Contracted Out and confused

Essex123

Hi,

I'm hoping someone can help me make sense of my situation regarding contracting out and "minimum contributions" in the 2009/10 tax year.

From 6/4/09 to 30/11/09, I was a member of a company group pension plan which was contracted out, with the employer NI savings reinvested into the plan. I believe my standard NI contributions were reduced from 11% to 9.6%.

From 1/12/09, the arrangements changed to having an individual personal pension which the company paid into each month. My NIC's went up to 11%. When I applied for the new personal pension with the IFA, I also contracted out of the second state pension. I got a letter through from HMRC saying my new arrangement for minimum contributions would be effective from April 2009.

My personal pension has now received a payment of Minimum Contributions from HMRC of around £1150, but I have no idea how this was calculated. I'm 29 (for the purposes of the calculation), and my tax year earnings were above the Upper Accrual Point.

Anyone have any idea how HMRC have calculated this figure?

Would HMRC know that up until 30/11 I was paying reduced NI contributions due to my member of a contracted out group pension plan?

I'm guessing the HMRC have made some kind of adjustment because "normally" earnings at the Upper Accrual Point would have generated Minimum Contributions of just over £2k.

I've tried using this manual but with no joy:

http://www.hmrc.gov.uk/nic/forms/ca17.pdf

Looking at my company group pension plan, I also had around £700 of "Protected Rights" credited to this plan in the tax year.

Does this all add up? Or do I need to be worried?

Thanks!

iwilldoitthistime

Hi

The earnings for the year would be split when they were notified to HMRC - D rate for the portion of the year you were contracted out, and A rate for the portion of the year you were a member of a Personal Pension. The Minimum Contribution paid into your Personal Pension would be based on those earnings recorded, and your age at 6/4/09.

Essex123

Thanks - this has put my mind at rest