Pension Boosting article discussion

roubiliac

I finally got an estimate from HMRC of my state pension due in Dec 2016.
Despite being two years away they still cannot say for sure, it is still only an estimate.
Anyway some relevant facts
I was in a public sector pension scheme that opted out of SERPS. I paid in for 35 years.
They sent me two figures.
1 figure what my entitlement under the new scheme is and a second, what I would be entitled to under the current scheme.
The figures are £47 a week and £116 a week.
Where the second figure is larger that is what I will get.

So basically anyone who had a pension scheme that opted out will not be getting the new figure of £144 that they keep bandying about.

dunstonh

So basically anyone who had a pension scheme that opted out will not be getting the new figure of £144 that they keep bandying about.

And so they shouldnt.

rpc

roubiliac wrote: »

So basically anyone who had a pension scheme that opted out will not be getting the new figure of £144 that they keep bandying about.

We haven't paid for that part of the state pension, so why should we get it?

In any case, we will probably be getting more.

It won't all come from the state pension - the contracted out benefits are sitting in a pot somewhere that will often give you more than the contracted-in state pension element.

jamesd

roubiliac wrote: »

So basically anyone who had a pension scheme that opted out will not be getting the new figure of £144 that they keep bandying about.

Wrong. Each year worked after the flat rate system comes in will increase the flat rate state pension entitlement by 1/35th of the flat rate amount until they reach the flat rate level. All a person who was contracted out needs to do to get the full flat rate is do that for enough years.

But they get more. They also get whatever personal pension pot or workplace income that the contracted out money went to pay for. So unlike someone who didn't contract out, they can get both the personal or work pension and the potentially full flat rate, while a person who didn't contract out gets only the flat rate.

Many people who were in contracted out work or individually contracted out will get the full flat rate anyway from the time it is introduced, or more, because they didn't do that for their whole working life.

It's impossible to get more than an estimate of the state pension level in December 2016 because that requires:

1. predicting the future inflation level
2. predicting the increase in wages
3. predicting whether a future government will maintain the triple lock
4. predicting whether a future government may increase the state pension even though the triple lock doesn't require it
5. predicting whether a future government will make some other change to the rules that change the answer

If you can tell them the answers to those questions they could tell you what your state pension would be.

roubiliac wrote: »

1 figure what my entitlement under the new scheme is and a second, what I would be entitled to under the current scheme. ... The figures are £47 a week and £116 a week.

Did you calculate the 47 number or did they? I'm wondering how you got such a low number.

jarviser

jamesd wrote: »

Wrong. Each year worked after the flat rate system comes in will increase the flat rate state pension entitlement by 1/35th of the flat rate amount until they reach the flat rate level. All a person who was contracted out needs to do to get the full flat rate is do that for enough years.

......

Did you calculate the 47 number or did they? I'm wondering how you got such a low number.

They calculate it.
Anyone who opted out years ago and is nearing retirement will be clobbered in the new scheme. I don't have any years left to make it up.
DWP just calculated my pension forecast for June 2016 when I reach 65.
Old scheme £118
New scheme £35
I have 41 years of NI contributions but I opted out on day 1. Final salary scheme for all that period.
It is obvious that the clobbering for being opted out is much higher in the new scheme. over £100 in my case.
However having said that I will get the higher of the two calculated figures, so for opted-out people retiring just inside the new date it seems to be basically no change.

gadgetmind

jarviser wrote: »

However having said that I will get the higher of the two calculated figures, so for opted-out people retiring just inside the new date it seems to be basically no change.

Before the implementation date, there will be exactly zero change as you'll be under the current system. After that, you'll get the best of whichever, as you say.

Under both systems, those opted out continuously will get exactly what they expected, which is basic state pension. Those with a few years left to go will get extra state on top of this.

tigerspill

jarviser wrote: »

They calculate it.
Anyone who opted out years ago and is nearing retirement will be clobbered in the new scheme. I don't have any years left to make it up.
DWP just calculated my pension forecast for June 2016 when I reach 65.
Old scheme £118
New scheme £35
I have 41 years of NI contributions but I opted out on day 1. Final salary scheme for all that period.
It is obvious that the clobbering for being opted out is much higher in the new scheme. over £100 in my case.
However having said that I will get the higher of the two calculated figures, so for opted-out people retiring just inside the new date it seems to be basically no change.

I dont understand why you will be clobbered?
Surely you will get the higher of the old and new values - i.e. £118?

jarviser

Yes I already said we get the higher figure. It's the new scheme calculation that is clobbered. I always thought the "flat rate new £140 pension for all" was a political pipedream.

RobStaffs

My wife has been looking after our granddaughter full time for nearly 18 months. About 8 weeks ago I sent of the paperwork to HMRC for pension credits to boost my wife's state pension contributions . We have not heard a peep from HMRC since. Dreading the phoning them as this takes so long to get through.

kidmugsy

jarviser wrote: »

Yes I already said we get the higher figure. It's the new scheme calculation that is clobbered. I always thought the "flat rate new £140 pension for all" was a political pipedream.

Contracting out brings you extra by way of your final salary pension. Do you really expect to benefit from it twice?