New State Pension Guide

bigfreddiel · 26 April 2016 at 10:33PM

Sandra_Priestley wrote: »

We have just received notification of my partner's pension due on 7.7.16. According to the website he should be entitled to £155 ish per week. However, he's been told he's only entitled to £130 ish per week. He rang the government helpline who said that even though he has 40 years contributions, because of his small private pension he was being penalised by £25.00 per week. There was no mention of this on any government websites that we viewed. If this is correct it seems very unfair, at no time was he informed that this was the case. If this is correct it should be made clear on the websites. No wonder everyone is being encouraged to take out a private pension as if this is the case as the government will be able to save lots of money in reduced pension credits and other benefits. He is extremely annoyed.

This has been commented on but I'm going to as well

Basically you've answered your own complaint. Your partner has a private pension. I would be 99.99% certain your partner was contracted out while the private pension was building up, so your partner has NOT paid for any additional pension, thus the lower amount.

Had he not paid into a private pension, then maybe the state pension would be nearer to £155/week.

So there is nothing to complain about.

Good luck fj

mgdavid · 26 April 2016 at 10:35PM

what set his expectation?

did he obtain an online SP Forecast from
https://www.tax.service.gov.uk/checkmystatepension

or did he request it by post or phone?
https://www.nidirect.gov.uk/articles/getting-state-pension-statement

xylophone · 26 April 2016 at 11:57PM

We have just received notification of my partner's pension due on 7.7.16. According to the website he should be entitled to £155 ish per week. However, he's been told he's only entitled to £130 ish per week. He rang the government helpline who said that even though he has 40 years contributions, because of his small private pension he was being penalised by £25.00 per week. There was no mention of this on any government websites that we viewed. If this is correct it seems very unfair, at no time was he informed that this was the case. If this is correct it should be made clear on the websites. No wonder everyone is being encouraged to take out a private pension as if this is the case as the government will be able to save lots of money in reduced pension credits and other benefits. He is extremely annoyed.

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

LXdaddy · 27 April 2016 at 4:47AM

Sandra_Priestley wrote: »

We have just received notification of my partner's pension due on 7.7.16. According to the website he should be entitled to £155 ish per week. However, he's been told he's only entitled to £130 ish per week. He rang the government helpline who said that even though he has 40 years contributions, because of his small private pension he was being penalised by £25.00 per week. There was no mention of this on any government websites that we viewed. If this is correct it seems very unfair, at no time was he informed that this was the case. If this is correct it should be made clear on the websites. No wonder everyone is being encouraged to take out a private pension as if this is the case as the government will be able to save lots of money in reduced pension credits and other benefits. He is extremely annoyed.

I would image that the deduction is because of a period of being "contracted out". If, like me and many others, he was in a pension scheme that contracted out of SERPS then he paid lower national insurance contributions and earned extra pension through the pension scheme. If so he would be entitled to less additional (SERPS or S2P) state pension under the old rules and that reduces the starting or foundation amount for the new rules.

There is much discussion about the impact of contracting out here and in media currently. Unfortunately at the time of the announcement of the new single-tier pension (not flat-rate pension) it was not given anything like enough prominence - I certainly was not aware of it at that time.

Edit: Oops - replying to the last post on a page and not realising there was another page with the answers already. So in summary - same as the posts above.

Mizban · 15 July 2016 at 12:04PM

Well yes and no, and anyone thinks the rules are clear then I don't know how most people are confused. I do need some help here with my case which maybe similar to some above. I spent most of my working life as self-employed apart from six years only as employee. I have 32 qualifying years of paid N I contributions (apart of the six years contracted out of company pensions reduced payments), the rest of my N I contributions are paid as self-employed. I was born in May /2016 hence I qualify for the new state pension. All media and others say self-employed people benefit mostly from the new state pension, I DO NOT. After letters and telephone calls to the Pension Service I was told that I was penalised by £36 per week because of my only six years contracted out time. I asked that I spent the rest and most of working life as self-employed how on earth those six years can cost me £36 reduction to my pension per week, they simply answered me they do not make the rules unfortunately and those figures as they are! Where did they come from and how? No answer to that. Hence I am getting as a result of that £119.30 like the old pension (the higher of two figures they calculated) etc etc ....CAN ANYBODY SEE MY POINT HERE PLEASE and how only six years of only contracted out time can result in £36/week reduction in my pension ????

molerat · 15 July 2016 at 1:09PM

Your "new" pension is reduced by the contracted out deduction which reflects the lower NI you paid whilst contracted out. Under the transitional arrangements you are allowed to keep what you earned under the old scheme so are no worse off than you would have been. Self employed people do benefit because they get the same amount as an employed person for a much smaller contribution, something that is being stopped from 2018. Also the six years contracted out has not cost you £36, the 3 years short of a full contribution record has cost you £13 of that.

greenglide · 15 July 2016 at 1:48PM

The amount of £36 deducted from the pension is to take account of the pension which, in theory at least, has been accrued in the contracted scheme you were in for the six years.

It is not just the length of time you were contracted out it is also the amount of your earnings during that time as that will have determined the amount of the NI rebate which will have been paid into your scheme.

What is the value of the occupational pension that you were in? You seem to ignored that.

Mizban · 15 July 2016 at 2:32PM

Thank you greenglide , the amount of my occupational pension I'm getting just under £300 per month now after cashing my 25% tax free cash lump sum. Not sure what was my whole fund prior to that.
Thank you also Molerat, pension service did mention the amount £36/week subtracted from £142/week amount under the new rules of state pension , making net amount £106/week BUT under the old rules £119.30 hence they gave me the higher of the two figures as they do.
One thing though, if I am awarded £119.30/week now that was based on 30 years N I Contributionsd what about the extra 2 years I contributed to ? Since I paid 32 N I Contributions years ! Interesting, not taken into account ha!

greenglide · 15 July 2016 at 2:50PM

I was born in May /2016

I assume you werent reaaly born in May 2016:-)

When were you actually born? If you only have 32 years of contributions does than mean the you have not reached SPa year or do you have large gaps in you contributions? If you are below SPa you will get an extra £155.65 / 35 (approx £4.44) for each additional year before SPa.

If you have already reached SPa then you may be able to fill some of the gaps in your contributions but that may make no difference.

However you occupational pension of £300 per month (plus the lump sub) seems a good deal rather than £36 per week (£156 per month) of State Pension?

molerat · 15 July 2016 at 2:51PM

Under the pre 2010 rules you needed 44 years male and 39 years female to get a full pension. It then changed to 30 years and any extra years added nothing to the basic pension, additional state pension earned was still added. The 2016 changes require 35 years for a full pension.

New State Pension Guide

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