How is PS2 accumulated?

srcandas

I've tried to find how this is calculated (as in what contribution gives you how much benefit) but without success (yup may just be me )

I was thinking is it best to have a consistent salary, some big years - some small years, more later on?

I have 4 more years where I can contribute but my salary will vary greatly as I wind down to retirement.

Is it better to have say 4 years with £15000 salary, or two years with £25000 and two with £5000, or does it make no difference?

:beer:

jamesd

Under current rules you add Additional State Pension of at least £1.70 per week for each year worked and earning between the minimum and £14,700 a year. In addition there is pro-rated increase of £0 to £1.10 per week for earnings between £14,700 and £40,040.

If the flat rate cut to pensions for workers comes in, nothing is added in additional state pension for anyone who already has at least £144.

So the best gain comes from higher early earnings and none after the flat rate comes in, because the flat rate penalises workers and rewards non-workers.

srcandas

jamesd wrote: »

So the best gain comes from higher early earnings and none after the flat rate comes in, because the flat rate penalises workers and rewards non-workers.

Many tx James. So if I'm reading that right two big years and two small ones would be best. That would give me more earnings above the £14700 limit.

And as long as I earn the minimum each year I'll get the first £1.70.

And my final year 2016 (and any extra years will give me nothing.

ps: I have a colleague who has taken dividends instead of salary. I wonder if he took into account the loss of PS2???

pps2: Before the moralists arrive I genuinely can work for my company as and when I like. I'm not artificially deferring salary.