Contracted out pension

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  • jamesd
    jamesd Posts: 26,103 Forumite
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    You won't get a letter if you have qualified. There was also a long period when they should have been sending them out but didn't. What should happen is a letter to only those who didn't qualify telling them how much they could pay to get the year to count, in addition to what they already had from work or credits.
  • 50Twuncle
    50Twuncle Posts: 10,763 Forumite
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    jamesd wrote: »
    You won't get a letter if you have qualified. There was also a long period when they should have been sending them out but didn't. What should happen is a letter to only those who didn't qualify telling them how much they could pay to get the year to count, in addition to what they already had from work or credits.
    In the last 7 years - I have been earning under the NI qualifying amount (not paying NI) and still no letter !!
  • 50Twuncle
    50Twuncle Posts: 10,763 Forumite
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    My wife (who claims Carers Allowance £62 per week for looking after me) - receives her NI credits from that benefit - is there no equivalent from DLA/PIP to ensure that disabled people get a decent state pension ?
  • p00hsticks
    p00hsticks Posts: 12,762 Forumite
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    50Twuncle wrote: »
    My wife (who claims Carers Allowance £62 per week for looking after me) - receives her NI credits from that benefit - is there no equivalent from DLA/PIP to ensure that disabled people get a decent state pension ?

    Disabilty and receipt of PIP / DLA does not necessarily preclude people from working and building up their NI record for state pension that way.

    If they are not working, then working age disabled people can get NI credits either by claiming ESA if they are sick, or JSA if they are actively seeking employment.
  • 50Twuncle
    50Twuncle Posts: 10,763 Forumite
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    p00hsticks wrote: »
    Disabilty and receipt of PIP / DLA does not necessarily preclude people from working and building up their NI record for state pension that way.

    If they are not working, then working age disabled people can get NI credits either by claiming ESA if they are sick, or JSA if they are actively seeking employment.
    Only if they are entitled to claim ESA - which I am not (ill health pension)
  • 50Twuncle
    50Twuncle Posts: 10,763 Forumite
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    OK I have done more research in to this
    I currently have 32 fulll years of contributions - worth £121.34 per week
    I need to make another 9 years to get the max £155.65 per week (plus any rises)
    making an unheard of 41 years work for max state pension
    Which will cost me a lot (approx £700 pa)
    But - had I been claiming ESA, my NI would have been paid for me (class 3)
    Instead - I am working (earning less than the minimum required to claim NI contributions) - hence my predicament
    What should I do now - to ensure that I receive the maximum pension in 14 years time ?
  • dunstonh
    dunstonh Posts: 116,252 Forumite
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    making an unheard of 41 years work for max state pension

    It's not unheard of. Most people that start work in their late teens, early 20s will exceed 41 years qualification. It was not long ago that 40 years was the state pension qualification to get the maximum basic.
    What should I do now - to ensure that I receive the maximum pension in 14 years time ?

    Find out how much it will cost you in voluntary NI contributions. The online state pension forecast can do this.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • 50Twuncle
    50Twuncle Posts: 10,763 Forumite
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    dunstonh wrote: »
    It's not unheard of. Most people that start work in their late teens, early 20s will exceed 41 years qualification. It was not long ago that 40 years was the state pension qualification to get the maximum basic.



    Find out how much it will cost you in voluntary NI contributions. The online state pension forecast can do this.
    The state forcast thing only shows my missing years (4) with the amount needed to make up those missing years (not future years)
  • molerat
    molerat Posts: 31,802 Forumite
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    edited 23 October 2016 at 2:45PM
    50Twuncle wrote: »
    OK I have done more research in to this
    I currently have 32 fulll years of contributions - worth £121.34 per week
    I need to make another 9 years to get the max £155.65 per week (plus any rises)
    making an unheard of 41 years work for max state pension
    Which will cost me a lot (approx £700 pa)
    But - had I been claiming ESA, my NI would have been paid for me (class 3)
    Instead - I am working (earning less than the minimum required to claim NI contributions) - hence my predicament
    What should I do now - to ensure that I receive the maximum pension in 14 years time ?
    £155.65 -£121.34 / £4.45 = 7.7 (8) years required to reach full pension amount. 32+8 = 40, 4 years less than the amount needed for a male pre 2010 to reach full basic pension. As said before looking at the number of years previously accrued is a bit irrelevant during the transition period, you don't have 32 years any more you have £121.34.

    The cost of class 3 NI going forward should be current amount increased by CPI each year so fairly easy to do a rough cost forecast. If you have a reasonable life expectation then class 3s become a no brainer.
  • xylophone
    xylophone Posts: 44,292 Forumite
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    edited 23 October 2016 at 2:47PM
    Your starting amount for new state pension is calculated as the higher of your entitlements under the old scheme or the new scheme.

    Under the old scheme this will be a full BSP of £119.30 ( because you have 30 years NI) + any Additional Pension - a deduction because you were contracted out.

    The calculation under the new scheme will be 32/35 of £155.65 - the deduction because you were contracted out.

    It is likely that the old calculation gives you the higher amount which in your case appears to be £121.34.

    It would seem therefore that buying years earlier than 2016-17 would be pointless in your case.

    You can add qualifying years up to your SPA by voluntary Class 3 contributions. Each qualifying year adds £4.45.

    See http://www.thisismoney.co.uk/money/pensions/article-3535618/STEVE-WEBB-Buying-ups-paying-missing-NI-boost-state-pension.html

    https://www.theguardian.com/money/2016/oct/08/how-to-boost-state-pension

    You might wish to obtain a State Pension Forecast Letter

    https://www.gov.uk/government/publications/application-for-a-state-pension-statement

    and then ring DWP ( if necessary) to confirm your position?
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