State Pension question

rogermhunt

I'm afraid I've never been that good at understanding Pensions, but the proposed new legislation has confused me even more in relation to what I can expect to get in State Pension when I reach 65.
I'd be grateful if somebody could reply based on my following information:
Born Nov 1952.
I have 40 years NI contributions up until April 2012.
I took redundancy in Nov 2012 and haven't worked since.
I decided to take a lump sum from my company pension scheme plus an annual pension of approx £13,000.
I'm now 62 but unlikely to take on work again and so will not make any more NI contributions.
When I reach 65 (Nov 2017) I had assumed that my State Pension would be around £113 per week (based on today's figures), but the new rules appear to suggest that I could get up to £148 per week.

Please can anyone advise, as there's quite a difference between the two figures.

Thanks

molerat

You need to get a pension forecast. No one here can tell you what you will get as your additional state pension needs to be added to the basic figure. In 2016 you will be given a foundation amount which is the higher of your current "old" pension or 35/35ths of the new figure less any contracted out deductions. This figure may be higher than the new £148 pension. If lower you may be able to bring it up to the new max.

[Deleted User]

Hi,

whilst waiting for someone who can help you, have a look at these, might help.

Forecast

Calc

rogermhunt

Thank you both for your quick replies.
I've followed the links and according to the Pension Statement Form, the calculation would be based on the current rules; not on the new rules being introduced in 2016. So the figure I'm being given based on my years contributions is £113.
So, it doesn't look like anyone will be able to get an accurate Pension Statement until they implement support for the new rules.

molerat

If your SRA is after April 2016 you will get the higher of the 2 figures. £113 is the basic state pension and the majority who have been in work will have accrued some additional state pension through the various schemes over the years. If you are entitled to only the basic pension and have not been contracted out then your starting figure will be the new £148. You must get a statement by post to get the true figure that applies to you at today's value, the postal statement gives both the old and new figures - you get the higher of the two.

jem16

rogermhunt wrote: »

I decided to take a lump sum from my company pension scheme plus an annual pension of approx £13,000.

What kind of company pension scheme did you have? Was it defined Benefit, also known as final salary?

If it was Defined Benefit how long were you a member of this scheme?

rogermhunt

jem16 wrote: »

What kind of company pension scheme did you have? Was it defined Benefit, also known as final salary?

If it was Defined Benefit how long were you a member of this scheme?

It was a final salary scheme and in it from day 1 (1980) . . . not sure what Defined Benefit means sorry.

jem16

rogermhunt wrote: »

It was a final salary scheme and in it from day 1 (1980) . . . not sure what Defined Benefit means sorry.

A final salary scheme is a Defined Benefit scheme. It's based on number of years service and final salary and you receive a set of defined benefits. Unlike a Defined Contribution scheme, it's guaranteed and not dependent on the stock market.

If you have been a member of this scheme for all of your working life than you have been contracted out all this time and will not have any SERPS/S2P entitlement.

This will mean that you will be entitled to only the basic state pension amount of £113pw under the current rules as this will be higher than your entitlement under the new rules by the time they apply the contracted out deduction.

xylophone

You are within five years of state pension age so should be able to get your "bespoke statement" showing your entitlement under the new rules.

https://www.gov.uk/government/news/500-days-to-go-until-biggest-state-pension-overhaul-in-generations

"Today’s campaign launch follows the introduction last month of a new bespoke statement service giving people information about their starting amount and what they may be able to do to increase the level of their State Pension before they retire. Initially available to people within 5 years of retirement, this service will be expanded on a month-by-month basis.

Already, more than 18,000 people have received a statement."

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

xylophone

Also mentioned here https://forums.moneysavingexpert.com/discussion/5075832

post 13

xylophone

If you have been a member of this scheme for all of your working life than you have been contracted out all this time and will not have any SERPS/S2P entitlement.

Not necessarily. http://en.wikipedia.org/wiki/State_Second_Pension

"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"'.