The new IDS £144pw state pension

PeacefulWaters

I'm 22 years off getting a state pension and assume a fair bit can change between now and then.

But, as things stand, the headlines tell me I should get a figure of around £7,500 a year in today's terms.

Some questions that are vaguely entering my mind this morning:

1. Until a couple of years ago I was contracted out of SERPS. Could this lead to a reduction on the figures above? If so, is there a formula to establish how much?

2. I have the option of drawing a private pension in as little as four years. While it's unlikely that I will do so, could this reduce my state pension in future?

Is there anything else I should be aware of in terms of state provision?

xylophone

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

See above.

PeacefulWaters

xylophone wrote: »

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

See above.

Ok, I see that I won't get the full £144 per week and other members and former members of contracted out pension schemes are in the same boat.

Presumably I'll end up with a figure of somewhere between £107 (current state pension) and £144 per week, but I can't see any intelligible formula that says how (or if) that progresses.

Is even the £107pw protected?

BobQ

Based on contributions to date, you are heading for a figure nearer £107 than £142. However, if these plans are implemented and you work (or are given credits) for 22 years you will increase your state pension (as contracting out is abolished) so it will be much nearer the upper figure.

Edit

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181229/single-tier-pension.pdf

Look at Matt (aged 32) in the examples.

Neasy

I'm so glad you asked this - I've been trying to work it out as well. Having taken time off to have kids and been self-employed when they were young, I have no idea what my contracted-out deduction works out as.

It appears that it was possible to get added pension credits at some point in the past if one was in receipt of child benefit for a child under 12 (or it may be under 6) - it's all so complicated!! I have no idea how that works if one was self-employed and paying voluntary class 2 (I think) contributions :eek: At least I know that I've been contracted-out since I joined the LGPS so that's easy enough to work out.

I've requested a "Statement of Account" re NI contributions as the pension statement I got a couple of months ago is presumably pretty useless now.

I contacted DWP to ask how one found out one's "foundation amount" and the guy I spoke to didn't know.

At least I have you guys to turn to!

BobQ

Neasy wrote: »

I'm so glad you asked this - I've been trying to work it out as well. Having taken time off to have kids and been self-employed when they were young, I have no idea what my contracted-out deduction works out as.

It appears that it was possible to get added pension credits at some point in the past if one was in receipt of child benefit for a child under 12 (or it may be under 6) - it's all so complicated!! I have no idea how that works if one was self-employed and paying voluntary class 2 (I think) contributions :eek: At least I know that I've been contracted-out since I joined the LGPS so that's easy enough to work out.

I've requested a "Statement of Account" re NI contributions as the pension statement I got a couple of months ago is presumably pretty useless now.

I contacted DWP to ask how one found out one's "foundation amount" and the guy I spoke to didn't know.

At least I have you guys to turn to!

Read the document linked to above.

The statement from a couple of months ago should tell you how many years you were contracted out. The remaining years when self employed, unemployed or contracted in will add to your foundation amount.

After 2016 contracting out will not apply to future contributions (although your NI will increase), so for each year you work you will move £4.11 closer to the £144 a week.