State Pension Question

drumtochty

Low income under SERPS might explain no ASP, say just at the lower earnings limit.

No even at the LEL you get an additional pension similar to those earning about £12k to £13k at todays rates.

The poster has never said he has a pension statement.

He did say

At April 2016, I will have paid NI contributions for 32 years.

Maybe those contracted in years were self employed so no additional pension.

tigerspill

drumtochty wrote: »

You are 49.
You were 16 in 1982.
By that time SERPS had started.
You claim to have 31 NI credits and 21 years contracted out.

Depending on your earnings and the fact that you have a year to work until April 2016 you will have 32 years NI contributions.

Therefore to calculate your new system state pension at todays rate of £148.40 a week you will get £136 per week gross as you are missing 3 years less 21 x anywhere between (21*£1.79 a week and 21 * £3.75) depending on your earnings when you were contracted out. That deduction if you earned less than £12k a year (at todays rate) will be £37.60 a week and if you were on about £40 k salary (at todays rate) your deduction will be nearer £78.75 a week.
Therefore you will get between £57 a week and £98 a week from the new system pension.

On the old system pension you will get the £113.10 but what I do not understand is you have 31 credits less 21 years contracted out. Therefore are you saying you did not work during these other 10 years.

Otherwise why have you not got say 10 years plus next year so 11 x £2 a week for your second state pension or SERPS.

In that case say an extra £22 a week in the old system.
So a total of £135 a week in the old system. It could be higher.

If that is the case, your foundation amount will be the £135 then a further four new system afther April 2016 will then hit the £148.40 per week max new system state pension..

Therefore do you have an up to date pension statement to confirm no second state pension or SERPS.

Thanks for the in-depth response.

To try and explain how I think my contributions have worked.
Started work in 1988 and had a company DB pension (BT). Our pension changed significantly in 2009. I was contracted out for those 21 years.
From 2009 our pension changes and I believe was no longer contracted out. that gives me another 6 years. Now we have what they call "Smart Pensions" which I don't really understand (maybe someone can help)
I got a pension statement last year that wait I has 30 years paid up. This didn't make sense to me as 21 + 6 is 27 years - so I called them and they said I had another 3 years for ages 16/17/18 while I was in education - giving the 30 years. I am not one year on so that gives 31 years. Not would need to go down to months to see whether 30 or 31 is correct - it is probably somewhere in the middle.

My income is around £60K currently.

Does this help explain it better?

I will see if I can find the statement and check the details.
UPDATE - My state pension statement also mentions I also have £11.20 per week Additional State Benefit. So this must be from the three years added at age 16/17/18 and/or for the past 6 years while contracted back in. Not sure as the letter doesn't say.

jamesd

Smart pensions are a term used for salary sacrifice. Salary sacrifice is the best way to make pension contributions because there is employee and employer NI saving and the employer may share some of their NI saving with the employees.

You'd probably have a low but non-zero amount of additional state pension entitlement. Not enough to make a difference to planning at this point, just wait and see what your foundation amounts turns out to be, knowing it'll be at or only a little above the basic state pension level.

tigerspill

jamesd wrote: »

Smart pensions are a term used for salary sacrifice. Salary sacrifice is the best way to make pension contributions because there is employee and employer NI saving and the employer may share some of their NI saving with the employees.

You'd probably have a low but non-zero amount of additional state pension entitlement. Not enough to make a difference to planning at this point, just wait and see what your foundation amounts turns out to be, knowing it'll be at or only a little above the basic state pension level.

Checked my pension statement and have £11.20 Additional State Pension.

Do you think we will all be able to get our foundation amount in April 16 or will they phase it based on age - oldest first. There might be a huge deluge of people requesting statements that April.

jamesd

Depends on demand, no way to know. Given the years for which you were contracted out and in I expect most of that additional state pension to be included in your foundation amount.

xylophone

Basic State Pension will increase to just under £116 in April - if next September it increases by 2.5%, you are looking at around £119.

A CPI increase on your AP might bring it closer to £12 by 2016 - it seems likely that your foundation amount will be in the region of £130?

You would then be able to increase this up to the level of a full new state pension as previously discussed.

Since the single person's Pension Credit level will be £151.20 in April this year and the new state pension is to at least equal PC ( which is uprated each year), it would seem that the full new state pension in 2016-17 would be at least £155 or thereabouts?

drumtochty

Tigerspill.

Your idea of getting a foundation amount in April 2016 is not possible at all as the system at HMRC takes a good few months to update and employers can be late to get the data into HMRC.

Therefore a 2016 statement will be available later let's say Sep 2016 but maybe a bit earlier.

The government when asked in the House of Lords during the committe stages of the bill for the new state pension, advised they would only send pension statements out to those who ask for it after the 2016 date.

They consider most people will file their statement in the bin if they do not ask for it

Now you say you have an additional state pension of £11.20. You say you earn £60k a year.

Therefore you will get an aditional £3.75 per week second state pension for each of your recent years after the pension staement you have.

So we are talking £113.10, + £11.20 plus I guess two years at £3.75 so £7.50.

At todays pension rate that would be £131.80.

Now at todays rate the new state pension is £148.40 it matters not whar it is in April 2016 as all the numbers we mentioned will also increase by then with inflation.

Your shortfal will be £148.40 less £131.80 so £16.60.
That is divided by todays annual increase in the new state pension of £4.23 per week for each year worked.

In that case you are short of 4 years state pension to get you to whatever the £148.40 maximium at todays rate of the new state pension will be in due course.

Therefor at your salary by the end of May 2019 you will have the neccassary national contributions to get the maximium state pension.

You will not have to work until the end of March 2020.

redjumpa

I've received a State Pension prediction of £125, as i was contracted out, it was expected. I was made redundant and took my works pension this year aged 59. I have calculated I could just about live on that without going back to work until 2021 when I will be 66 and under the current regs qualify for my State Pension. Is there any guarantee that I will receive my State Pension at 66 or could that change again before I reach my pension age of 66.

greenglide

There are never "guarantees" as far as politics goes.

Remember there is an election due soon. When that is out of the way things should clearer.

There are no announced plans to increase the State Pension beyond 66 before 2021 and it would be quite a challenge as the phased roll out of the new age which has been done up to now would be difficult with such a short timescale.

But never save never!

tigerspill

Thanks guys - the responses to my questions have been very helpful.
There is huge wealth of knowledge on here and I for one and hugely appreciative of people willing to give of their time and experience in sharing answers!
Great forum!