Contracted Out and State Pension help?

WillowCat

mgdavid wrote: »

Willowcat, are you sure you don't get NI creedit as a mature student? And you do get NI credit if you sign on as unemployed - did you, or just remove yourself from the job market?

No, no credits as a mature student. I didn't sign on for the full tax year (as I was a student for part of it) so lost that year too.

zagfles

jamesd wrote: »

That was forecast rather than foundation and with all of the years contracted out I'm not sure that it will all be received.

The potential issue is that the same rule used for calculating defined benefit minimum income payments might be used for enough contracted out years to take the foundation amount below even the basic state pension portion.

Yes, for the new rules calculation, but the old rules calculation would give the OP his full BSP plus whatever SERPS/S2P he's accrued. The foundation amount will be the higher of the two, ie in the OP's case almost certainly the old rules calculation.

Previously I'd been assuming that the BSP part was safe but having read more

Read more where? URL?

I'm no longer sure of that so I'm not even sure that just eliminating the additional state pension part in the approximation was good enough.

Why eliminate it? It's what he's accrued under the current rules and it what his foundation amount will be, as his "new rules" calculation will be much lower. What makes you think otherwise?

WillowCat

atush wrote: »

It is hardly likely you will lose ALL of your pension contributions, more like half. Unless you trade them for something else (perhaps unwisely like say half of your home). If you have a DB pension it is likely to be worth more than you will be offered.

So get yourself a statement and a forecast to date. You will get to the 35 years as you are still getting NI credits, and the above will tell you how much s2p will be added on top of your basic state pension.

I may lose all of it - in return I get to keep my house, paid for 100% by me and in my sole name. There's not enough money for me to buy another home with half the proceeds so I would be left renting - using the capital for rent until it runs out then on housing benefit for the rest of my life. They are defined contribution so no doubt on value.

Thanks for the prompt re the state forecast - I had it in my mind that people born between 1960 and 1969 couldn't get one at the moment, but I've just checked again and that doesn't seem to be the case - I must have got confused somewhere.

atush

zagfles wrote: »

Yes, for the new rules calculation, but the old rules calculation would give the OP his full BSP plus whatever SERPS/S2P he's accrued. The foundation amount will be the higher of the two, ie in the OP's case almost certainly the old rules calculation. Read more where? URL? Why eliminate it? It's what he's accrued under the current rules and it what his foundation amount will be, as his "new rules" calculation will be much lower. What makes you think otherwise?

Well that was what I thought.

We await to be corrected?

atush

WillowCat wrote: »

I may lose all of it - in return I get to keep my house, paid for 100% by me and in my sole name. There's not enough money for me to buy another home with half the proceeds so I would be left renting - using the capital for rent until it runs out then on housing benefit for the rest of my life. They are defined contribution so no doubt on value.

Thanks for the prompt re the state forecast - I had it in my mind that people born between 1960 and 1969 couldn't get one at the moment, but I've just checked again and that doesn't seem to be the case - I must have got confused somewhere.

I would not be so very sure abt your pension and home, if you are a carer and your soon to be ex is still earning. Do get legal help here.

And if you do, do make sure your DB pension has actually been PROPERLY valued.

Too many just go on whatever sum is given to them, but DB pensions with all their extras such as death in service and index linking are quite often undervalued during a divorce esp w/o good legal advisors. As you could as you are a carer, make him wait for the death of same to have his 50% of the house leaving you to the needed income from pensions.

And you should also find out a transfer value and run it by an IFA to see if you dont need spousal benefit or if you are yourslef not in good health., you could be one of the only people for who a transfer could work out best?

JohnB47

Interesting. I assumed that WillowCat was male. Perhaps 'she' indicated otherwise and I missed it.

jamesd

JohnB47 wrote: »

Interesting. I assumed that WillowCat was male. Perhaps 'she' indicated otherwise and I missed it.

Name, losing pension in divorce (to keep house, the usual female preference) and carer are all indications that favour a female rather than male identity. None of them certain, just good clues that it's important to be sure to cover any differences that may apply to each gender, like state pension age.

jamesd

WillowCat wrote: »

This is something I'm trying to get my head around. I'm 47, have 25 years contributions ... Most of my 25 years were contracted out ... I'm now a carer so get NI credits but I'm worried that my state pension will be very small due to the contracting out

You should be able to get to the full flat rate state pension amount if you're a sufficiently full time carer, working or buying voluntary self-employed contributions. Amount not yet known but likely to be around £155 in today's money.

WillowCat wrote: »

Thanks for the prompt re the state forecast - I had it in my mind that people born between 1960 and 1969 couldn't get one at the moment, but I've just checked again and that doesn't seem to be the case - I must have got confused somewhere.

