Additional State pension queries

kuepper

How is additional state person calculated? My pension statement has confused me:

It quotes a figure based on earnings between 6/4/97 and 5/4/02, and another figure based on from 6/4/02 (in which period I have mainly been on incapacity) but no mention of how these figures are arrived at. All I can find is a guide which mentions 'more than £' for every whole year since 6/4/02!

Also did I/we not earn anything toward todays pension between 1975 and 6/4/78 ? Seems I get a small credit for before and after these dates but nothing for that period.

hugheskevi

How is additional state person calculated?

It has changed several times since it was introduced in 1978.

Broadly, you get a percentage of your income above a certain level and up to a cap, but both the rates and the levels have changed over the years, as well as different rates being introduced within the income band. In short, it is complicated as politicians have loved to meddle and tinker with the calculation over the years.

It quotes a figure based on earnings between 6/4/97 and 5/4/02, and another figure based on from 6/4/02 (in which period I have mainly been on incapacity) but no mention of how these figures are arrived at.

State Earnings Related Pension (SERPS) ran from 1978 to 2002. From 2002 onwards it changed to State Second Pension, with the way it was calculated also changing.

It would be extremely hard to set out in detail how it was calculated, but the broad approach is that you accrue an amount each year, based on a percentage of your income above a particular level under the rules that applied in the particular year. That amount is added to previous accruals and uprated by earnings until you reach State Pension age (although the introduction of the new pension system will change that).

You could also contract-out at some points in the past (and indeed currently), in which case you accrued little or no additional pension, but again, the rules have changed a number of times about exactly how contracting-out affects Additional Pension.

So there is no realistic way you can calculate your own Additional Pension and just have to rely on HMRC and DWP getting the numbers right and telling you what you have. You can check your National Insurance history to ensure they are using the correct data.

Also did I/we not earn anything toward todays pension between 1975 and 6/4/78 ?

Additional State Pension didn't exist then. There was an earnings-related pension before that, but that ended in 1975. The pre-1978 earnings related pension (Graduated Retirement Pension) wasn't properly inflation proofed, so is only worth about £5 p/w in most cases as most of its value was inflated away.

kuepper

hugheskevi wrote: »

So there is no realistic way you can calculate your own Additional Pension and just have to rely on HMRC and DWP getting the numbers right and telling you what you have.

Trust the government! Bloody hell is that what it's come to!

xylophone

Also did I/we not earn anything toward todays pension between 1975 and 6/4/78 ? Seems I get a small credit for before and after these dates but nothing for that period.

See http://www.financialadvice.net/State_Graduated_Retirement_Pension_Scheme/zone/354

How is additional state person calculated?

http://www.mgmadvantage.co.uk/blog/state-pensions-part-5-calculating-the-additional-state-pension/

Wet towel round the head/burning the midnight oil time?:D

kuepper

xylophone wrote: »

http://www.mgmadvantage.co.uk/blog/state-pensions-part-5-calculating-the-additional-state-pension/

Wet towel round the head/burning the midnight oil time?:D

that doesnt say how to calculate it if you've been on incapacity benefit

xylophone

that doesnt say how to calculate it if you've been on incapacity benefit

http://www.scottishlife.co.uk/scotlife/Web/Site/Adviser/TechnicalCentralArea/InformationGuidance/General/TheStateSecondPensionExplainedPage.asp

kuepper

xylophone wrote: »

http://www.scottishlife.co.uk/scotlife/Web/Site/Adviser/TechnicalCentralArea/InformationGuidance/General/TheStateSecondPensionExplainedPage.asp

Too technical for me