joint pensions-I'm outraged.

McKneff

kathyr wrote: »

Not sure this is correct. My husband and I receive our own individual pensions. However, we are treated as a married couple when calculating tax credit qualifications.

It is correct and your tax credit qualifications calulation process is correct also as they are based (i think) on household income

Farway

If you are still in doubt, get a free pension forecast for you & hubby

http://www.thepensionservice.gov.uk/state-pension/forecast/home.asp

Savvy_Sue

The Home Responsibilities Protection thing is that the person claiming Child Benefit (and possibly some other benefits too) gets their stamp credited. So there was no need to pay voluntary contributions.

However, I think there's some complication that you only get the HRP for FULL tax years you are claiming Child Benefit for, so if you swapped the Child Benefit claim from wife to husband and back again a few times, that could conceivably reduce the number of full years you have.

taliesin

Savvy_Sue wrote: »

The Home Responsibilities Protection thing is that the person claiming Child Benefit (and possibly some other benefits too) gets their stamp credited. So there was no need to pay voluntary contributions.

Close but not quite right. This is one of those cases where "the devil is in the detail". I didn't fully appreciate how this works until we came to look at Mrs T's pension entitlement a few years back. Let me share what I learned with you.

HRP is not the same as an NI credit. HRP reduces the number of years you need to acquire to receive a pension, whereas the credit tops up the years available towards the total. If you have enough years paid, credited and protected to qualify for a full pension, you don't see any difference, but if the total falls short, the effect can be significant.

Example: Mrs X will reach age 60 this year, so requires 39 years for a full pension. She paid 10 years' contributions before ceasing work to bring up a family and has 19 years' HRP, but has not made contributions since. The 19 years HRP reduces the total of paid or credited years needed for a full pension to 20 years; the 10 years actually paid will get her 10/20 (that is, half) of a full pension in her own right.

BUT: If Mrs T had paid voluntary contributions for ten of the years whilst she was bringing up her family, HRP would have been ignored for those. So the number of paid or credited years needed would be 30, and she would receive 20/30 (that is, two-thirds) of a full pension in her own right. She would have been better off.

If you have less than the full number of years, a year of voluntary contributions is usually worth more than an HRP year. Whether the increased pension is worth the cost of the stamp is another matter and an even more complicated calculation.

This is just one of a number of reasons why it might make sense to pay voluntary contributions for a year already covered by HRP. Other reasons include that you might wish to be covered for benefits for which HRP does not apply. Or, you may not have enough paid years to qualify for a pension at all.

And again, there is the issue of the married woman's stamp and its impact on HRP eligibility - but let's not get into that. I'm sure those affected know now what a mistake it was to elect to pay it.

Bottom line - this is an exceptionally complicated area. Everyone keeping track of their likely financial situation in retirement (and that should be almost everyone!) should get a forecast from the Pension Service and an update whenever their situation changes. Details in preceding posts.

seven-day-weekend

Good post taliesin.

My own pension is a good example of how HRP works. I get my Pension next January, so I needed 39 years to qualify for the full amount.

I have 24 qualifying years through working. So this leaves me 15 years short for a full Pension. However, I also have 13 years of HRP from years when I was not working/not earning enough to pay NI and also claiming Child Benefit. When this is taken off, it brings the shortfall down to only two years. I have paid these by Voluntary Contributions.

So....roll on January!

McKneff

And again, there is the issue of the married woman's stamp and its impact on HRP eligibility - but let's not get into that. I'm sure those affected know now what a mistake it was to elect to pay it.

Too right, but i suppose on the other hand the amount of money saved although all spent now trying to bring up a small family (no help in those days from the government) by paying MW stamp goes someway to compensate for the loss of pension. Its still galling that it wasnt explained properly back then.

pollypenny

I came out as two years short as well, SDW.
I had opted for the MW stamp originally, but changed back to full contributions. As I had paid the MW stamp, I wasn't allowed to buy extra years.

Somehow, I also lost out from when things were calculated on the ABCD letter at end of NI number, rather than the tax year. Don't ask for explanation. I haven't one, except for feeling aggrieved!

McKneff

Being only two years short of the minimum required wouldnt have made that much difference per weeks pension would it.

Depending on how long you paid MW stamp for it will probably balance out to you being better off, moneywise.

Now me, I'm 19 years short, and I can claim 60% on my OHs contributions instead of my own so i will be worse off in the long run.

pollypenny

No, I'm ok. I retired 6 months after my 60th birthday, so the extra 20 weeks made up the pension.

The whole thing is a pain, though.

Love your signature, McKneff.

seven-day-weekend

I was able to pay the Voluntary Contributions (I think) because I was working up until 2004 (Break covered by HRP was from 1981-1994) and so when I gave up work I was still only 54 and was just able to pay the next two years on a Voluntary basis. I wasn't actually buying back years.

As regards the Married Womens' Stamp, I did pay it for a year and then changed to the full contribution as I knew it made sense. I must have had a good employer who explained it properly. It was a no-brainer really, wasn't it, once you knew all the facts? I'm so glad young married women don't have that choice any more!