Info & Advice needed for my in-laws retiring next year

ClaireBear23cats_2

hi (not sure if this should be on pensions board or benefits board - sos if in wrong place)

my father in law (to be) is retiring next year aged 65years. he has always had a low paid job (currently about £11,500, he has paid full stamp in terms of state pension when due) and only started a pension about 12 years ago, where he's had 4 changes of contract providers and has will end up with 3 very small pensions. basically he will probably get around £80 a month in private pensions - dire situation.

his wife didn't pay full stamp (aged 61years and despite my advice to pay £4K last year to top up to full state pension, she was too scared to incase she died before she'd got the money back, happy thoughts!) and only gets about £15 a week state pension.

they do not own a property, they rent from the local council currently £63 per week.

they have some savings - they wouldn't tell me exactly but between £8 & £10K. they are talking about getting a new car for about £5K which i do not think is a good idea, but would it be if it got them below the £3K benefit threshold - is it £3K allowance between them or each ie: £6K?

what i want to know is what will they get in state pensions (i believe they will get married couple pension £134.75 p/w but i think his wifes pension of £15 p/w will seize then)?
and what benefits will they be entitled to due to having such low private pension? will they get help with their rent or their rent paid? will they get council tax help? anything else they could get?

i have heard of pension credit and i believe the pensions service have drop in sessions - it may be too early yet as he doesn't retire until June 2007.
i know the government do have a 'minimum income guarantee' - what is this?

they are worrying themselves silly that they will have no money whatsoever when they retire so i thought i'd ask you clued up MSE-ers to help me give them some idea. his take home pay is about £800 p/m now (sometimes he gets overtime, but all has seized of late!) so i can't see how they will be that much less than this come when he retires? please help. much appreciated.

claire

CIS

Each person gets a state pension in their own right, UNLESS, the wife has less than 60% of the vlaue of her husbands basic state pension in her own right.
If she does have a pension lower than 60% of his, then providing he has claimed his pension, when she claims hers, she can claim against his NI record and have her pension increased to 60% (maximium of £50.50), they will still get the pension paid to each of them (there is no such thing as a married persons pension).
If she has more than 60% value she cannot get any increase, and gets a pension based solely on her own record.

Providing he has the full pension of £84.25, then she will get £50.50 , so a total of £134.75 plus any additional or graduated pension they have.
As he has occupational pension of around £80 p/month, then they are looking at around a minimum of £20 per week in extra pension credit.

By getting pension credit, they should also get full CTB/HB.

They dont need to get rid of any money for pension credit, in fact it will reward them for having some savings, by paying extra.

Mininum Income guarantee (MIG) was the predeceser to pension credit, although pension credit works in almost exactly the same way.

EdInvestor

Won't the husband get a big chunk of S2P if he has a full NI record?
That would take them beyond the pension credit level surely, before counting in the private pensions?

Suggest they both apply for a state pensions forecast here

CIS

Quite possible he will, but if he was contracted out he may not.

If between them they have more than around £20 AP then it's almost certain they wont get any Pension Credit.

As EdInvester points out, get a forecast and they should find out where they stand with reagrds to the state pension.

ClaireBear23cats_2

hi
thanks for your replies

couple of questions
what is SP2 (i'm assuming State pension 2) - I didn't think this paid much more than about £4 a week

what does AP stand for (is it additional pension)?

thanks, c

EdInvestor

Yes, they are the same thing.The other name for this pension is SERPS.

S2P(SERPS/Additional state pension) can double the amount of state pension received for someone retiring now with a full NI record from 1978.

You may be thinking of "graduated pension" which preceded it, which your father in law should also receive, but it is quite small.

There is another wrinkle. He may have "contracted out" of SERPS/S2P into those private pensions for the 12 years ( ask him). If he did, his S2P would be reduced and the private pensions would take up the slack.This wouldn't apply though if these private pensions were not the "contracted out" type, but just ordinarly personal pensions.

The pension forecast will tell the story. They should also confirm what happens to mil's pension when hubby retires.