MSE News: Guest Comment: What you need to know about the new State Pension

jamesd

michaels wrote: »

So basically what I said, if I had contracted out for 10 years I would have a fund that would be worth something and would still be in a position to make enough years of contribution to get the full amount payable under the new scheme.

Correct. Almost everyone who contracted out is a winner if they can work or buy more years under the new system and reach state pension age after it starts.

Lord_Snooty_and_His_Chums

This is all very unsettling for my ageing brain cells. My retirement date is 2020 and I have been contracted out for 37 years. It is my intention to stop work next year.

Do I get any form of state pension at 66 (2020) other than a few coppers from the graduted contributions rip off?

kidmugsy

Lord_Snooty_and_His_Chums wrote: »

This is all very unsettling for my ageing brain cells. My retirement date is 2020 and I have been contracted out for 37 years. It is my intention to stop work next year.

Do I get any form of state pension at 66 (2020) other than a few coppers from the graduted contributions rip off?

Do you really expect us to guess how many years of NICs you're credited with? Or how many years you were contract in?

xylophone

any form of state pension at 66 (2020)

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

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf The single tier legislation has now been passed.

jamesd

Lord_Snooty_and_His_Chums wrote: »

My retirement date is 2020 and I have been contracted out for 37 years. It is my intention to stop work next year. ... Do I get any form of state pension at 66 (2020) other than a few coppers from the graduted contributions rip off?

You will get an amount at least equal to the current Basic State Pension because it has never been possible to contract out of that, only the SERPS/S2P earnings-related part. I explain more here.

If you were contracted in at some point you ill get some earnings-related pension as well. Once the flat rate system starts you can ask what your Foundation Amount is. Then you can make voluntary class 2 self-employed or class 2 NI payments to increase your state pension from the foundation amount to the maximum flat rate level if you are not already over that.

JezR

Pincher wrote: »

I worked for a year in the USA, so had to contribute to some kind of state pension plan, probably US$1,000 worth. The thing is, it was May to April, which means it's split into two US tax years, so does it count as two NI years, one, or NONE, in the UK?

The USA scheme doesn't work in years but in credits. Normally you would get four credits for working a year in the USA whatever the dates, and this would be assessed as equivalent to one year of NI contributions should you need them.

You need six credits, ie 18 months of payments to get any pension from USA Social Security.

kangoora

JezR wrote: »

The USA scheme doesn't work in years but in credits. Normally you would get four credits for working a year in the USA whatever the dates, and this would be assessed as equivalent to one year of NI contributions should you need them.

You need six credits, ie 18 months of payments to get any pension from USA Social Security.

Oh, interesting. I worked in USA from mid-august 2000 to my termination date of 28/2/2002. Looks like I might have qualified by 2 weeks, I suppose I need to contact USA Social Security to register a claim for this?

I'm likely to have the 35 years NICs I need for my full UK state pension so could I go to the USA for a small portion of theirs?

I'm guessing it will be buttons being based on only 18 months contributions however. Still, it's better in my pocket than some government coffers and it looks like I paid enough to qualify.

sylwright

I contributed for 42 years and only got my pension at age 61/10months last November. I won't be very happy if my pension ends up worse off than new pensioners will be getting under the new system, but its starting to look like that will be the case.

Its definitely starting to look like the less you pay into this system, the more you get out of it.

jamesd

Whether you get more or less depends on how many years you worked, what child benefit or unemployment benefits you received and how much you were earning while working. If you're getting £155 a week or so now it's unlikely that the flat rate will be higher. You also have the option of deferring your state pension once after you've started to claim it and you'll get the 1% every five weeks / 10.4% a year increase that is about twice what those reaching state pension age after the change get. deferring is one of the best deals around for those in normal good health.

You will also have the chance to purchase up to £25 a week or extra state pension by buying class 3A national insurance contributions. These can be a good deal for those who are in good health. Better for women with younger female spouses in good health, women in general, those in England and worse in general for those in Scotland or male. This is because some parts of the country have lower life expectancy on average than others and because women live longer than men but he calculation rules ignore that reality. It's disappointing that the state pension system is still discriminating against men and those in different parts of the country.

The flat rate will make most of those who work for 42 years under that system worse off than most who work for 42 years under the current system because it takes money from workers to give it to those who don't work at all or as much.

p00hsticks

sylwright wrote: »

I contributed for 42 years and only got my pension at age 61/10months last November. I won't be very happy if my pension ends up worse off than new pensioners will be getting under the new system, but its starting to look like that will be the case

Given the majority of those eligible for the new pension won't be able to claim until they are aged 66, 67 or 68, I doubt that will be the case.