State Pension Post 2016 'Contracted Out'

JohnB47

SeekTruth:

You may have gained AP in any periods that you were not contracted out, you could also have gained AP even if contracted out since 2002 (as long as your pay wasn't too high).

Could anyone expand on that? I've been working part time and paying into a contracted out pension scheme since 2002. Under what circumstances might I have gained AP during this period?

xylophone

Could anyone expand on that? I've been working part time and paying into a contracted out pension scheme since 2002. Under what circumstances might I have gained AP during this period?

See

http://en.wikipedia.org/wiki/State_Second_Pension

http://adviser.royallondon.com/technical-central/information-guidance/general/state-second-pension-explained?referrer=slp

JohnB47

xylophone wrote: »

See

http://en.wikipedia.org/wiki/State_Second_Pension

http://adviser.royallondon.com/technical-central/information-guidance/general/state-second-pension-explained?referrer=slp

Thanks for that but having read those (quickly) I can't see how it answers my question. Surely being in a employers 'contracted out' pension scheme means no gains from SERPS or S2P, full stop. I can't see, in those documents, where it says otherwise, although I do see where '2002' comes in, the date that S2P replaced SERPS.

In my case I was in a Local Government pension scheme from 2002 to 2008 and in the NHS scheme from 2009 to date. Surely I can't have gained any S2P during that time?

xylophone

From the Wiki article


S2P gives all employees earning up to £32,592 a year (in 2011/12) a larger pension than SERPS, regardless of whether they are "contracted out" or not - with most help going to those in the '"lowest"' earnings (up to £14,400 a year in 2011/12) - known as the "LET" or '"Low Earnings Threshold"'. The accrual rates within each band of earnings are:

zagfles

greenglide wrote: »

But pension forecasts have said that for a long time.

Between 1978 and 1997 people who were contracted out could still a certain of additional pension due to the calculation of the COD and the GMP but this stopped from 1998 onwards where the COD and the GMP would always be equal.

Yes, both zero ;)There's no COD or GMP post 1997.

xylophone

And http://adviser.royallondon.com/technical-central/information-guidance/general/contracting-out-of-the-state-second-pension?referrer=slp

"Final-salary scheme

Employees who are contracted-out through their employer's final-salary pension scheme receive a national insurance contributions (NICs) rebate of 1.4%, that is they pay 1.4% less in NICs than someone who chooses to remain in S2P i.e. contracted-in. The employer receives a rebate of 3.4%. These rebates apply to earnings between the employee's and employer's NI thresholds and the upper accrual point (UAP).

Recognising that S2P has different accrual rates applying to different bands of earnings and that the final-salary rebates didn't take this into account as they were a flat rate, a top up pension was introduced. This top up pension is based on the difference between what each individual would have received under S2P compared to SERPS assuming that they had not contracted-out. It applies to earnings up to the Secondary Earnings Threshold (SET), currently £33,800 (2014/15)."

zagfles

JohnB47 wrote: »

Thanks for that but having read those (quickly) I can't see how it answers my question. Surely being in a employers 'contracted out' pension scheme means no gains from SERPS or S2P, full stop. I can't see, in those documents, where it says otherwise, although I do see where '2002' comes in, the date that S2P replaced SERPS.

In my case I was in a Local Government pension scheme from 2002 to 2008 and in the NHS scheme from 2009 to date. Surely I can't have gained any S2P during that time?

Yes you will have if you earned under about £30k in today's terms. Links above explain it.

JohnB47

zagfles wrote: »

Yes you will have if you earned under about £30k in today's terms. Links above explain it.

Thanks. My earnings were, since 2002 and still are under £7000 pa (part time work in both cases). How would such extra pension be described in a pension statement? I have statements from 2008, 2011 and 2013 and they all have similar 'additions', which seem to increase slowly over time.

Eg 2008: Payable Additional Pension £7.43 and Graduated Pension £1.98

2011: Payable Additional Pension £13.16 and Graduated Pension £2.14

2013: 'additional State Pension and Graduated Retirement benefit' £17.77

Is it the Additional Pension part? I thought that was something from way back before I started employment that was just increasing in line with inflation.

zagfles

JohnB47 wrote: »

Thanks. My earnings were, since 2002 and still are under £7000 pa (part time work in both cases). How would such extra pension be described in a pension statement? I have statements from 2008, 2011 and 2013 and they all have similar 'additions', which seem to increase slowly over time.

Eg 2008: Payable Additional Pension £7.43 and Graduated Pension £1.98

2011: Payable Additional Pension £13.16 and Graduated Pension £2.14

2013: 'additional State Pension and Graduated Retirement benefit' £17.77

Is it the Additional Pension part? I thought that was something from way back before I started employment that was just increasing in line with inflation.

Yes.......

xylophone

See http://www.monetos.co.uk/pensions/state-pensions/graduated/

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373460/dwp040-oct14.pdf may be worth a look?