Contracted out years joke

greenglide

so depending on how much p.a the STmax goes up to in that time I can keep adding SP value...

As the nSP maximum goes up with inflation (and the 2.5% triple lock as long as it lasts) the value of your accrued years goes up as does the value of each year extra qualifying so it doesnt "get harder"?

So each extra qualifying year is worth one 35th of the current (and future) nSP max until you hit the maximum.

tony4147

I received a state pension forecast last year, I had 33 years NI contributions and I was contracted out for 20 years..

I'm 52 and have been told by the state pension service that they won't be able to tell me what I will be entiltled too under the new scheme until late this year / early 2016.
My contracted out pension is at present approx £40K, and I intend to work another 10 years which will take me well over the 35 yr requirement for a full state pension of £144? / wk.

I find the new state pension very confusing, will I get the 'full sp' and get to keep my £40k in my contracted out pension?

GunJack

greenglide wrote: »

As the nSP maximum goes up with inflation (and the 2.5% triple lock as long as it lasts) the value of your accrued years goes up as does the value of each year extra qualifying so it doesnt "get harder"?

So each extra qualifying year is worth one 35th of the current (and future) nSP max until you hit the maximum.

I must have missed the bit that the added amouts would also be included in the triple-lock (if it survives, of course), so if that's the case then yes I should be able to hit the STmax (I was only doing quick estimates in my head )

p.s. I wasn't suggesting it was hard in any way...

GunJack

tony4147 wrote: »

I received a state pension forecast last year, I had 33 years NI contributions and I was contracted out for 20 years..

I'm 52 and have been told by the state pension service that they won't be able to tell me what I will be entiltled too under the new scheme until late this year / early 2016.
My contracted out pension is at present approx £40K, and I intend to work another 10 years which will take me well over the 35 yr requirement for a full state pension of £144? / wk.

I find the new state pension very confusing, will I get the 'full sp' and get to keep my £40k in my contracted out pension?

your CO pension is what it is, it won't be reduced by anything to do with SP. How much SP you will get depends on your NI record - how many years NI contributions will you have by Apr 2016?

tony4147

GunJack wrote: »

your CO pension is what it is, it won't be reduced by anything to do with SP. How much SP you will get depends on your NI record - how many years NI contributions will you have by Apr 2016?

Well the forecast last year stated 33 years, so I expect 34 by 2016.
What happens about the years I contribute after 2016?

SnowMan

tony4147 wrote: »

I received a state pension forecast last year, I had 33 years NI contributions and I was contracted out for 20 years..

I'm 52 and have been told by the state pension service that they won't be able to tell me what I will be entiltled too under the new scheme until late this year / early 2016.
My contracted out pension is at present approx £40K, and I intend to work another 10 years which will take me well over the 35 yr requirement for a full state pension of £144? / wk.

I find the new state pension very confusing, will I get the 'full sp' and get to keep my £40k in my contracted out pension?

Based on this information the likelihood is you will get the full single tier state pension of about £151pw in today's terms, and have your contracted-out pot on top.

The DWP will calculate a starting amount at 6th April 2016 based on the better of the existing and new state schemes. The starting amount is what they treat you as having earned up to 6th April 2016.

Because you have a number of contracted-out years then it is likely this starting amount will be based on the existing scheme calculation. Because you already have 30 qualifying years (the number of years for a full basic state pension under the old system) then your starting amount should be at least the basic state pension of £115.95pw. It may be slightly higher if you have earned some additional state pension from periods when you contracted-in, although there is every chance the additional amount is zero.

However although the starting amount is below £151pw, you can after 6th April 2016 earn an extra 1/35th of the single tier amount so about £4.31pw (£151/35) for each qualifying year after 6th April 2016, to increase your state pension up to the full single tier amount of £151pw.

You actually need at most 9 qualifying years to take you up to the single tier amount of £151pw as 115.95 + (9 x 4.31) = 154.74. If you get 10 qualifying years after 6th April 2016 through working then that is more than the 9 years you need.

So you should get the full single tier state pension amount of about £151pw (in todays terms) and have your contracted-out pot on top.

Note whether you have 35 qualifying years is of limited relevance. Somebody who solely comes under single tier (for example a school leaver after 6th April 2016) will need 35 qualifying years to get a full single tier pension. But as above the transitional arrangements work differently for those who already have qualifying years at 6th April 2016.

greenglide

The 33 qualifying years you already have will get you at least the current basic pension as your "starting amount". This is currently £115.95.

Each extra qualifying year you get after 6/4/2016 will get you around £4.31 extra up to the maximum - currently proposed at over £151.

So if you are £36 short this will take around 9 years to reach the maximum which should be achievable.

redux

Can anyone explain in simple terms why it is that people who have been contracted out, thus paying lower NI contributions and having that money instead put in a separate pension scheme, and will eventually receive the benefits of that extra money having been in that separate scheme, keep coming on here and elsewhere and complaining that their reduced contributions to the state scheme are going to buy them fewer benefits from the state scheme?

Is there something confusing about the meaning of the word contract?

If their private or company scheme hasn't done as well as they might have hoped, or something the salesman said hasn't been fulfilled or was misunderstood, the pension company is the target of their potential complaint, not the state.

greenglide

I must have missed the bit that the added amouts would also be included in the triple-lock (if it survives, of course)

It happens "by default" as most of the calculations are based on the full nSP amount (I don't think it has an "official" name). This rate is increased by the triple lock (currently) each year so everything that is dependant on it increases as well.

Anyone who is over the maximum already due to AP earned in the current scheme will get the excess (what will become the protected payment when in payment) increased by the CPI as applies to AP etc currently.

So nSP will give more increase (in value) from the triple lock than the current rules because more of it is indexed by 2.5% minimum.

tony4147

redux wrote: »

Can anyone explain in simple terms why it is that people who have been contracted out, thus paying lower NI contributions and having that money instead put in a separate pension scheme, and will eventually receive the benefits of that extra money having been in that separate scheme, keep coming on here and elsewhere and complaining that their reduced contributions to the state scheme are going to buy them fewer benefits from the state scheme?

Is there something confusing about the meaning of the word contract?

If their private or company scheme hasn't done as well as they might have hoped, or something the salesman said hasn't been fulfilled or was misunderstood, the pension company is the target of their potential complaint, not the state.

Didn't know I was complaining????????? what I was asking was for an understanding of what happens for the people that have contracted out for a number of years. Now that has been explained in the last few posts.

Isn't that the purpose of these forums to ask questions and hopefully find answers from someone more knowledgable ??????????