State Pension Calculator - When will you get it ?

dunstonh

It's a good idea to check your S2P position now, so you can monitor it.Many people may be surprised about how much it is - it can easily double the size of the basic state pension.

The maximum basic state pension is £4540 a year. At 2007/8 rates, the theoretical maximum for Serps/S2P is £3,390 a year.

S2P can be abolished without requiring primary legislation. Its all very well finding out what you currently may get but it is subject to change. With previous Govts reducing the amounts multiple times in the past do you really want to rely on future govts sticking to that figure now?

EdInvestor

dunstonh wrote: »

At 2007/8 rates, the theoretical maximum for Serps/S2P is £3,390 a year.

Perhaps you have a source for that figure?

margaretclare

dunstonh wrote: »

The maximum basic state pension is £4540 a year. At 2007/8 rates, the theoretical maximum for Serps/S2P is £3,390 a year.

DH gets £691.72 every 4 weeks. That's £8992.36 per year for SRP plus SERPS. If SRP is £4540, SERPS must be £4452.36.

He gets maximum SERPS because he was never contracted-out, and in the years when it mattered he was in decent jobs - sales manager, senior sales engineer etc.

In addition he gets approx £260 a month from his annuity.

I get all mine separate from his. I also get the £4540 plus some SERPS plus 3 different annuities.

Margaret

[Deleted User]

the government can go f**k themselves

dunstonh

Perhaps you have a source for that figure?

Taxbriefs financial publishing. Page: Pen/37 updated May 07.

DH gets £691.72 every 4 weeks. That's £8992.36 per year for SRP plus SERPS. If SRP is £4540, SERPS must be £4452.36.

That maybe the case. Or it could be that the figure includes Graduated, Serps and S2P. The figure I quoted was the 2007/8 theoretical maximum for S2P. As rates change each year, the figure alters. You may have accumulated benefits of a higher amount from earlier years but going forward, that is the figure for this year. Future years could have the figure higher or lower or abolished altogether.

Later in the brief it states that anyone earning less than £30k a year is currently better off in S2P than Serps (at its final level - not the earlier higher levels). Higher earners are no worse off but will lose out from 2010/11.

Nice bit in there too about the rebates for contracting out being higher from 2007/8 to 2011/12 than past years but do have a contribution cap which initially bites at age 43. So, it looks like around age 43 should be the point to contract back in.

EdInvestor

Plenty of people are now retiring with enough SERPS/S2P to double their state pension. It's impossible to generalise though as it varies with each individual. However to get that much you need to have worked pretty solidly from 1978 when SERPS came in through to retirement, at a bit higher than average salary and not have contracted out.

dunstonh

This is all very well but it shows you how difficult it is to rely on S2P when it varies so much, based on NI contributions at levels which change.

What if you review your pension now as a low earner (below 30k a year) and in a few years time (post 2011/12) you become a high earner? You may still be working on a S2P projection that shows you getting a lot more than you are really going to get. How many people get a BR19 forecast that frequently to monitor it?

What if in 10 years time the Govt decides to retrospectively lower S2P again?

jamesd

How does the contribution cap work for someone above the UEL? Cap at 42 year old UEL rate?

Still can be advantageous to be contracted out if you're planning to retire earlier than state retirement age, expect to be single, have a suitable risk tolerance or for a variety of other reasons, I expect. I suppose the best age to be today might be 38 so you get the increased contributions before they stop completely for personal pension plans.

dunstonh

How does the contribution cap work for someone above the UEL? Cap at 42 year old UEL rate?

Well, last year a 43 year old got 5.5%. It increased with age. A 50 year old got 6.8% for example with a 55 year old getting 10.5%.

From 07/08 it stops increasing after 43 and sticks at 7.4%.

The revised rebates are the first increases since 2002/3. Since then it had suffered a decline each and every year.

Still can be advantageous to be contracted out if you're planning to retire earlier than state retirement age, expect to be single, have a suitable risk tolerance or for a variety of other reasons, I expect. I suppose the best age to be today might be 38 so you get the increased contributions before they stop completely for personal pension plans.

Totally agree. Also, if you are an active investor, you do stand a good chance of getting more financially. You have to be looking at around 3% above inflation. A passive investor would probably not achieve that or run it very fine (the latter being the case with a balanced managed fund).

jamesd

Thanks. So at 43 it goes up from 5.5% to 7.4%? If so, that sounds like an unexpected bonus and positive incentive to contract out while it's still possible.

Assuming young enough to not go over 7.4% anyway, PPP, contracting out ending, and suitable risk tolerance etc..