply, I am also aware that the government can rescind decisions too. Best not to count on anything until I am closer to it.

Cathy

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Re: Will I lose my social security benefits?
« Reply #11 on: October 28, 2015, 05:22:07 PM »
Given the number of years to go before I apply, I am also aware that the government can rescind decisions too. Best not to count on anything until I am closer to it.

This is an excellent point. In Canada, "[e]xcept for criminal law, ... there is no requirement of legislative prospectivity embodied in the rule of law or in any provision of our Constitution". British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49 at 65. The federal and provincial legislatures in Canada enjoy an almost unlimited power to change the law retroactively, so long as the legislation is otherwise constitutional. In fact, the legislature could potentially even revoke your benefits after you've already received them. In Canada, a legislature even has the "power of passing a law to specifically deny compensation to an aggrieved individual with whom it has broken an agreement". Authorson v. Canada (Attorney General), 2003 SCC 39 at 55 (quoting Wells v. Newfoundland, 1999 CanLII 657 (SCC) at 41) (internal quotation marks omitted). "The wisdom and value of [such] decisions are subject only to review by the electorate." Wells at 59.
« Last Edit: October 28, 2015, 05:24:07 PM by Cathy »

dadof4

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Re: Will I lose my social security benefits?
« Reply #12 on: October 29, 2015, 01:41:01 AM »
Thanks to all for your help so far.
It would be a little disheartening to have paid the max for 5 years and get absolutely nothing in return.
This means I'll have to come back another 5 years lol
As other have mentioned, you need 40 credits (ie 10 years total) to start qualifying for social security retirement payment. You do qualify for some benefits after only 5 years (like spouse and child payments in case of death).
Another option, is to generate passive US income, and continue filing tax returns for another 5 years. A relative of mine was in the same boat as you (5 years of active work, then left the US), but continued receiving checks related to premium payments from his old clients. Filed US tax returns for that income (and paid SS out of it). He recently retired and is receiving a [modest] SS income.

Seppia

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Re: Will I lose my social security benefits?
« Reply #13 on: October 29, 2015, 03:39:39 AM »
That is a great suggestion thank you so much dadof4!
I will keep all my stocks and index funds here, so I will have to file tax papers.
I don't expect it to be very large ($5000 per year at most), would this be enough?
Thanks

terran

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Re: Will I lose my social security benefits?
« Reply #14 on: October 29, 2015, 06:46:12 AM »
That is a great suggestion thank you so much dadof4!
I will keep all my stocks and index funds here, so I will have to file tax papers.
I don't expect it to be very large ($5000 per year at most), would this be enough?
Thanks

I'm thinking that wouldn't work because you don't pay FICA on capital gains or dividends. I think you need something that counts as earned income and reports at least $4880 on a w2, or a bit more as 1099 work as 1/2 of the self employment tax you would be paying would count as an expense reducing income. It sounds like dadof4's relative probably had a commissioned sales job that continued to pay commissions on customers he brought in to the company (or something like that).

Some of the links/comments up thread make it sound like your social security can be applied to your Italian pension though, so that might be the way to go?

Seppia

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Re: Will I lose my social security benefits?
« Reply #15 on: October 29, 2015, 06:50:16 AM »
Yes thanks.
The worst case scenario (me losing the money completely) is luckily ruled out now.
In an ideal scenario I would definitely prefer to keep social security coming from the USA
The difference is that Italy is very close to banana republic status, the United States of America on the other hand keep on kicking ass, regardless of what a lot of spoiled US whiners say.
:)
Thanks again for your help to all

Goldielocks

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Re: Will I lose my social security benefits?
« Reply #16 on: October 29, 2015, 05:21:19 PM »
That is a great suggestion thank you so much dadof4!
I will keep all my stocks and index funds here, so I will have to file tax papers.
I don't expect it to be very large ($5000 per year at most), would this be enough?
Thanks
Let me know which broker you will keep using after you are non resident, I know they are out there, but it isn't easy to find without being on hold a lot.  ( hint Wells Fargo is now a 'no')

Seppia

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Will I lose my social security benefits?
« Reply #17 on: November 03, 2015, 05:02:32 AM »
Update:
After having consulted with some very trusted people, I will most probably liquidate all non-401k/ira investments and ship them to Europe.
Main reasons behind this choice are:
1- ever changing laws in Italy regarding money abroad. The Italian government is the worst and if there's something they don't understand they will immediately assume the worst and you will be presumed guilty. I have always been employed by a company, so everything is very clear and clean, but not worth the headache, especially because
2- the US dollar is at historical highs. Sure it could go higher but it doesn't seem a bad moment to bring the money back in euros, especially considering I will most probably live in Europe the rest of my life.

The equities sold at a gain will be sold in January, the ones at a loss in December.
I will also max out my Ira for both this year and the next.

I will leave my 401k and Ira here, when I quit will obviously roll over the 401k into the Ira.
These accounts should be much easier to "explain" to Italian authorities should they inquire on anything.