Is my hubby correct?

Katykat

He was made redundant 6yrs ago at age 50. He elected to draw his company pension. He had 2 options. either take a regular sum of £160pm for life, or £245 till aged 60 then £64 for life (all figures nett). He says he was told by his pension dept that whatever pension he gets at age 65 will be deducted from his state pension, so he elected option 2. He has £245 paid into a special account which he does not intend to use until he is 65. He works again now. I thought that the state pension was not means tested. Is it correct that he will have £64pm stopped. He is concerned now because he pays into another company pension and he thinks he will have this stopped from his state pension too.

ALIBOBSY

Your main state pension is not means tested and any outside pension does not effect it.

However it would effect any pensioner tax credit.

Was his pension dept getting mixed up with the contracted out deduction made against his serps figure on top of the basic pension?

He can request a pension forecast and see what the estimated figures are.

ali x

dzug1

Some occupational pensions are indeed reduced at age 65 when the state pension starts. But it's usually a fairly trivial amount - nothing like the full state pension.

So maybe the explanation is that hubby only half understood what he was told....

EdInvestor

Contact https://www.thepensionservice.gov.uk and ask them to explain what will happen.

margaretclare

Hello

I don't think any deductions can be made from the state pension. However, the total - state plus private or works pension - is taxable. The total may also put you above the level for claiming means-tested benefits.

Conditions for receiving the private pension may be what your husband means - he may not have been given the correct information or he may have misunderstood. Whatever, he should have something in writing which explains clearly.

HTH

Tibbledom

The original option 2 your husband accepted was almost certainly an income levelling option, occasionally offered on redundancy, to allow for the payment of Basic State Pension (BSP) from age 65.

The purpose of this is to provide an option for your husband’s income to remain relatively constant over time allowing for the Basic State Pension (BSP) coming into payment at State Pension Age (SPA).

Incidentally are you sure the reduction to £64 per month takes place from 60 or from age 65? I would expect it to take place from age 65.

If the original pension of £245 pm until age 60 has been increased each year it is possible the amount at 65 (or 60) of £64pm has also increased in a similar way, that would be typical of this sort of income leveling option. So your husband might get occupational pension of £64pm + increases from 50 and not just £64pm.

Almost certainly your husband will get his BSP on top of the £64pm.

I am not sure what the scheme is talking about his pension being deducted from his state pension – it sounds complete nonsense and could be some misunderstanding. It is likely that the scheme was contracted out and so your husband won’t get any (or minimal) state SECOND pension from the period he was in the scheme, as someone has already suggested as a possible reason for the confusion, but this won’t really affect the BSP. Actually have to be a bit careful here because of the complex way it is calculated it could theoretically reduce the BSP a bit.

In fact I think it would be illegal for the scheme to further reduce his pension anyway. Although my knowledge is a little out of date the pension rules allow for income levelling due to the BSP, as is happening here, but otherwise a pension must be payable for life without discrete jumps or falls (not talking about annual increases here).

In summary I would expect your husband to get from age 65 a) his scheme pension of £64pm plus b) his BSP plus c) his current employer scheme pension.

On top of this he may have some other private or company pensions or state second pension from periods where he was not contracted-out of the State Second pension.

It is impossible to be absolutely certain of course without being directly involved but I think is the likely scenario. Don’t assume this is right though. I would suggest you do 3 things.

• Reread the paperwork in relation to the pension currently being paid and go back to the scheme for further clarification and if you still don’t understand ask for something in writing.
• Contact the Pension Service at www.pensions.gov.uk

to clarify what State Pension your husband (and you) are entitled to at SPA. If your husband has more than 30 years NI contributions then as he will be reaching SPA after 6/4/2010 he should get a full Basic State Pension and if you have being paying national insurance contributions you may be entitled to BSP in your own right, and if not you will be entitled to the dependants addition to BSP.

• If you are still unsure contact TPAS (voluntary organisation offering free pensions advice at www.pensionsadvisoryservice.org.uk ) for further help.

Katykat

Thanks all ( inc williamrobb- even though you're wrong!!!).I thinks you are all right, my perseption is that during the years he was contributing to his company pension, he was contracted out of SERPS, so it is THIS pension which will be reduced. He did have a period during the early years when he had no company pension, so he should get some SERPS. I did mean retirement at 65, not 60. I've always maintained that he must have misunderstood the pension advisor, but he wouldn't have it ( williamrobb???) Now he's read this & I've dissected it into simple infant language, I think he accepts it- that is untill he forgets it all & insists he's right again!!!!!
Thanks folks