Pension Boosting article discussion

SnowMan

BBC Money box on radio 4 tomorrow (Saturday) at midday is covering the problems the Pension Service have been having. The programme preview says

"The official service that tells people how much state pension they will get has gone into meltdown [ ] as so many try to find out if they need to make extra National Insurance contributions before the price rises by 50% on Monday. We talk to the chief executive of the Pension Service about what has gone wrong and what he can do"

sharjam

Thanks to Edinvestor for advice. I contacted the forecast service and they are going to send me out a pension forecast in the next ten days.
Apparently they have been inundated with requests and as a result they will allow anyone who requests a forecast before the 5/4/09 to pay missed years at the fee set to change on 5 april (this weekend) within a month of receiving their quote. I hope this is useful info for anyone interested. Thanks to the forum for getting me the advice I needed.
Sharjam

Clara_N

I opted out of SERPS many years ago, left work to have children and then returned to work in SERPS again.

Does this effect my pension and how?

It only affects the second state pension, which you can't top up later anyway.

I am in the same situation. HMRC don't pay into your private pension during the years you don't work, so I have no contributions to the private pension for that period.

Clara

SnowMan

sharjam wrote: »

Thanks to Edinvestor for advice. I contacted the forecast service and they are going to send me out a pension forecast in the next ten days.
Apparently they have been inundated with requests and as a result they will allow anyone who requests a forecast before the 5/4/09 to pay missed years at the fee set to change on 5 april (this weekend) within a month of receiving their quote. I hope this is useful info for anyone interested. Thanks to the forum for getting me the advice I needed.
Sharjam

Thanks. That is really useful information and a new development.

I have just rung the Pensions Forecasting Team on 0845 300 0168 and they have confirmed the same thing to me. That is anyone who requests a forecast before 5 April will be given a short extension to pay the voluntary class 3 contributions at the lower rates. However she couldn’t confirm that extension period was 1 month (but it may be).

She also said that the on-line service is going to be down until Monday 6 April midday (if you log on currently it says only that it is not available until 2pm today).

Information on how to get a forecast is at http://www.pensions.gov.uk/state-pension/forecast/how-do-i-apply.asp

However as the on-line system is apparently down then the options are limited.

So anyone who thinks they might want to pay class 3 voluntary contributions probably needs to ring the 0845 3000168 and ask for a forecast now by phone. That line is open 8am -8pm today and 9am to 1pm tomorrow (Saturday).

She also thought that anyone requesting a forecast in writing before 5 April (using the application form downloadable from the link above) would also be treated as having requested a forecast before 5 April. They may work off the postmark so need to post out to catch the Saturday post. Again the detail is sketchy.

If you have registered for the on-line forecasting service but not received your access token, I am concerned that you would NOT be treated as having applied for a forecast. But I don’t know how this will be treated.

I am pretty sure this extension will be mentioned on the BBC Radio 4 moneybox programme (after the midday news on Saturday) already mentioned.

SnowMan

Clara_N wrote: »

I opted out of SERPS many years ago, left work to have children and then returned to work in SERPS again.

Does this effect my pension and how?

It only affects the second state pension, which you can't top up later anyway.

I am in the same situation. HMRC don't pay into your private pension during the years you don't work, so I have no contributions to the private pension for that period.

Clara

Clara. Request a Pensions Forecast now (see above post) in case there is a need to buy extra years at the older rates.

It is possible that you have Home Responsibilities Protection (HRP) credits if after 6/4/78 you were looking after children under age 16 and receiving child benefit and not paying or registered for reduced rate married woman's contributions. HRP credits are being converted to normal credits after 6/4/2010 subject to a maximum of 22 years.

Opting out (contracting-out) of SERPS only affects the state second pension (SERPS as it was S2P as it is now) and not the basic state pension.

harryhound

Clara_N wrote: »

I opted out of SERPS many years ago, left work to have children and then returned to work in SERPS again.

Does this effect my pension and how?

It only affects the second state pension, which you can't top up later anyway.

I am in the same situation. HMRC don't pay into your private pension during the years you don't work, so I have no contributions to the private pension for that period.

