Pension forecast April 2016

ekeir

OK so I have at last been able to get a pension forecast under the new rules which start a few days after I turn 65. There are two amounts shown, one for the old rules and one for the new. Under the old rules I get £120. Under the new £70!
Can this really be correct? After all the hype, with people actually believing that they would get £144 plus if they retired after April 2016. This is with 39 years NI contributions, mostly contacted out. I thought I might be a couple of pounds better off under the new system but to find out I would be so much worse off is a shock. Luckily I get the greater of the two amounts.

JB9302

Did you get the forecast via phone or letter ? , I wrote a week or so ago and await a forecast .
I got a verbal of £116.60 a few months ago under current system and expect a similar figure to yours with 42 yrs and quite a few contracted out .
Still I will be happy with the my original forecast as I have a good public sector one .

greenglide

So you will get the [STRIKE]new[/STRIKE] old rules figure because it is the greater. The actual amount will be dependant on the actual rate of the new state pension which will be announced in the autumn spending statement next year.

Your many years of contracted out employment reduce your new state pension (the rebate derived amount) so you only get what you have earned in the existing system and you have very little AP with having been contracted out.

This is well known (to people who have read the literature) and all along the government has been careful to qualify the statements about the £144 pension.

You haven't lost anything, you simply haven't gained anything.

My starting amount A is around £152 so it will get that. I have a mixture of contracted out and not contracted out service so I don't gain either. Does it make any real difference to either of us?

No, it doesn't.

In future you do really need to read the detail behind the rules and never believe to tabloid (and broadsheet) press.

ekeir

JB9302 wrote: »

Did you get the forecast via phone or letter ? , I wrote a week or so ago and await a forecast .
I got a verbal of £116.60 a few months ago under current system and expect a similar figure to yours with 42 yrs and quite a few contracted out .
Still I will be happy with the my original forecast as I have a good public sector one .

The quote was by letter JB. I think they just started to send them out within the last couple of weeks.

greenglide wrote: »

So you will get the new rules figure because it is the greater. The actual amount will be dependant on the actual rate of the new state pension which will be announced in the autumn spending statement next year.

Your many years of contracted out employment reduce your new state pension (the rebate derived amount) so you only get what you have earned in the existing system and you have very little AP with having been contracted out.

This is well known (to people who have read the literature) and all along the government has been careful to qualify the statements about the £144 pension.

You haven't lost anything, you simply haven't gained anything.

My starting amount A is around £152 so it will get that. I have a mixture of contracted out and not contracted out service so I don't gain either. Does it make any real difference to either of us?

No, it doesn't.

In future you do really need to read the detail behind the rules and never believe to tabloid (and broadsheet) press.

I didn't say I believed the hype Greenglide and I certainly don't believe what I read in newspapers. I am still amazed at the difference between the two quotes. That is over 40% less.

SeekTruth

greenglide wrote: »

So you will get the new rules figure because it is the greater. The actual amount will be dependant on the actual rate of the new state pension which will be announced in the autumn spending statement next year. ....

A slip of the tongue I suspect. The OP will get the old-rules figure and it is highly unlikely to depend on the actual rate of the new state pension.

zagfles

ekeir wrote: »

The quote was by letter JB. I think they just started to send them out within the last couple of weeks.



I didn't say I believed the hype Greenglide and I certainly don't believe what I read in newspapers. I am still amazed at the difference between the two quotes. That is over 40% less.

Basically the "rebate derived amount" shows you the value of the element of your contracted out pension which came from the NI rebates, about £74, which you should get as part of your contracted out pension.

So you get that plus the £120, ie £194 in total from the "state", when you count the NI rebates you and your employer got. You've done pretty well compared to those starting out now who'll only get the basic £144 single tier (contracting out being abolished).

ekeir

zagfles wrote: »

Basically the "rebate derived amount" shows you the value of the element of your contracted out pension which came from the NI rebates, about £74, which you should get as part of your contracted out pension.

So you get that plus the £120, ie £194 in total from the "state", when you count the NI rebates you and your employer got. You've done pretty well compared to those starting out now who'll only get the basic £144 single tier (contracting out being abolished).

No Zagfles, I get £120. The £70 is what I would get under the new pension rules. The amount under existing state pension rules is £120. The statement says that I get the higher of these two amounts.
I did think as the new system was supposed to be more efficient and cost neutral that I might get a couple of pounds a month more. That is why I am shocked to see that under the new rules I would actually get more than 40% less.

zagfles

ekeir wrote: »

No Zagfles, I get £120. The £70 is what I would get under the new pension rules. The amount under existing state pension rules is £120. The statement says that I get the higher of these two amounts.
I did think as the new system was supposed to be more efficient and cost neutral that I might get a couple of pounds a month more. That is why I am shocked to see that under the new rules I would actually get more than 40% less.

You don't get it.

You were contracted out. That means the state subidised your contracted out pension through NI rebates.

The "rebate derived amount" is £74 (£144 less £74 = £70, the amount you'd have got under the new rules)

That £74 will be paid as part of your contracted out pension. If you hadn't been contracted out you'd have got about £74 as additional state pension (SERPS/S2P).

The money to pay it came from the state through NI rebates.

So you get £120 plus £74 = £194 from the state. Except instead of getting directly from the state, like contracted-in people, you get it indirectly, by your contracted-out scheme using the NI rebates which the state provided to pay it.

You've got a good deal compared to what people in the future will get. There's no more contracting out after 2016, no NI rebates, just £144 from the state. Not £194.

MrsFingersCrossed

My OH has just applied for his new forecast, and we await it with interest. He'll be 60 next month so falls into the band who can now get a forecast based on new system. I think we have a fair idea of what to expect but it will be good to know for sure. It is a mite confusing. I am not allowed to post links yet but I found a document at gov dot uk slash government which explains it in a bit more detail
It's called ' single-tier-valuation-contracting-out.pdf ' You could probably search and find it if anyone's interested.
I wonder how many posts I have to make before I can post links...

ekeir

I don't think all this snark and sarcasm is justified. Even if I actually was thinking the thoughts people are putting into my head.
I didn't believe the hype about the flat rate pension nor did I ever say that I did. The shock I expressed was about the fact that the figure quoted under the new pension rules was more than 40% less. I'm not stupid enough to assume though that with the burden that an ageing population places on the country that the government was suddenly going to find £1500/year more to give me.
A lot of people did believe the hype about the flat rate pension though because, as chancellors always do, only the positive was emphasised. That was not my motive for posting though, contrary to what some defensive people have read into my OP.
I am not complaining about the fact that I will get the same under the new rules. Nor did I ever say I was. I just said that I was under the misapprehension that I might get a little more. So it's not clever to say Quel horreur!!! It's just sarcasm and childishness. I would hope that this isn't what passes for normal discussion in this forum.
My main motive for posting was to inform people. I've seen many people posting on the internet in a similar position to me with many years contracted out. As one of the first to get a forecast under the new rules I was informing people what I would get. The kind of response I was expecting was the first reply, from JB9302.
For what it's worth I know I am very lucky. Just getting my pension at 65 is a bonus.

jem16

ekeir wrote: »

I just said that I was under the misapprehension that I might get a little more.

Can I just ask why you thought you might get a little more than the flat rate?

When do you actually turn 65?