I just received my State Pension forecast

Oompa_Lumpa

I am "only" 29 but thought it would do no harm to request a statement to see what the lie of the land was.

I started work in September 1998, and so the total pension earned upto 5 April 2005 is half of nothing.

However, it was the forecast at 5 April 2041 that I was interested in.
It consists of the following (per week):

Basic State Pension £82.05
Additional State Pension £84.70
Total £166.75

However it then states under the heading "Boosting your pension": "Your record shows that for 2 years in the last 9 years that you didn't pay enough NIC to make them qualifying years. You may be able to pay voluntary Class 3 contributions to make up the difference".

It then breaks down my shortfall as:
96/97 £190.40 (Class 3 contributions needed)
97/98 £242.00 (Class 3 contributions needed)

I am a little confused, as it says that I will be eligible for the Additional State Pension (presumably that's the old SERPS), but then it says that some part of my pension would have been higher had I conributed sufficient NICs in those 2 years.

Could someone please clarify which element could be "boosted" (is is the basic as I won't have enough years clocked up), and if it is worth my while spending the £450 topping my NICs up, or will I generate enough NICs between now and 2041 (citeris paribus) that my 2 year shortfall will be long negated, and so the Class 3 contributions would be wasted?

Thanks for any help

EDIT - I guess the shortfall is on my basic pension, as I need 44 years and 2040 less 44 = 1996. Hence why they said I was short from 1996 to 1998.

I guess I'll have to work out whether it is better to pay £440 now or lose 2/44 of the basic pension when I reach 65!!!

Any ideas which would be the better choice?

isasmurf

Your forecast suggests you will get paid full Basic State Pension, and AFAIK you can't top up the additional pension, so I'm unclear about what pension you could top up. Other experts will clear that up for us.

The Additional State Pension is a combination of the old SERPS, and the current State Second Pension (S2P).

Out of interest, some of my friends and relatives have been getting a pension forecast from DWP without requesting one. Are they sending them out to everybody, does anyone know?

CIS

They send them out automatically in certain circumstances, S/E etc, and then every so often they target certain age ranges for forecasts.

The forecast is predicting you can achieve 100% based on your current working pattern, the 2 years you can backpay for wont help , IF you maintain your current working pattern. Look at paying them as an insurance against future breaks in your employment, they'll cover you for 2 yrs basic state pension,if you record is broken.

Even if you accrue more than 44yrs, yoiu'll only ever get 100% BSP, but get less than 44 and teh % pension drops.

The state pension is in 2 parts, the basic pension and the additional pension.

The basic pension requires 44yrs for a full 100%, and is based on the number of years in which you have earned or been credited with at least 52 x the Lower Earnings Level. The BSP can be accrued through employment, S/E, benefits or voluntary class 3 NI.

The additional pension can be voluntarily topped up, it is accrued only through employment or by virtue of certain state benefits.

If you have any more questions please post again

skipton

Can you request a state pension forcast at any time or do you just live in hope that it will be sent at some time in your life?

Oompa_Lumpa

I specifically requested my statement.

EdInvestor

Request a forecast here

Everyone should do it every year.It's the only to check on what's happening to S2P,which it is rumoured, might be stealthily cut bck in future.

BTW just the basic state pension would cost around 90k to buy on the open market now for a man, and more for a woman, double it for both pensions. So the two state pensions are getting on for 200k's worth of pension rights building up. It's worth paying attention to them.

Oompa_Lumpa

CIS wrote:

The forecast is predicting you can achieve 100% based on your current working pattern, the 2 years you can backpay for wont help , IF you maintain your current working pattern.

CIS, is that correct?

My pension date (65) is shown as 5 April 2041, as you need 44 years that means that in order to get a full basic pension I need qualifying years from 1996/97 (I believe).
I think the Pensions Department are also stating that as that is why they have told me I have a shortfall in 96/97 and 97/98.

So, in conclusion, I think that based on my current working pattern I will only generate 42/44 of the basic pension.

CIS, which of us are correct?

CIS

What does it say for your current pension figure ?, they show years of shortfall that you can pay, whther you need to pay them or not.

Unless they've changed the system since I worked for them, the figure on the front is always just based on your current record, ie would you could achieve based on your NI record to date + what you could earn based on your current working status.

If you couldn't acheive a full pension acorrding to the front page, the section that shows the figures you could pay to boost your pension showed the figure that you could achieve if you backpaid as well, which would be the highest you could achieve.

Aark

I believe that the years in which you had your 16th, 17th and 18th birthdays count as qualifying years.

CIS

They do , automatically, under the juvenile credits system.

Oompa_Lumpa

I believe that the years in which you had your 16th, 17th and 18th birthdays count as qualifying years.

OK, that's where I was going wrong then. CIS, sorry to doubt you - it's just that I couldn't come up with 44 years based on my profile, but those 3 "free years" would see me through.