MSE News: Government outlines flat-rate state pension

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
373 replies 47.8K views
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  • wakeupalarmwakeupalarm Forumite
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    johnaka wrote: »
    since march(redundancy) 2009 to may claimed benefits.
    from may self employed paying class2 stamps.
    got 40 years in full time employment plus a year on job seekers.

    beside the above surely the additional state pension and
    graduated retirement benefit will have gone up a bit in line with inflation?

    I think the additional state pension is revalued each year against average earnings, so should have increased since your last pension forecast in 2008.
  • johnakajohnaka Forumite
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    thanks for the replies.
  • gterrgterr Forumite
    555 Posts
    Hi there,

    Could I ask someone to advise on my situation, with regard to my contracted-out years, please? I've read the entire thread plus the DWP link but am still unclear.

    I worked from 1981 to 1996 (approx 17 years) contracted-out, then from 1997 to the end of 2013 (approx 13 years) will have been self-employed with Class 2 NI.

    My recent pension forecast (January) says:
    35 qualifying years, worth £107.45 pw
    ASP plus GRB = £0.71 pw
    I will reach State pension age in Oct 2021.
    There is no info on the forecast about contracted out deductions.

    I understand the principles aside from computing the deduction for being contracted-out.

    I understand that I will get less than the £144 flat rate - perhaps no more than the £108.16 payable under the existing scheme - but would appreciate knowing roughly how much I will get.

    Many thanks for your time.
  • gadgetmindgadgetmind Forumite
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    gterr wrote: »
    I understand that I will get less than the £144 flat rate - perhaps no more than the £108.16 payable under the existing scheme

    As you already have 35 years, I think you will get the full flat rate. Let's see what others think.

    If not, you will have plenty of time to build up to it.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gterrgterr Forumite
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    gadgetmind wrote: »
    As you already have 35 years, I think you will get the full flat rate. Let's see what others think.

    If not, you will have plenty of time to build up to it.

    But what about the deduction for being contracted out for 17 of those 35 years?

    (Also, I am planning to stop working at the end of this year. My understanding was that only additional years added after 2016 would help to reach the £144 if I am below it at 2016.)
  • edited 7 April 2013 at 9:59AM
    SnowManSnowMan Forumite
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    edited 7 April 2013 at 9:59AM
    gterr wrote: »
    Hi there,

    Could I ask someone to advise on my situation, with regard to my contracted-out years, please? I've read the entire thread plus the DWP link but am still unclear.

    I worked from 1981 to 1996 (approx 17 years) contracted-out, then from 1997 to the end of 2013 (approx 13 years) will have been self-employed with Class 2 NI.

    My recent pension forecast (January) says:
    35 qualifying years, worth £107.45 pw
    ASP plus GRB = £0.71 pw
    I will reach State pension age in Oct 2021.
    There is no info on the forecast about contracted out deductions.

    I understand the principles aside from computing the deduction for being contracted-out.

    I understand that I will get less than the £144 flat rate - perhaps no more than the £108.16 payable under the existing scheme - but would appreciate knowing roughly how much I will get.

    Many thanks for your time.

    Working in 2012/2013 terms:

    Hard to say without knowing your contracted-out deduction (COD).

    It is quite possible that your COD is more than £36 (=144 - 108) in which case you will just get your £108pw.

    Were you contracted-out via an occupational pension scheme throughout the 17 years or were you contracted-out through a personal pension for part of that period?

    If you were contracted-out just through an occupational pension then your COD will be the same as the GMP under your occupational pension which you should be able to find on a deferred benefit statement (you need the amount at leaving and revaluation rate in deferment which should both be shown).

    If that GMP revalued up to now(ish) is more than £36pw then it will be the £108pw old scheme state pension guarantee that you will get (rather than the new scheme). For example if it is £40pw see here for the sums.

    Note in your case the COD/GMP from your contracted-out period will equal the 'rebate derived amount' deduction made in calculating the new scheme amount for the foundation amount calculation; this is because all your contracted-out service was pre 97 so you avoid some complications in the calculations that apply post 97.

    Alternatively to get your COD ring up the DWP on the number on your pension statement and ask them for the figure. I'm guessing they should be able to tell you.
    I came, I saw, I melted
  • gterrgterr Forumite
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    SnowMan wrote: »
    Working in 2012/2013 terms:


    If you were contracted-out just through an occupational pension then your COD will be the same as the GMP under your occupational pension which you should be able to find on a deferred benefit statement (you need the amount at leaving and revaluation rate in deferment which should both be shown).

    Many thanks. Yes, it was just occupational pensions: two of them, covering a max of 17 years, though the actual years of service were less than 17 years (some gaps, and perhaps a period in each job before I could join the pension scheme). They were deferred until the end of 2010, and then both were brought into payment early for medical reasons. Not sure if that would have a bearing on things??
  • SnowManSnowMan Forumite
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    gterr wrote: »
    Many thanks. Yes, it was just occupational pensions: two of them, covering a max of 17 years, though the actual years of service were less than 17 years (some gaps, and perhaps a period in each job before I could join the pension scheme). They were deferred until the end of 2010, and then both were brought into payment early for medical reasons. Not sure if that would have a bearing on things??

    In that case it should be possible to work out or at the very least estimate your 'rebate derived amount' from adding the GMPs from your two contracted-out schemes (after adding in GMP revaluation to nowish). The gaps won't affect things as long as you weren't contracted-out through a personal pension during those gaps.

    The early retirement won't affect things as that doesn't alter the GMP amounts in any way.
    I came, I saw, I melted
  • momistmomist Forumite
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    I have just spoken to the pension service looking for advice. My wife is one of those who now lies (just) in the new flat rate zone when she becomes eligible for the state pension. As such her pension will change from 26/30ths of the basic rate to 26/35ths of the flat rate. This changes a shortfall of £380/year to an eye-watering shortfall of £1500/year! :eek:

    The pension service will not commit to anything until the budget legislation has passed through parliament, and of course will not suggest when that might be. Does anyone here have an informed opinion on when that might happen (if there are no serious delays/amendments)? We can't make any rational decision on buying back lost years without knowing it has been passed.
  • jem16jem16 Forumite
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    momist wrote: »
    I have just spoken to the pension service looking for advice. My wife is one of those who now lies (just) in the new flat rate zone when she becomes eligible for the state pension. As such her pension will change from 26/30ths of the basic rate to 26/35ths of the flat rate. This changes a shortfall of £380/year to an eye-watering shortfall of £1500/year! :eek:

    It doesn't work like that.

    They compare what you would have under the old system against what you would have under the new system. You are then awarded the higher of the two.
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