State Pension Forecast

peterg1965

Just received my wife's, forecast on the current scheme, she is 52, so I was interested in getting a rough feel for her foundation amount for the new scheme.

It states the Basic State Pension as being £115.95 per week with 35 qualifying years - this is the 'full' amount.

It also states ASP and Graduated Retirement Benefit of £24.32 per week.

So, for clarity, under the new scheme is £115.95 the Foundation amount and the ASP disregarded?

She is in the NHS PA and has been contracted out since about 1980.

jem16

peterg1965 wrote: »

It also states ASP and Graduated Retirement Benefit of £24.32 per week.

So, for clarity, under the new scheme is £115.95 the Foundation amount and the ASP disregarded?

No it would not be disregarded. She would get both basic and any ASP/Graduated Retirement Benefit. That would be her foundation amount.

peterg1965

Really? That is a pleasant surprise as I believe she has been contracted out for all but 2/3 of the last 35/36 years or so.


So her foundation amount will be a minimum of £140.27?


If she works and pays NI until 2018 (2 years beyond 1 Apr 16) she would add another £8 or so to that figure is my appreciation of how this works, which would take her to almost a full Flat Rate, assuming that it is around the £150 week figure.


I should get my statement in the next couple of days, I am younger by 3 years and have been contracted out since I was 18 so it will be interesting to compare.

jem16

peterg1965 wrote: »

Really? That is a pleasant surprise as I believe she has been contracted out for all but 2/3 of the last 35/36 years or so.


So her foundation amount will be a minimum of £140.27?

Should be unless there is some statement to say that her SERPS/S2P may be reduced due to contracted out deductions.

jamesd

With so long contracted out it's likely that there will be quite substantial contracted out deductions used in the "old rules" calculation. Perhaps enough to reduce that and her foundation amount to just the basic state pension plus graduate retirement benefit. Can't tell, just have to wait and see. The new rules calculation would be worse than the old rules for someone who spent so long contracted out so that can be disregarded when trying to work out the foundation amount.

In practice unless she plans to retire quite soon this is moot. All a higher foundation amount will do is mean that she reaches the flat rate cap sooner due to continued working than someone with a lower foundation amount. She's probably in the largest "losing out to the flat rate" group, with a cap that is likely to be lower than what she would eventually get under current rules. Assuming she plans to continue working for many more years.

xylophone

Even though she has been contracted out, it is not impossible that she has some additional state pension because of the way that S2P works.

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


I don't think she can have any GRB - she would have been 12 when the scheme ended!

Therefore a Foundation amount of BSP plus ASP of around £140 is quite possible.

xylophone

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

The figures are now out of date but the principle is clear.

peterg1965

Interesting, so best not read too much into this before getting a definitive foundation pension forecast after the new State Pension starts in April 16. I guess the only certainty then is that it will be no lower than £115 which is what I suspected it would be. Her intention is to stop working in the 3-5 year timeframe.

peterg1965

I received my State Pension Forecast this week, after having received my wifes last week. My SP forecast is £120/week, based on the full £115.95 (33 yrs NI contributions) + £4 or so ASP. The additional bit is a slight surprise as I have been contracted out for the last 31.5 years. So, having started a new job 'contracted in', I reckon 7-8 years gets me back to around the full Flat Rate pension, based on increases of £4.12 a year over my 'soon to be' foundation amount.

So, the good news is that despite having been in Final Salary schemes for the last 30+ years, my wife and I will probably also benefit from the full flat rate. A useful exercise in getting the information I think.