Clara

Hi Clara,

I'm sure that Snowman knows the pension ropes a lot better than I do, but see my posting above.
http://forums.moneysavingexpert.com/showthread.html?p=20082221&highlight=1974#post20082221

When Barbara Castle, the flame haired toast of the Labour Party, who lived in a "menage a trois", introduced SERPS, she did a good (but expensive for the rest of us) job for the female carers.
She certainly intended that you should be able to retire as more than an appendage of your husband by giving you the home responsibility cover so that your additional pension would be based on your best 20 year average (if I remember the initial rules correctly.)
http://www.thepensionservice.gov.uk/state-pension/serps/home.asp
http://en.wikipedia.org/wiki/Barbara_Castle
http://www.incipit.co.uk/pages/serps.php

SnowMan

Thanks harryhound.

While the earnings for SERPS were based on the best 20 years earnings (revalued in line with general earnings increases up to SPA), you would not get the full SERPS pension unless you were paying full contracted-in national insurance contributions for your entire working lifetime after 6/4/78.

If your working lifetime after 6/4/78 was 30 years (say) and you only contributed full contracted-in contributions for 20 years you only got 20/30th of the maximum entitlement. Another way of looking at it is you couldn’t just be in SERPS for 20 years and then contract-out the rest of the time. It all got very complex with the reduction in SERPS accrual in 1988 and then the switch to S2P but the basic theory holds, I think!

Because Clara had presumably no earnings and in any case had elected to contract-out of SERPS then she would not have any entitlement to SERPS for those years where she was looking after her children.

However as she does not appear to have been a married woman’s reduced rate payer (or else she would not have been able to contract-out of SERPS prior to having her children) then she is likely to have qualified for HRP credits for basic state pension purposes.

harryhound

We don't know Clara's dates do we?
It looks like she may have been of the married woman's stamp, in which case perhaps the system would have contracted her back in for some of the years she had home responsibilities?
[Then she started working again and earned a good wage for 20 years?]
But the Government cancelled SERPS any way:rolleyes:

SnowMan

harryhound wrote: »

We don't know Clara's dates do we?
It looks like she may have been of the married woman's stamp, in which case perhaps the system would have contracted her back in for some of the years she had home responsibilities?
[Then she started working again and earned a good wage for 20 years?]
But the Government cancelled SERPS any way:rolleyes:

Yes, We are guessing a bit.

She says "I opted out of SERPS" which I am taking to mean "I contracted-out of SERPS through a persoanl pension" which would only be possible if she was paying full rate NI previously or else she would have had nothing to contract-out of. That would suggest she was not paying the married woman's stamp (schedule E) at the time.

Now as contracting-out of SERPS through a personal pension started in 1988 (and could only be backdated to 6/4/87) then that would suggest her years of looking after children were some time after 1988. Although she might mean contracting-out of SERPS through a company scheme which could have been earlier.


But if when she says "I opted-out of SERPS" she means "I elected to pay the schedule E reduced rate married woman's stamp" then things are completely different.


I think the starting point for Clara is to get a pensions forecast.

Zin_Darwin

jancee wrote: »

If you are certain you have no contributions in a particular year since 1996/7 then you can pay for the full year by sending a cheque to HMRC at Benton Park View, Newcastle upon Tyne, NE98 1ZZ. NI number on the back and the years you want to pay for. Costs for each year are in Martin's new calculator.

Below excerpt intimates that the deadline may be extended beyond today. Do we have a definitive answer yet?

---

" UPDATE! Mon 6 April. For those thinking of buying extra National Insurance years to boost their state pension, the Govt last week extended the deadline to pay at the previous tax year's prices (which ended yesterday). Today, prices rocket by 50%. However, you had to get a pension forecast by Sunday, after which you have a month from getting the forecast to pay at last year's price.
We've also heard this applies to anyone who tried to get a forcecast but couldn't because the website was down or the lines were jammed last week. We're still checking out this latter point with the Department for Work and Pensions' press office so come back in a couple of hours for confirmation and full details.