Contracting out calculation

CathA

Hi all

If anyone was contracted out (as many people have been in company/government pension schemes) how does that work in regard to calculating State Pension? I rang DWP to ask for a pension forecast, which I know will be based on the rules as they stand now. I realise next year it all changes, but is there a calculation to use to work out how much the SP will be reduced due to the fact that someone was contracted out? For example, 2% reduction in SP for every year you were contracted out? I asked when I spoke to DWP how it was worked out and she didn't really know, just said everyone's circumstances are different. Fair enough, circumstances vary but a simple mathematical formula should be pretty standard? Any ideas anyone? Thanks.

xylophone

https://forums.moneysavingexpert.com/discussion/5075832
post 13 might be of interest.

CathA

xylophone wrote: »

https://forums.moneysavingexpert.com/discussion/5075832
post 13 might be of interest.

Thanks for that. I've looked at all the links and had a read, but it looks like I'm going to have to wait a while to find out. I'm not in he age categories they mentioned, so will have to wait a while to get a forecast under the new system. Hopefully by then they'll have created a better system than some poor s*d sitting at the end of a phone frantically tapping at a calculator!! I can see a few problems there.

SeekTruth

CathA wrote: »

Hi all

If anyone was contracted out (as many people have been in company/government pension schemes) how does that work in regard to calculating State Pension? I rang DWP to ask for a pension forecast, which I know will be based on the rules as they stand now. I realise next year it all changes, but is there a calculation to use to work out how much the SP will be reduced due to the fact that someone was contracted out? For example, 2% reduction in SP for every year you were contracted out? I asked when I spoke to DWP how it was worked out and she didn't really know, just said everyone's circumstances are different. Fair enough, circumstances vary but a simple mathematical formula should be pretty standard? Any ideas anyone? Thanks.

If you are happy crunching numbers then I suggest you look at the DWP Technical Note at this link (NB At the time the note was produced the Single Tier Pension was proposed to be introduced in April 2017, the introduction date has since changed to April 2016).

You could also look at the this thread

Good luck if you decide to perform your own calculations!

kidmugsy

I have always found the intricacy of allowing for the contracted-in and contracted-out years of my career too much for me. So do the administrators of one of my pensions: talking on the phone one of them told me that one particular figure they needed was arrived at by the method of "we just guess".

CathA

kidmugsy wrote: »

I have always found the intricacy of allowing for the contracted-in and contracted-out years of my career too much for me. So do the administrators of one of my pensions: talking on the phone one of them told me that one particular figure they needed was arrived at by the method of "we just guess".

Having worked for the Government for 12 years, the 'just guess' option seems about right! I'll have a look at the calculations when I'm REALLY bored! Thanks all.