Choosing between UK, Canada and US social security systems

[saxondale]

By the time I hope to retire I will have contributions across each system and I am hoping to get opinions on which system I should transfer credits to.

I will have:

- 6 years UK NI contributions
- 8 years CPP contributions
- 5-10 years US SS contributions

My understanding is that the Canadian system is best (CPP/OAS). I'll be retiring in South East Asia.

Questions:

- Am I correct in assuming Canada is best?
- On the lower end of my contribution scale I will fall short of OAS by a year. Can I top up the year via a voluntary NI contribution?
- Can I make voluntary UK NI contributions to increase my CPP pension?

Apologies in advance I know this is complex because it requires familiarity of the UK and Canadian pensions systems.

[Rockies]

I didn't know that transfers were allowed. Are there any rules/limitations? I have a few years credits in the USA but most of my credits in Canada, I didn't even consider that I could do anything with my US credits if I retire in Canada.

[daverobev]

AFAIK you can only transfer UK-Canada under very specific circumstances. IE basically if you're on 'secondment' for a low number of years only. That's all. And I think it's being cancelled going forwards. Not sure about US-UK or US-Canada but.. I don't think what you're imagining actually exists between these three.

If you can, apply to pay UK Class 2 NICs - it is a stupidly cheap way of getting UK State Pension years (£160 a year to buy about £250 of pension...).

You need to have at least 20 years of OAS Qualifying Years in order to get *any* OAS at all when retiring abroad - it is only 10 years if you retire in Canada. I don't believe UK years count towards that number. I don't know about US.

You have to have at least 10 UK years to get *any* UK State Pension at all. It may be that time in the US counts to qualifying years.

In both these cases qualifying years is just eligibility, you're still paid based on the number of years you were in the country/paid into the system respectively.

But you may know more than me, and the US may give you the years you need for the UK to get at least something.

[FLBiker]

PTF, mostly.  I've got ~15 years in US SS, and I'll have a few years paying into CPP in Canada.  I plan to retire in Canada, so I should be fine for OAS.  My understanding is that I'll collect BOTH US SS and CPP, but my US SS will be reduced by up to half of my CPP payment, due to the Windfall Elimination Provision.

Here's some info: https://retiremitten.com/social-security-strategies-when-you-also-have-a-canadian-pension/

The idea of starting CPP early and US SS late (to reduce the WEP) is an interesting one to me.  My CPP will likely be pretty small, though, so I'm not sure how important that will be.

And if you don't have enough credits to qualify for US SS, I believe you can use CPP credits to top it up.  That isn't my situation, though, so I'm not sure how that works.  And, unfortunately, I can't add anything about the UK.  There is a non-zero possibility that I might work in the UK in the coming years, though, so I'm curious how that works.

[saxondale]

AFAIK you can only transfer UK-Canada under very specific circumstances. IE basically if you're on 'secondment' for a low number of years only. That's all. And I think it's being cancelled going forwards. Not sure about US-UK or US-Canada but.. I don't think what you're imagining actually exists between these three.

I looked into this more and you're correct. There's not really an option to transfer between systems. There are options to qualify based on pension contributions abroad. So working 10 years in the UK can be used as 10 qualifying years for OAS. This is my understanding.

If you can, apply to pay UK Class 2 NICs - it is a stupidly cheap way of getting UK State Pension years (£160 a year to buy about £250 of pension...).

You need to have at least 20 years of OAS Qualifying Years in order to get *any* OAS at all when retiring abroad - it is only 10 years if you retire in Canada. I don't believe UK years count towards that number. I don't know about US.

I plan on doing this. I'm not 100% sure but this looks like a way to also "buy" qualifying years for OAS.

From the Government website:

You can qualify to receive Old Age Security pension payments while living outside of Canada if one if these reasons applies to you:

    you lived in Canada for at least 20 years after turning 18
    you lived and worked in a country that has a social security agreement with Canada. The time you lived or worked in that country and Canada must be at least 20 years

I should have 20 years across three countries. It's unclear whether NI buybacks will qualify here.

You have to have at least 10 UK years to get *any* UK State Pension at all. It may be that time in the US counts to qualifying years.

In both these cases qualifying years is just eligibility, you're still paid based on the number of years you were in the country/paid into the system respectively.

That's fair. It's a bit tedious to collect from three systems but there are benefits too.

PTF, mostly.  I've got ~15 years in US SS, and I'll have a few years paying into CPP in Canada.  I plan to retire in Canada, so I should be fine for OAS.  My understanding is that I'll collect BOTH US SS and CPP, but my US SS will be reduced by up to half of my CPP payment, due to the Windfall Elimination Provision.

Right. The WEP stuff is interesting and basically eliminates the benefits of straddling two systems.

[daverobev]

Where do you get that you can transfer UK years to Canada? I think you're either misunderstanding what you've found (if you work in Canada for 3 years and the UK for 18, you qualify for pro-rated OAS at 3/40 - not 21/40), or it's outdated and based on being posted there for a short period. Happy to be found wrong but that's what I found.

NI year purchases absolutely won't count to the qualifying 20 years.

(Edit - see my reply below - this is wrong, UK years do NOT count for Canada in terms of qualifying)

[saxondale]

Where do you get that you can transfer UK years to Canada? I think you're either misunderstanding what you've found (if you work in Canada for 3 years and the UK for 18, you qualify for pro-rated OAS at 3/40 - not 21/40), or it's outdated and based on being posted there for a short period. Happy to be found wrong but that's what I found.

That's what I'm saying. The years can be used to qualify. Not as contribution years.

NI year purchases absolutely won't count to the qualifying 20 years.

Looking for a source for that.

[daverobev]

Ok, I misunderstood what you wrote.

Ah and I misremembered when I replied today - earlier I said that UK years do NOT count for Canadian stuff, at all:

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-international/united-kingdom.html

The Convention is a limited agreement dealing only with contributions. It is not an agreement of the standard type and cannot help people to qualify for social security benefits from Canada and the United Kingdom.

The provisions of the Convention ensure that persons from Canada who are sent to work temporarily in the United Kingdom will not be required to make contributions to the U.K. pension program. They will continue to be covered under the Canada Pension Plan. On a reciprocal basis, the Convention ensures that persons from the U.K. posted to work temporarily in Canada remain covered under the pension program of the United Kingdom.

In other words what I said earlier today is false: if you work 3 years in Canada and 18 in the UK, you have... 3 Canadian qualifying years. Unless you do the transfer thing, keep paying NI and not CPP, in which case you'd end up with 21 UK and 0 Canadian.

[daverobev]

And another thing - the UK is a pain in that in some countries it doesn't uprate the pension each year with inflation, but in other countries it does.

If you retire in Canada your UK State pension will stay the same forever. If you retire in the US, it will change every year just as if you lived in the UK. So if you're planning on buying those extra years - just bear in mind depending on the country of residence it may not end up as much as you think.

Also, Canada withholds 25% of CPP, OAS, RRSP withdrawals in most countries. There is a list of which they do and which they don't - if you retire in the UK for example (despite not having a social security agreement!!!), Canada withholds nothing. If you retire in France, they keep 25% and that isn't recoverable except as a credit against your French taxes!

It is, in short, a bloody mess.