MSE News: Budget 2012: Single state pension plan confirmed

peterg1965

gadgetmind wrote: »

Not the basic ones as they just show number of years. I'm told you can get a full breakdown but I've never bothered.


There is a deduction for the contracted out years but no details have yet emerged.

From what I am understanding in this thread, with 35 years of NI, assuming all contracted out, the minium you will receive is the current SP which is £107?

So to make up to the full £144 you will potentially needed to have had 9 years of full contracted in NI to achieve the single tier rate. The unknown question is whether 10 years of full NI credits, achieved before 2017 would be sufficient. Or is this too simplistic?

gadgetmind

peterg1965 wrote: »

From what I am understanding in this thread, with 35 years of NI, assuming all contracted out, the minium you will receive is the current SP which is £107?

That depends on the "rebate derived amount" calculation when it emerges but your assumption seems reasonable.

So to make up to the full £144 you will potentially needed to have had 9 years of full contracted in NI to achieve the single tier rate. The unknown question is whether 10 years of full NI credits, achieved before 2017 would be sufficient. Or is this too simplistic?

Dunno where your numbers come from. The SERPS/S2P calculations are jolly tricky so it's hard to know how much would be needed to get to £144. I'll just do it with 35 years total inc 12 years contracted out despite my S2P accrual rate being fairly toppy.

cyclonebri1

SnowMan wrote: »

Only those who read the press reports and haven't really thought about how the 35 year rule will work.

Those reaching SPA post 2017 currently with 30 years credits could in many cases be beneficiaries of the changes. This is because of the protection of accrued state pension rights to 2017 (that protection is based on the old system). In some cases that person has already accrued the £144 partly through basic state pension and partly through having contracted out of SERPS but will then have an opportunity to accrue some extra state pension on top of this.

We think we think but do we?

What??? Sorry your comments escape me, re 1st and last bit.

If this helps you, I am already retired with full entitlement, well at least 38 years, and she who must be obeyed hasn't a chance of earning extra "credits" as she has 35 years already, no second state pension, and only works 16 hr/wk.(by choice)

So like I said, doesn't apply to us.

gadgetmind

SnowMan wrote: »

In some cases that person has already accrued the £144 partly through basic state pension and partly through having contracted out of SERPS but will then have an opportunity to accrue some extra state pension on top of this.

I don't think so. See the case of Jenny is the White Paper summary.

"A check is performed to see if Jenny would get a higher valuation under the rules of the current system.

"In Jenny’s case, the current system valuation is higher, and therefore becomes her foundation amount.

"As this amount is more than the full level of the single-tier pension, Jenny will not be able to get extra pension by adding post-implementation qualifying years."

wakeupalarm

Surely if she already has 35 years of NI contributions she will have qualified for the £144 pension come 2017.

gadgetmind

wakeupalarm wrote: »

Surely if she already has 35 years of NI contributions she will have qualified for the £144 pension come 2017.

Yup. One of the winners IMO assuming never contracted out.

SnowMan

gadgetmind wrote: »

I don't think so. See the case of Jenny is the White Paper summary.

"A check is performed to see if Jenny would get a higher valuation under the rules of the current system.

"In Jenny’s case, the current system valuation is higher, and therefore becomes her foundation amount.

"As this amount is more than the full level of the single-tier pension, Jenny will not be able to get extra pension by adding post-implementation qualifying years."

Jenny is contracted-in throughout so that's of no relevance. Matt is closer to the correct scenario as he has been contracted-out through the Teachers pension scheme.

Have a look at example 2 in this post which gives an example with numbers of how it works. What is incorrect in that post? There may be something incorrect in that post but I can't see it.

Look at para 24 also which made me look into it in the first place

Individuals with a foundation amount which is less than the full level of the single-tier pension. These are likely to be younger people, with fewer qualifying years, or older people who have spent many years contracted out of the additional State Pension. These people will be able to increase their single-tier pension up to the full level, at the rate of 1/35th of the full rate (£4.11 to the nearest penny) for each additional qualifying year they gain before reaching their State Pension age.

zagfles

cyclonebri1 wrote: »

But the qualification period has increased from 30 to 35 years for actual worked years???


It doesn't affect me or 'er indoors but It must be driving some folks nuts if this is to be the case. :mad:

I said NI credits count (ie NOT through contributions) for child ben, JSA etc. The white paper link was posted earlier.

zagfles

Errata wrote: »

Suspect all you like, the number is 10 million - hardly an incredible few.

Really? Where did you read that? Anyone employed accrues S2P or contracted out pension (there's no choice - except for women on the much lower NI rate which doesn't accrue basic pension either). Anyone getting credits through child ben, or being a carer, accrues S2P.

So someone whose never been employed and has never claimed child ben, yet has somehow managed to get NI credits which don't count for the additional pension for 30 years will be in the position you describe. The self employed are the obvious ones, ie really self employed and not director of their owm limited company as many "self employed" people do. People who've been on JSA for 30 years and never found a job. And, err...

Please post a link to evidence for this supposed 10 million who have a full basic pension but no S2P/SERPS/contract out pension. An article in some rag like the Mail or Mirror doesn't count, proper evidence please!

zagfles

SnowMan wrote: »

EXAMPLE 2
- 30 years existing contributions,
- contracted-out throughout in the past.
- No additional state pension through SERPS and S2P because contracted-out.
- A contracted-out company scheme pension of £110, made up of £50 resulting from the contracting-out of SERPS and £60 from the employee and employers own personal contributions to the scheme.

In this case you get a guarantee that your flat rate pension will be at least £107 (full basic rate pension as you have 30 years).

Agreed.

So you are not getting the full flat rate pension of £144 directly but you are indirectly because of the £50 of company scheme pension that has really come from contracting-out of SERPS which added to the £107 state pension takes you £13 above £144.

However the real quirk here if you are able to pay another 5 years of qualifying contributions post 2017 you will end up with the £110 scheme pension plus a full £144 of flat rate pension.

No that's not my understanding, because a deduction would be made from the 30 years under the new rules because of the contracted out period, so it would be 30 years under the old rules or 30/35 minus a "rebate related amount" under the new rules, so more than 5 more years would be needed to get a full new pension.

ETA: However the point does remain that someone who has been contracted out will have more of an opportunity to accrue additional state penion than someone who has been contracted in.

For instance if two people in similar jobs both have 35 years in 2017, one has been contracted out and the other hasn't, and they both intend working another 10 years.

The one who has been contracted out will be able to earn more state pension and may get up to the full £144 per week, plus his contracted out pension. The other won't be able to earn any more state pension and his NI conts after 2017 will count for nothing.