Clarifying Contracted out Deductions

Tropicgal

My husband turns 65 in two days. We have lived abroad since 1988 when he retired from the Royal Navy after 25 years. He left the RN in March of 1988. He applied for his UK Pension and has received information that he is entitled to GBP95.03 per week based on his contributions.

Because we are not very up to date with the regs in UK now can you clarify this for us -

The form says that when it comes to additional state pension this is based on your earnings from 6 April 1978 to 5 April 1997 and amounts to GBP47.73 but Contracted Out Deductions of GBP47.62 have to be taken away as he has been in an employers or a personal pension cheeme from 6 April 78 to 5 April 97. So he will get GBP 0.11 for additional state pension.

Now from 6 April 1978 until March 1988 he was still employed by the RN and paying his Nat. Ins. Contributions as he had always done and from July 1988 to 5 April 1997 he was employed abroad and in a different pension scheme in the country he resided in. So for 10 years nothing changed (78-88) so why had Contacted out Deductions of GBP47.62 been taken away from his Additional State Pension?

xylophone

http://www.xafinity.com/Uploads/Files/spva-pensioners-newsletter-2010_single-pgs.pdf
"Guaranteed Minimum Pension (GMP). The following will only apply if you retired from the
Armed Forces after 5April 1978 and were employed up to or before 5April 1997.
The Social Security PensionsAct 1975 introduced the State Earnings Related Pensions Scheme
(SERPS). TheAFPS contracted out from this scheme but, by law, had to pay a pension benefit at
least as good as that paid out by SERPS. This amount is known as your GMP.
Her Majesty’s Revenue & Customs (HMRC) National Insurance Contributions Office (NICO) will
advise XP how much of your pension the GMP amount is.
Please note that this is not an additional amount to be paid, as it forms part of your existing
pension.
Men can currently claim their State benefits at age 65. The state pension age for women will be
increasing from 60 to 65 between 6April 2010 and 5April 2020, however, their GMP payment age
will remain at 60.At GMP payment age the Pensions Service which is part of the Department of
Work and Pensions (DWP) is responsible for paying part of the annual pension increase on your
GMP with your State benefits. This addition will be shown on your annual pension statement
received from The Pensions Service who may refer to GMP as Contracted Out Deductions (COD).
XP must allow for this when calculating any increase on your pension to avoid you receiving an
increase on the same amount of GMP twice.
GMP may be in two parts, for the period 5April 1978 to the date you left theArmed Forces (or 5
April 1988 whichever is the earlier) and for the period 6April 1988 until you left the service (or 5
April 1997 whichever is the earlier). XP will apply any increase to the part of your GMP that was
earned after 5April 1988 and pay this with yourArmed Forces Pension, but only up to a maximum
of 3%.Any increase above 3% and all of any increase on the GMP amount earned before 6April
1988 is paid by DWP with your state benefits. However, a further change in the law (PensionsAct
1995) means that XP will pay any increase in full on all the benefits earned after 5April 1997"