New state pension - how much when contracted out

Hello,

I was contracted out for as long as I can remember, so I made no or very few additional contributions (SERPS?).

How much is the new pension if there are only the basic state pension contributions?

(I am also overseas and making no more contributions, I have 19 qualifying years so I understand I only get 19/35ths anyway, its just I don't understand what the starting point will be).

Comments

  • molerat
    molerat Posts: 31,642
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    At April 2016 you were given a starting amount of the higher of £119.30 / 30 x 19 + S2P or £155.65 / 35 x 19 - COPE. You need to get a statement to find out how much you have got.
  • alphason
    alphason Posts: 181
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    molerat wrote: »
    At April 2016 you were given a starting amount of the higher of £119.30 / 30 x 19 + S2P or £155.65 / 35 x 19 - COPE. You need to get a statement to find out how much you have got.

    Thanks, I did the online pension foreast, and it says I can get 155.65 but it assumes I will be making further contributions. If I write off for a forecast will they be able to tell me assuming no more contributions?

    This may sound strange, but if I wanted to (I'm under 50) could I use some of my private pension pot (only the contributions that were credited by contracting out) to buy some of the missing years. So not cashing in anything just reallocating them back to the state pension. I think I can get some cash out at 55 but the years will be more expensive to buy at that time, to be able to reverse things now and put the money back. Just a thought.
  • molerat
    molerat Posts: 31,642
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    The on line statement should show how much you currently have and how much you COPE amount is. From there you should be able to work out which calculation was used for that amount and also if buying pre 2016 years is worthwhile as they can be reasonably priced. Also is the class 2 route open to you ?
  • Silvertabby
    Silvertabby Posts: 8,945
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    edited 25 May 2017 at 11:50AM
    I was going to say that the on-line forecast should have given you your foundation amount (pension accrued to April 2016) as well as your SPA quotation - perhaps it's because you are under 50?

    There's probably no point in paying any more pre 2016 contributions, as that may not increase your foundation amount. When do you intend to retire? If you will be working/paying NI for some time yet, then you may find that you will hit the £155 maximum without any further ado.

    No, you can't pay the equivalent of your NI rebate to convert your pre 2016 contracted out contributions to contracted in. Even if it were possible, it would be eye-wateringly expensive. Assuming you were on average wages, your own NI rebate was £25 per month whilst your employer's was nearer £75 per month.
    That's £1200 per year.

    You can, however, pay voluntary class 3 NI conts if you need to plug any future gaps.
    Also is the class 2 route open to you ? Posted by molerat
    Class 2 ends next April.
  • alphason
    alphason Posts: 181
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    Thanks, I will check the forecast again
    .
  • alphason
    alphason Posts: 181
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    Thanks, I've looked more closely at the forecast and can see my cope amount now.

    Is it better to but pre or post April 2016 missing contributions, is there an online calculator somewhere to work out the benefit?

    Would renting out a UK property mean I was self employed, therefore could buy past years at class 2 rate?
  • molerat
    molerat Posts: 31,642
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    edited 7 June 2017 at 9:58AM
    There is no on line calculator that will do the sums for you but it is quite easy to work out.

    You need to know your April 2016 figure. If your statement is from post April 2017 then divide the current amount by 1.025.

    From there you need to see if the figure is the sum of £119.30 / 30 x years + any S2P or 155.65 / 35 x years - COPE. Purchasing pre 2016 years will re calculate that figure, purchasing post 2016 years will add to it.

    You will be able to purchase missing pre 2016 years right back to 2006-07. Each pre 2016 year is worth £119.30/30 (£3.98) under the old scheme and £155.65/35 (£4.45) under the new calculation.

    If you really have only 19 pre 2016 years then purchasing any missing pre 2016 years will be the cheapest way forward as you currently have under 30 years. A simple spreadsheet will show you the effect of buying those years on both the old and new pension calculations, it is important to do both as the effect of the COPE could change which calculation is used.


    As to whether class 2 is available it would be best to speak to DWP/HMRC on that front.

    Another point to take into account is if you pension will increase in your country of residence once in payment. Possibly not a major factor as purchasing contributions still gives a very good payback even without future inflation uplifting.
  • xylophone
    xylophone Posts: 44,011
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    Did you read the links in my post above?
  • alphason
    alphason Posts: 181
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    edited 27 June 2017 at 7:42AM
    I did read the some of the links useful thanks (not all open from where I am).

    I've a better understanding now. Its just one of a few things I have been trying to sort out as I have a few issues at the moment I am struggling to fix.
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