New Flat Rate Pension 2017

Gatser

Sorry to be lazy ... not reading the HMRC website...

If my pension forecast currently says:
Basic Pension £107
Additional (SERPS?) £10
Total Forecast £117

Will this all be replaced by the flat rate £140
or will it be £140 + £10 ?

I would have thought the latter but not sure
Thanks

bilbo51

Gatser wrote: »

Sorry to be lazy ... not reading the HMRC website...

If my pension forecast currently says:
Basic Pension £107
Additional (SERPS?) £10
Total Forecast £117

Will this all be replaced by the flat rate £140
or will it be £140 + £10 ?

I would have thought the latter but not sure
Thanks

It's not the latter.
And it's not the former either.

What is your state pension date?
How many years NI contributions have you got?
Did you ever contract out of SERPS/S2P?

peterg1965

I think the question is better phrased; how many years FULL NI contributions do you have? If you have ever been contracted out (FS pension) then even if the SP forecast says you have 30/35 years contributions, that may not mean you get the full Flat Rate pension.

bilbo51

peterg1965 wrote: »

I think the question is better phrased; how many years FULL NI contributions do you have? If you have ever been contracted out (FS pension) then even if the SP forecast says you have 30/35 years contributions, that may not mean you get the full Flat Rate pension.

The type of pension (FS or otherwise) is irrelevant here. Contracting out into any type of pension will have an effect.

SnowMan

Gatser wrote: »

Sorry to be lazy ... not reading the HMRC website...

If my pension forecast currently says:
Basic Pension £107
Additional (SERPS?) £10
Total Forecast £117

Will this all be replaced by the flat rate £140
or will it be £140 + £10 ?

I would have thought the latter but not sure
Thanks

It will be replaced by at least £117 (107 + 10), or more precisely at least your accrued basic state pension and additional state pension under current rules at 2017, with the opportunity to accrue a further £4 a year or so for each qualifying year after 2017 until you reach £144.

Depending on what periods of contracted-out and contracted-in service you have, and how many qualifying years you have, you might get a bit more than that at 2017, because of an additional guarantee that you will get no less than had the new system applied throughout but with a deduction for contracting-out

It would only be in an extreme scenario, never contracted-out and 35 qualifying years to 2017 that you would get as much as £144 at 2017.

Assumes that the proposals are implemented as planned in 2017 and that you reach SPA post implementation.

jamesd

Additional is the portion due to SERPS and S2P. Such a low value at your age suggests a long time contracted out, perhaps in a final salary work scheme. The maximum £107 for the basic state pension means you have at least 30 qualifying years.

For the new scheme the requirement will be 35 years to get £144.

At the time the new scheme is introduced a calculation of entitlement under the old scheme and the new scheme will be made. That amount accrued so far will be used as the base amount for what you'd get under the new scheme. More working years or buying years will be able to increase the amount up to £144 for those who do not have £144 yet and who have also not yet reached state pension age.

In general, those who have spent a long time contracted out in the existing scheme will be winners in the transition to the new scheme because of that ability to increase their income up to £144.

This doesn't affect those who reach state pension age before the new scheme starts. Such people get paid under the old rules.

Gatser

...this proves it was not a quick and easy answer...as I suspected.

thanks for all your feedback.

I will not hit NRD until 2024 so I realise I am being premature but I have lots of spreadsheet columns to complete!

With compound growth (at 2.5%), I am coming up with flat rate State pension income at £144 x 1.025^20 = £236 per week after 20 years.

:T

Tancred

bilbo51 wrote: »

The type of pension (FS or otherwise) is irrelevant here. Contracting out into any type of pension will have an effect.

Even if you were contracted out after 1997? I thought it only mattered if you had contracted out prior to 1997.

bilbo51

Tancred wrote: »

Even if you were contracted out after 1997? I thought it only mattered if you had contracted out prior to 1997.

No. If a person were contracted out of the Additional State Pension (SERPS or S2P) at any point, then no ASP would have accrued for the time they were contracted out - no matter when, no matter into what kind of scheme.

You don't imagine that you would be allowed to leave the state scheme to join a private scheme and still get benefit from the state scheme do you? :huh:

Tancred

bilbo51 wrote: »

No. If a person were contracted out of the Additional State Pension (SERPS or S2P) at any point, then no ASP would have accrued for the time they were contracted out - no matter when, no matter into what kind of scheme.

You don't imagine that you would be allowed to leave the state scheme to join a private scheme and still get benefit from the state scheme do you? :huh:

In that case can you buy yourself back into contracted in scheme for any missing periods?

Anyway, contracting out was an alternative only to S2P, not the 'state scheme' as a whole because the basic state pension is given to everyone with the minimum NI contribution years regardless of whether they were contracted in or out. Now it appears that the government is abolishing S2P only to give people less than what they would otherwise be entitled to! :mad:

Linton

Tancred wrote: »

In that case can you buy yourself back into contracted in scheme for any missing periods?

Anyway, contracting out was an alternative only to S2P, not the 'state scheme' as a whole because the basic state pension is given to everyone with the minimum NI contribution years regardless of whether they were contracted in or out. Now it appears that the government is abolishing S2P only to give people less than what they would otherwise be entitled to! :mad:

What you get from 2017 is the larger of what you get under the new scheme and what you would have got under the old one. So although some people may do better than others you cant actually lose out.