Disappointment with section226 pension scheme

ABN

EdInvestor wrote:

Note that the Govt plans to change the law soon so that you will only need to have 30 years' contributions to get the basic.

From the direct.gov.uk website for NICs

How many qualifying years do you need?
Currently men normally need 44, and women normally need 39 qualifying years to get the full State Pension. Between 2010 and 2020 this will gradually increase to 44 qualifying years for women because the State Pension age for women is changing from 60 to 65.

or are we looking at different things ?

EdInvestor

No, same thing.

Details here

ABN

Interesting 2 government web sites saying 2 totaly different things.

Nothing new there then

But from the way they keep harping on about the short fall in the pension fund and the way they keep increasing stealth tax's above the rate of inflation (MOT's up 14% to £50 etc) can't realy see them reducing it to 30 yrs and feel the increase is more likely.

EdInvestor

Perhaps you've misunderstood: from 2010 the plan is you will only need 30 years of NI contributions to get the basic state pension.Also from 2010 if you're a woman, the age at which you will get the BSP will go up from 60 to 65 in stages between 2010 and 2020 ( this decision was made years ago).

Some time in the fairly distant future after that, the age may go up again for everyone but it's not clear when ( or even if) at this stage.

The new 30-year rule is expected to be in the next Queens Speech.

So for women, the age of getting the pension goes up, but the amount of NI you have to pay to get it goes down.

ABN

EdInvestor wrote:

Perhaps you've misunderstood.

Could well be but from the web site I quoted they say

increase to 44 qualifying years for women

My understanding of qualifying years is year that have been paid.

But should it come down to 30yrs puts me in a difficult suitation. Currently have 38yrs of NIC's. As I'm unemployed and get no benifits am having to pay Voluntary Class 3 contributions out of my savings. Thus seems I may well be wasting my money which can't be easily replaced.

EdInvestor

That's right, the warning is aimed at you.

If you reach state pension age before 6 April 2010 you will be unaffected by the proposed changes. You may want to pay voluntary Class 3 contributions to increase your entitlement to the basic State Pension if you are not currently entitled to the full amount or will not be by the time you reach state pension age.

However if the proposals in the White Paper become law, you may not need to pay voluntary contributions, if you are due to reach State Pension age on or after 6 April 2010 and have already paid enough contributions to qualify for a full basic state pension under the proposed new rules...

You should therefore consider very carefully whether you should delay paying Class 3 contributions until it is clear whether the rules will change. If you nevertheless decide that you want to pay, you might not be able to get a refund if it turns out at a future date that you need not have paid them. However, if you delay paying the contributions, you may have to pay them at a slightly higher rate.

Assuming you are due to retire after 2010,I would hold off paying for the moment until the position becomes clear.

defender_of_the_weak

cog

what was your employment situation when you took this pension out? and how did it subsequently change. What advice did you receive in the intervening years regarding keeping this policy going?

It may also be worth contacting NU to find if you can increase the premiums to this plan, some do some don't allow further increases, but if you have a GAR of 9.5% it may be an idea to increase prmiums if possible to maximise the benefit as well as considering other savings and schemes to plan for retirement