Single Tier Pension question

masefield

Hi there, I am currently 53 and I am currently employed in the public sector. Previously to my current employment I was also employed in local government since March 1987. I joined the lgps on commencement of my local governemt career and paying NIC on the contracted out basis.

Please could someone advise as to what my state pension position will be with the forthcoming introduction of the new single tier pension and will I have paid sufficient NIC to obtain the new state pension and will there be any reductions based on the position that I had previously paid NIC on the contracted out basis.

Many thanks in advance.

mania112

So if i'm understanding you correctly you've been employed since 1987?

So by 2017 you will have accrued 30 years of NIC, which is what's needed for a full state pension.

masefield

Yes that would be correct - so you are saying that it is irrelevant that as part of the 30 years the majority of my NIC has been paid on the contracted out basis. If what you are saying is correct then I won't suffer any reduction.

SeekTruth

My understanding is that at transition to Single Tier (now expected April 2016, not 2017) there will be 2 calculations performed to calculate your Foundation Amount (the amount you enter Single Tier with).
Calculation 1 is based on the current system and will give you one thirtieth of the current basic pension (£107ish per week) per year of paying NI contributions (up to a maximum of 30 years). In your case I guess it will give you 29/30 of the £107ish. Depending on your pay levels over the years, in particular since 2002, there may be an addition to this.
Calculation 2 is based on the new system and is based on a requirement for 35 years contribution for a full Single Tier pension, so in your case would be 29/35 of £144ish but with some adjustments to take account of the fact you have been contracted out - this adjustment can quite possibly reduce the amount.
The higher of the results from the 2 calculations is then taken as your Foundation Amount and (assuming it is lower than the Single Tier pension) in your remaining working life you will increase your state pension entitlement by 1/35 of the £144ish per year, up to a maximum of £144ish.

Hope this helps.

Bigmoney2

You can request a statement of NI contributions which will set out exactly how many years of contributions or credits you have accrued.

http://www.hmrc.gov.uk/ni/intro/online-statement.htm