State pension estimates for 2016 +

jamesd

greenglide wrote: »

The pension forecast people (the future pensions people) almost certainly don't have access to the IT to tell them how much someone who has deferred would get if they claimed now. You would need to go down the claim process and then tell them you wanted to defer.

I think you're probably right about them not having access. The problem is how to get the amount - even the amount at state pension age - without using up a deferral opportunity.

greenglide wrote: »

I am sure it would be better if they required you to make the claim, establish entitlement and then defer so that you would know the exact value of the pension that was deferred.

If they could tell you without using one of the deferral opportunities that would be harmless. But I don't know that it can be done that way.

Anyone know how to get the amount without using a deferral opportunity?

greenglide

You ring the claims line, tell them what you want and state that you just want to know how much you would get if you wanted to claim now.

As long as you told them that you wished to continue deferment it would not count as a further period of deferment.

uk1

I guess my simple point is that the DWP should simply be able to state what you would get if you retired today having deferred. Not theoretically, or notionally, but my wife specifically based on her file and her name. This isn't rocket science. It is a simple calculation that could provide reassurance and information. They have made errors before which need to be corrected. That is one of the reasons why a definitive personalised statement is important.

We can calculate how much we expect it to be, but that simply isn't good enough. This isn't a situation the government would tolerate a commercial organisation providing financial services to the public to get away with.

Bootsox

jamesd wrote: »

That was mentioned very early on, probably just something you missed in the flood of news.....snip

Thanks for your input, I have been trying to google an answer to the query below but without success:

For 32 years of my working life, by virtue being in a DB pension scheme, I understand that I was "contracted out" .

Despite this, I feel that I have still paid an awful lot of NICs (for my last comparable year it was just over £4k).

So how does that compare to someone who was "contracted in", e.g., in tax year 14/15, to earn a qualifying pension year you only need to earn a £5,772 wage?

Is it the case that, although I was "contracted out", I could have been still been paying more overall NICs than someone who was "contracted in"?

jamesd

If you were on exactly the same pay you'd pay the same employee NI whether contracted in or out in private sector schemes. Employee NI above the low earnings thresholds is currently 12% of earnings until roughly the higher rate income tax band, then 2%, so a difference in pay would cause a difference in NI.

When contracted out in private sector schemes what happens is that the NI is the same but a rebate of some of the NI is paid to the pension scheme. In a defined benefit scheme like final salary the scheme is obliged to pay at least a guaranteed minimum pension, roughly the equivalent of what the state pension would have been for the money, though usually more. In a defined contribution scheme the rebate money was paid into the pension pot and directly visible to the individual.

It's normal for defined benefit pension schemes to be contracted out and I don't remember ever hearing of one that wasn't.

For anyone paying NI there are two parts to the state pension under current rules, the basic state pension which is paid just on qualifying years and the earnings-related additional state pension. A very low earner would get the full basic state pension but not much additional, while a high earner would get more additional for their higher NI payment level. In defined benefit schemes the same effect would happen based on the salary affecting how much the pension pays.

Under the flat rate rules the earnings link is being removed, so those who get paid more won't get any more state pension than those who work less, whether it's because they are in a high earning job or working 80 hours a week in several low earning ones. So if you'd spent most of your working life under flat rate rules you'd have considerably more reason to be unhappy than under the rules that apply to most of your working life because of how soon you're retiring: you'd pay more NI to get no more state pension. That money is being taken to use to pay more to those with no or limited work records instead.

JezR

Yes it is the case under the old pension rules that person A could have paid considerably more NI in monetary terms over a working life than person B, but because they had paid a lesser percentage of salary through being contracted out they don't get as much state pension in total.

Under the new system anyone paying (or being credited with) 35 years of NI will get the same pension irrespective of how much has been paid in money.

greenglide

Is it the case that, although I was "contracted out", I could have been still been paying more overall NICs than someone who was "contracted in"?

The rate of employees NI currently is 12% for earnings up to the upper earnings limit. Anyone who is contracted out gets a 1.4% rebate and the employer gets a 3.4% rebate for being contracted out.

For the same level of earnings a person who is contracted out will always pay less NI than someone who is not contracted out (there is no such state as "contracted in").

greenglide

uk1 wrote: »

I guess my simple point is that the DWP should simply be able to state what you would get if you retired today having deferred. Not theoretically, or notionally, but my wife specifically based on her file and her name. This isn't rocket science. It is a simple calculation that could provide reassurance and information. They have made errors before which need to be corrected. That is one of the reasons why a definitive personalised statement is important.

We can calculate how much we expect it to be, but that simply isn't good enough. This isn't a situation the government would tolerate a commercial organisation providing financial services to the public to get away with.

If you ring or write to the SP claims line they can give you that information - the precise amount you would get if you claimed.

The pension forecast team cannot give you this information as the IT systems are very different.

JB9302

Mine arrived today , £116.59 pw under existing rules and £42.98 pw under new rules both roughly as I expected .
42 qualifying years , been retired since 2009 and reach SPA in Jan 2017 , so I guess it will be around £120 pw by then
Wife will have hers 2 1/2 yrs deferred by then .

Bootsox

Is this all one ginormous scam, where is the £143 I was promised?