FRSP - Not everyone gets £144

SnowMan

gadgetmind wrote: »

I guess contracted out deduction is only for those contracting out to a final salary scheme? I contracted out to a protected rights pot and don't see any such figure.

However, I was contracted in for long enough (maybe a decade?) for my SP+S2P to be >£144 so am protected by the "no worse than now" rule.

You would still expect there to be a 'contracted out deduction' on pensions statements for those contracting out through an appropriate personal pension. The SERPS foregone and the contracted-out deduction are calculated in slightly different ways if I recall albeit the revaluation (national average earnings) should be the same.

When I was contracted out it was through a company pension scheme and in that case the big difference is that the revaluation up to SPA of the SERPS foregone and the contracted-out deduction are different. As with many my overall SERPS pension is negative although fortunately they don't reduce my basic state pension for this (at least I hope they don't).

There is no 'contracted out deduction' shown on my statement either although it shows £1pw of S2P from a single recent year where I was contracted-in.

I cannot identify the circumstances where 'contracted out deductions' are shown or not shown on statements; I expect the figure exists behind the scenes.

So you make a good implied point that it will be difficult for those without 'contracted out deduction' showing on their statements from working out their sums and that is assuming that that is the calculation.

The comment from this parliamentary note is spot on

The result of these complex arrangements is that the relationship between the gross Additional Pension and the Contracted-out Deduction can change constantly. This makes it extremely difficult to offer the 11 million contributors who have accrued contracted-out rights between 1978 and 1997 meaningful information about their future pension entitlement. The extract below from the letter issues to people requiring a forecast of their state pension notes the difficulty with this issue.

“At some time, you chose to “contract out” of the additional State Pension by paying into an Occupational or Personal Pension. Because of this we make a contracted-out deduction (COD) from the maximum amount of additional State Pension that we would otherwise pay you. We make changes every year to the additional State Pension and the COD, but this may be at different rates. This means that your additional State Pension could go up or down.

Linton

gadgetmind wrote: »

I guess contracted out deduction is only for those contracting out to a final salary scheme? I contracted out to a protected rights pot and don't see any such figure.

However, I was contracted in for long enough (maybe a decade?) for my SP+S2P to be >£144 so am protected by the "no worse than now" rule.

No, I think it is for all. The State Pension Forecast gives the "Total Additional State Pension" and then a "Contracted out deduction", which results in the ASP you actually receive. The deduction in the new pension scheme is the equivalent to the "Contracted Out Deduction", whether its the same value no-one knows.

gadgetmind

Linton wrote: »

No, I think it is for all. The State Pension Forecast gives the "Total Additional State Pension" and then a "Contracted out deduction", which results in the ASP you actually receive.

I have just checked my state pension forecasts from 2010, 2011 and 2012. (The last is called a "statement" rather than "forecast".)

None of them show any deduction being applied to my S2P even though I was contracted out for well over a decade.

Linton

gadgetmind wrote: »

I have just checked my state pension forecasts from 2010, 2011 and 2012. (The last is called a "statement" rather than "forecast".)

None of them show any deduction being applied to my S2P even though I was contracted out for well over a decade.

Strange, mine from Sept 2012 which is called State Pension forecast, does show it towards the end of Page 2. Is yours the one you apply for from the online service here?

gadgetmind

Yup, downloaded via government gateway.

It's far more chatty than previous ones, and has figures inline rather than in tables.

It says -
"We estimate that your additional State Pension and Graduated Retirement Benefit, based on your National Insurance contributions record to date, is £26.99 a week.
The amount of additional State Pension could be lower than the estimate shown in this statement, especially if you were contracted outof the additional State Pension anytime between 6 April 1978 and 5 April 1997. There is more information on this in the leaflet Your Pension Statement Explained."

I was contracted out during that period but no deduction is shown. Surely I'll just have less S2P because I was contracted out? Why is my S2P as estimate - surely they know what I've accrued?

Yes, this mess did need fixing!

Linton

Thinking about it, I havent been able to log in to the online calculator for a while so I probably asked for a forecast by phone.

gadgetmind

I can't see why the online one should be any different, but I might call them anyway.

dunstonh

I just checked my state pension forecast via gateway and it is missing the contracted out data. It shows contracted in benefit but goes on to say that it may not be right as I may have been contracted out. I am sure the forecasts used to say how much benefit had been given up from being contracted out.

gadgetmind

I'm now utterly flummoxed. Some reading suggests that the COD might only be deducted from the pre-1997 SERPs earned, which in my case would mean these SERPs minus COD = 0 and I've earned SSP and S2P since.

See Section 2 here -
http://www.parliament.uk/briefing-papers/SN02674.pdf

It looks like COD is only for between 1978 and 1997.

Linton

gadgetmind wrote: »

I'm now utterly flummoxed. Some reading suggests that the COD might only be deducted from the pre-1997 SERPs earned, which in my case would mean these SERPs minus COD = 0 and I've earned SSP and S2P since.

See Section 2 here -
http://www.parliament.uk/briefing-papers/SN02674.pdf

It looks like COD is only for between 1978 and 1997.

That paper dates from 2010 and relates to the 2008 Pensions Act. Who knows whether the 2017 Contracted Out Deduction will be the same. Yes, its a mess. Hopefully the 2017 rules will be comprehensible.