They are available but it's possible that a phone call may be needed rather than using the online system for at least part of that age range. I had to phone myself to get one because I'm in that range.

WillowCat wrote: »

there is a strong possibility that I will lose my entire pension fund in a divorce settlement. ...

WillowCat wrote: »

They are defined contribution so no doubt on value.

That eliminates the concern atush had about valuations, since she was thinking of the defined benefit case. You do have perfectly correct valuations based on the value of the investments.

WillowCat wrote: »

I may lose all of it - in return I get to keep my house, paid for 100% by me and in my sole name.

I agree with atush about the need for good legal advice. While the English and Welsh law presumption is equal shares that presumption can be overturned by the facts. With the assistance of a capable solicitor you may well find that you do not have only a 50% interest in the property, particularly if the to be ex did not contribute in other ways towards living costs.

WillowCat wrote: »

]There's not enough money for me to buy another home with half the proceeds so I would be left renting - using the capital for rent until it runs out then on housing benefit for the rest of my life.

You really need the legal advice on split value but I do wonder whether you need a house, or the size/value of house that you have now, in the place where you are now. A smaller place, in a less built up area and perhaps different part of the country can help a lot, both with value splits and reducing bills.

It's also interesting to consider the age of your ex. If they are 55 or older they have immediate access to 25% of a pension pot tax free, with the rest available added to their taxed income. So for them the pension would be effectively cash, while it isn't for you yet. So if they have other cash some trade of that to you for some of the pension could be fair and a way to facilitate a move to a less costly place that is still more than half of the property value.

More dramatic move options if you happen not to be in the Welsh valleys or NE England could be a move to one of those areas where property can be dramatically cheaper. That sort of move could free up a lot of capital to use to generate an ongoing income sometimes.

WillowCat

jamesd wrote: »

You should be able to get to the full flat rate state pension amount if you're a sufficiently full time carer, working or buying voluntary self-employed contributions. Amount not yet known but likely to be around £155 in today's money.

They are available but it's possible that a phone call may be needed rather than using the online system for at least part of that age range. I had to phone myself to get one because I'm in that range.

That eliminates the concern atush had about valuations, since she was thinking of the defined benefit case. You do have perfectly correct valuations based on the value of the investments.

I agree with atush about the need for good legal advice. While the English and Welsh law presumption is equal shares that presumption can be overturned by the facts. With the assistance of a capable solicitor you may well find that you do not have only a 50% interest in the property, particularly if the to be ex did not contribute in other ways towards living costs.

You really need the legal advice on split value but I do wonder whether you need a house, or the size/value of house that you have now, in the place where you are now. A smaller place, in a less built up area and perhaps different part of the country can help a lot, both with value splits and reducing bills.

It's also interesting to consider the age of your ex. If they are 55 or older they have immediate access to 25% of a pension pot tax free, with the rest available added to their taxed income. So for them the pension would be effectively cash, while it isn't for you yet. So if they have other cash some trade of that to you for some of the pension could be fair and a way to facilitate a move to a less costly place that is still more than half of the property value.

More dramatic move options if you happen not to be in the Welsh valleys or NE England could be a move to one of those areas where property can be dramatically cheaper. That sort of move could free up a lot of capital to use to generate an ongoing income sometimes.

That's good to know that I could get close to or even achieve the flat rate pension.

I have had legal advice - my solicitor told me that he does have equal rights as there were no children. Apparently contributions are always considered equal regardless of the facts in the individual case. So I'm going it alone as if I'll lose it regardless I may as well not pay any solicitors fees too!

My house is a modest two bed terrace in the southwest. I already downsized to this from living in the south east so I could be mortgage free. I'm reluctant to move from the area as I have family here, who are increasingly in need of help as they get older.

Yep, he is of an age where he could take the pension as cash next year and there is enough for him to buy a house with it.

I'm not minding so much if I lose my private pension if I can still get the full state pension - it's worth it to have my life back. I was scared of having, say, £50 per week state pension, then being denied any topups which might exist as I could be deemed as still having the private pension.

jamesd

Given the location there probably isn't that much to save from a move to a one or two bed flat, perhaps £50,000 depending on area. The reduced chance of upstairs/downstairs disturbances may make the house worthwhile. Though I suppose you could think even more into the future and wonder about a ground floor flat to help with potential mobility issues when you're a lot older. Or a bungalow but that would cut the potential saving even more.

It happens that Plymouth council is running a grant-assisted solid wall insulation scheme that might help with fuel bills, though with British Gas doing the initial surveys the first quote from them may not be very competitive. You can use other suppliers. Of course that would still cost you money you probably don't have at the moment, though the Green Deal finance would be available to cover the difference. Of course this isn't worthwhile or applicable if you have cavity walls.