Single tier state pension confusion.

Triumph13

slpj wrote: »

-- Since nobody may receive more than the new single tier pension?

Or have I now completely confused myself? lol.

Hi slpj

The only way people will receive more than the single tier pension is if they have allready accrued more than the single tier level in basic and Serps combined under the OLD method AT THE POINT OF CONVERSION

After conversion you can only add furthe state pension up to the single tier level, so if you take the single tier limit as £145 pw then:

• Someone with a foundation amount of say £133 pw under the old method would get an extra £4 pw for the next 3 years of NI post conversion but nothing for any further years as they would have reached the £145 single tier maximum
• Someone with a foundation amount of £150 would get no benefit whatsover as they are already past the limit for further accrual so they would just get their £150 pw plus appropriate indexation.

You look like being about £1 below the limit so that is the maximum amount of extra you could accrue post conversion. The only way that you personally could get more than this in state pension would be by going back to work and accruing more Serps before the changeover.

greenglide

slpj wrote: »

I'm not working at the moment. But if I were to resume employment, I would be purchasing additional NI years by virture of my NI deductions.

If you were to take up employment again for the two years up to April 2015 then, assuming the employment was not contracted out, you would accrue S2P for that period which could cause your fountation amount to become larger than the STP amount, depending on the amount earned.

slpj

Thanks again all. Please continue to be patient. .

Put an electronic circuit in front of me, and I'm a wizard, but this is still confusing me. There must be a malfunction in my brain. lol.

I've just read this on ---

http://www.thisismoney.co.uk/money/pensions/article-2296364/Budget-2013-Flat-rate-pension-144-confirmed-George-Osborne.html

"The S2P meanwhile has the potential to increase this weekly income to more than £200 depending on how much you earn and how many years of National Insurance contributions (NICs) you have been making.

Those who have already built up an entitlement to extra pension contributions greater than £144 through S2P or SERPS (State-Earning Related Pension Scheme) will have these payments protected when the additional state pension is abolished in 2016, but they will no longer be able to add to them --- "

Doesn't that effectively say that it's worth me having the full 35 NI years before 2016, when the calcualtion is done?

I couldn't get to the 200 quid mentioned, but couldn't I get to 144+ my Serps of £34.41? Total circa £179.

grey_gym_sock

no, the calculation up to 2016 doesn't use £144 + SERPS/S2P.

it is the higher of

(a) £110 + SERPS/S2P (old style)

or

(b) £144 (new style)

jem16

slpj wrote: »

Doesn't that effectively say that it's worth me having the full 35 NI years before 2016, when the calcualtion is done?

Having 35 years at conversion time will not help you in any way as you already have the maximum number of years under the old system.

I couldn't get to the 200 quid mentioned, but couldn't I get to 144+ my Serps of £34.41? Total circa £179.

You will never have a calculation of £144 + SERPS. It doesn't exist.

The only way you will get anymore than your current entitlement is to actually be working for the next 2 years and build up some extra S2P.

slpj

Oki Doki.

I think I get it now. Thanks for your indulgence. .

But just to add some spice. I've just read an interesting Guardian news piece (8 February 2014). It suggests that if I HAD contracted out of SERPS, then I would have been able to get a larger pension when the single tier is implimented.

http://www.theguardian.com/money/2014/feb/10/poorer-state-pension-contracted-in

"It appears that whether you'll be a winner or a loser comes down in large part to whether or not you contracted out of the state second pension and/or its predecessor, Serps."

What say you all?

jem16

slpj wrote: »

Oki Doki.

I think I get it now. Thanks for your indulgence. .

But just to add some spice. I've just read an interesting Guardian news piece (8 February 2014). It suggests that if I HAD contracted out of SERPS, then I would have been able to get a larger pension when the single tier is implimented.

http://www.theguardian.com/money/2014/feb/10/poorer-state-pension-contracted-in

"It appears that whether you'll be a winner or a loser comes down in large part to whether or not you contracted out of the state second pension and/or its predecessor, Serps."
What say you all?

All depends on individual circumstances.

I've been contracted out all my working life but as I will finish teaching in 2015/16 but won't receive my state pension until 2022 I will not be a winner as I won't be able to build up extra entitlement. I'm likely to receive no more (and hopefully no less) than the basic state pension at the moment.

wakeupalarm

Jem16, you could take up another job, even just part time, teaching isn't the be all and end all of life. Another 6 years part-time could get you around £30 extra per week for the rest of your life.

jem16

wakeupalarm wrote: »

Jem16, you could take up another job, even just part time, teaching isn't the be all and end all of life. Another 6 years part-time could get you around £30 extra per week for the rest of your life.

Fortunately I have no need for the extra £30 a week and am quite happy to retire at age 60.

Triumph13

jem16 wrote: »

Fortunately I have no need for the extra £30 a week and am quite happy to retire at age 60.

And PLEASE nobody mention public sector pensions and start that all back up again!:rotfl: