MSE News: Government outlines flat-rate state pension

StevieJ

The_History_Man wrote: »

I have already retired early in my mid fifties due to ill health having paid 32 years Nat Ins contributions and was told by HMRC that I do not need to pay any more. Do the changes mean I will need to pay 3 more years contributions in order to get my full state pension at the age of 67?

It is thought that providing you have 30 years in before 2017 you should be OK.

gadgetmind

StevieJ wrote: »

It is thought that providing you have 30 years in before 2017 you should be OK.

That's not exactly what the whitepaper says.

If you retire before 2017 with 32 years then you get full current state pension of £107.50.

After 2017, you'll get 32/35ths of the new £144, which is £131.So not full new state pension but better than current.

The above assumes no S2P and no contracting out.

vordrubval

The starting date for the new scheme is April 2017. Your small works pension has no impact on the caculation for state pension. What does have an impact is the number of years of NI contributions that you have. If you have both accrued 35 years of NI contributions by April 2017 then you will both be entitled to the full amount, ie £144 each, making £288 for the both of you. Note however, that if one of you does not have the full 35 years of NI contributions, your £144 will be reduced correspondingly on a sliding scale. (you must have at least 10 years of NI contributions to qualify for the state pension).

I suspect you may be better off under this new scheme, this because under the current scheme, married couples are treated as a family unit, and can only get £178 per week state pension maximum (not counting additional pension). Under the new state pension scheme post April 2017, you will both be treated separately, getting £144 each if you both have 35 years NI contributions.

vigman wrote: »

Apologies if I have missed the obvious, but folks are saying they are falling short of the new scheme by x months. Where are the dates for cut-off/starting points for the new system please?

I will be 65 in August 2018. I have retired on ill health grounds on a small work pension. My wife will be 65 in July 2019. If we have paid the necessary contribution years should we both get the £144 pw (equivalent then), and will my small work pension be excluded from the calculation?

Thanks in advance

Vigman

PS Also both paid a lot of extra years when self employed!!

Jack_Griffin

The_History_Man wrote: »

I have already retired early in my mid fifties due to ill health having paid 32 years Nat Ins contributions and was told by HMRC that I do not need to pay any more. Do the changes mean I will need to pay 3 more years contributions in order to get my full state pension at the age of 67?

Read the case studies (worked examples) at the end of this white paper
http://www.dwp.gov.uk/docs/single-tier-pension-executive-summary.pdf
What you get will depend on how much 2nd state pension you've built up as you don't lose that, you should get a pension statement from HMRC so you can work it out.

https://www.gov.uk/state-pension-statement

noh

vordrubval wrote: »

.....................

I suspect you may be better off under this new scheme, this because under the current scheme, married couples are treated as a family unit, and can only get £178 per week state pension maximum (not counting additional pension). .........

That is not true.
There is no such thing as a married couples pension. Under the current system each partner is assesed as an individual.
They most certainly can get more than £178 per week basic pension between them. If each of them had 30 years contributions they each would receive £107.45 pw basic pension a total of £214.90

gadgetmind

Jack_Griffin wrote: »

you should get a pension statement from HMRC so you can work it out.

However, the statements say that S2P is an estimate, and might be wrong (and particularly for those contracted out pre 1997) and you won't find out exact numbers until later.

Dunno why it might be wrong for those contracted out. Surely they have records? Does anyone know?

Dee140157

Like others I am starting to get my head around these changes. I got a forecast last year and discovered I had more years built up than I realised, so have 28 years so far. At the time I had the amounts for the 2 missing years which I can pay at that rate by April this year, which was going to bring me to the full 30 years. However now I need 35 years. So far I understand I have 7 more years (at least) to pay all together. I am only 50.

I will retire at 67. Got that one too.

What confuses me, is that after a few years out of the work force, I am now working part time. My earnings are below the limit at which I pay NI contributions, but above (just), the lower earnings threshold where I gain benefits but do not pay contributions. I had assumed I would need to make up the 7 years, but does this situation mean I will gain the qualifying years even though I am not paying anything? This is what I do not understand.

If this is the case then I will not need to pay the 2 years contributions next month as I intended since I plan to work at this job for at least 10 years all being well.

Does anyone know the answer to this?

gadgetmind

Dee140157 wrote: »

My earnings are below the limit at which I pay NI contributions, but above (just), the lower earnings threshold where I gain benefits but do not pay contributions. I had assumed I would need to make up the 7 years, but does this situation mean I will gain the qualifying years even though I am not paying anything? This is what I do not understand.

My understanding is that as long as you earn over £107 a week (averaged over the year, so £5564 pa) then you will get another qualifying year. This goes up by £2 a week next year.

And and well done (seriously!) because this is one of the cheapest ways to get qualifying years. Only looking after a kid or living on the dole beat it and paying class 2 self employed NI of £130 looks positively expensive in comparison.

Keep checking the statements by getting a new one every May.

Jaycee_Dove

gadgetmind wrote: »

That's not exactly what the whitepaper says.

If you retire before 2017 with 32 years then you get full current state pension of £107.50.

After 2017, you'll get 32/35ths of the new £144, which is £131.So not full new state pension but better than current.

The above assumes no S2P and no contracting out.

And if you retire before 2017 with 39 years or more (because you had to keep on paying NIC and might even have been persuaded to buy extra years before the limit was reduced) then you still get £107.50 - far less than those who have not even paid the new full number of years via the post 2017 pension....

which reveals why one or two 'imminent pensioners' on here are unhappy.

Jack_Griffin

If The History Man earned more than a very low salary (e.g. threshold £4,524 or less in 2007/2008) and they were not contracted out they'll have some decent SP2.

The question is whether that is more than enough to cover the difference between £131 & £107 (or £37) as 32 years is more than enough to qualify for the full £107 element. So if you have built up more than £131-£107 = £24 SP2 then you'll get more, unless you were really low paid or on the dole a lot then that is very likely.

If you were contracted out the amount is also less, but you should have another workplace pension to compensate.

But SP2 entitlement is a complex calc & really your best bet is to get a state pension statement https://www.gov.uk/state-pension-statement to see what you've built up.

I've an HMRC pension statement from 2011 which states on it "each extra qualifying year is worth £1.70/week", I assume that is the absolute minimum on todays basis, which is different to the way it was done before 2002, so 32 years of average pay is going to push you higher I'd have thought. It really depends on what you were paid in the past relative to average wages, the more you made, the better off you'll be.