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  • FIRST POST
    • thatoldchestnut
    • By thatoldchestnut 13th Nov 17, 9:38 PM
    • 53Posts
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    thatoldchestnut
    Contracting out and the state pension
    • #1
    • 13th Nov 17, 9:38 PM
    Contracting out and the state pension 13th Nov 17 at 9:38 PM
    I am a 35 year old male who has paid into the LGPS since 2009 and so I’d been contracted out until April 2016. I checked my state pension forecast online for the first time today and was surprised to find that these years are described as “Full Years” and I have built up 14 years of NI contributions so far. I thought my contracted out years would be ones I would have to make up for at some point between now and SPA if they were fewer in number than the years I’d spent contracted in. Is this not the case or have I totally misunderstood the situation (as usual)? I thought looking at my forecast would tell me my starting amount too, but I can’t find any reference to it.

    The other confusing thing is that the most I can get in state pension is £159.55 pw. 159.55 / 35 x 14 = £63.82, but it says this would actually give me £67.81 pw. I’m sure there’s probably something I’m missing, but it’s quite perplexing!

    I have one year in 06/07 that is not full but I have the option to pay about £70 to add it if I wish, which on the face of it sounds like a good deal but I might try to get advice from the Money Advice Service about that.
Page 1
    • Dazed and confused
    • By Dazed and confused 13th Nov 17, 9:47 PM
    • 1,868 Posts
    • 831 Thanks
    Dazed and confused
    • #2
    • 13th Nov 17, 9:47 PM
    • #2
    • 13th Nov 17, 9:47 PM
    As you're going to have another 30+ years to contribute what do you expect to benefit from paying for the old year? Or won't you be working enough years in the future to get to the £159.55 mark?


    The other confusing thing is that the most I can get in state pension is £159.55 pw


    What is confusing about it? What did you expect to be able to get, as a maximum amount?
    • thatoldchestnut
    • By thatoldchestnut 13th Nov 17, 10:18 PM
    • 53 Posts
    • 12 Thanks
    thatoldchestnut
    • #3
    • 13th Nov 17, 10:18 PM
    • #3
    • 13th Nov 17, 10:18 PM
    What is confusing about it? What did you expect to be able to get, as a maximum amount?
    Originally posted by Dazed and confused
    Sorry, perhaps I phrased that badly. What confused me is the that it thinks I have built up £67.81 per week in state pension, but if I divide £159.55 by 35 years and multiply it by 14 years I get £63.82, so I didn't understand the discrepancy.

    I was considering paying for the old year so it'd get me closer to 35 years of contributions sooner, but I take your point that all being well I'd get there anyway.
    • Silvertabby
    • By Silvertabby 14th Nov 17, 9:48 AM
    • 1,807 Posts
    • 2,230 Thanks
    Silvertabby
    • #4
    • 14th Nov 17, 9:48 AM
    • #4
    • 14th Nov 17, 9:48 AM
    DWP are confusing things for some reason - their definition of 'full year' is 'full financial year' rather then 'full not contracted out year'.

    Your DWP foundation amount calculation will be under the old rules. ie:

    £119 (old basic State pension) /30 x 14 = £55.53 plus a bit of SERPS/SP2 (from pre 2009) taking you up to £67.81.

    This is higher than your calculation under the new rules, which would have been :

    £159.55 /35 x 7 = £31.91

    You only need about 23 years of post 2016 NI to bump you up to the maximum State pension so, unless you intend to retire at 55, you won't benefit from paying for previous years.
    • GunJack
    • By GunJack 14th Nov 17, 10:35 AM
    • 9,839 Posts
    • 7,328 Thanks
    GunJack
    • #5
    • 14th Nov 17, 10:35 AM
    • #5
    • 14th Nov 17, 10:35 AM
    A year is "full" if you have paid whatever NI you should have, either contracted-in or -out doesn't matter, it's either a full year or not
    ......Gettin' There, Wherever There is......
    • thatoldchestnut
    • By thatoldchestnut 14th Nov 17, 8:08 PM
    • 53 Posts
    • 12 Thanks
    thatoldchestnut
    • #6
    • 14th Nov 17, 8:08 PM
    • #6
    • 14th Nov 17, 8:08 PM
    Ah, that makes a bit more sense. Thank you Silvertabby!

    DWP are confusing things for some reason - their definition of 'full year' is 'full financial year' rather then 'full not contracted out year'.

    Your DWP foundation amount calculation will be under the old rules. ie:

    £119 (old basic State pension) /30 x 14 = £55.53 plus a bit of SERPS/SP2 (from pre 2009) taking you up to £67.81.

    This is higher than your calculation under the new rules, which would have been :

    £159.55 /35 x 7 = £31.91

    You only need about 23 years of post 2016 NI to bump you up to the maximum State pension so, unless you intend to retire at 55, you won't benefit from paying for previous years.
    Originally posted by Silvertabby
    • Dansmam
    • By Dansmam 15th Nov 17, 7:27 AM
    • 530 Posts
    • 1,798 Thanks
    Dansmam
    • #7
    • 15th Nov 17, 7:27 AM
    • #7
    • 15th Nov 17, 7:27 AM
    DWP are confusing things for some reason - their definition of 'full year' is 'full financial year' rather then 'full not contracted out year'.

    Your DWP foundation amount calculation will be under the old rules. ie:

    £119 (old basic State pension) /30 x 14 = £55.53 plus a bit of SERPS/SP2 (from pre 2009) taking you up to £67.81.

    This is higher than your calculation under the new rules, which would have been :

    £159.55 /35 x 7 = £31.91

    You only need about 23 years of post 2016 NI to bump you up to the maximum State pension so, unless you intend to retire at 55, you won't benefit from paying for previous years.
    Originally posted by Silvertabby
    At your age I wouldn’t have known that I’d be looking to retire (ok, take pension and change direction possibly unpaid) at 55. If you can find the £70 without too much trouble I’d be inclined to get that year paid up. Keeps your options that tiny bit more open.
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