New state pension question

SnowMan

gadgetmind wrote: »

Is there any point in those in their early 50s asking for these calculations and details now or is it better to just wait until April next year?

The statements for those under 55 will only reflect the old scheme calculation but not the new scheme calculation.

So if no decisions depend on it, is is probably easiest to wait until statements are available showing entitlement on both bases.

Getting a statement now does show you the minimum you might get i.e. the old scheme basis, and if your amount is above £151.25pw then you know the new scheme calculation won't bite. So it's not completely without use especally if you are trying to work out now what income you will have in retirement.

greenglide

So is it the difference between pre 6/4/2016 which is 1 / 30 of current basic pension (£115.95) for each year (old rules) or 1/35 of nSP amount when announced (£155 or so) or post 5/4/2016 1/35 of the nSP rate at the new price?

They can surely not all be the same?

[Deleted User]

I feel that I am beginning to get to grips with the complexities of the April 2016 changes, but only due to the fantastically knowledgeable and helpful posters on here. Thanks to all who have shared their knowledge so selflessly.

Am I right in thinking that the (maximum) amount of the new single tier pension is to be announced in the Autumn Statement on Nov 25th? If so, perhaps we will get the detail on the purchase of additional years in the post 2016 scheme on Nov 25? Hopefully the number crunchers on this wonderful forum can get going on the figures before the end of year.

SnowMan

Deleted_User wrote: »

Am I right in thinking that the (maximum) amount of the new single tier pension is to be announced in the Autumn Statement on Nov 25th?

You are right the level is expected to be announced in the Autumn Statement on 25th November 2015, although it doesn't have to be.

Section 3 of the Pensions Act 2014 provides for the full rate of the new State Pension to be set out in regulations.

47.The full rate of the new state pension which will be applicable for the first year will be set by regulations prior to the start date of the new state pension

The 2014 Autumn Statement said the rate would be announced in Autumn 2015.

It has been clearly stated that the level will be above the (single) pension guarantee credit level of currently (2015/2016) £151.20pw, which is why they have been using £151.25pw in state pension statements.

roxy28

SnowMan wrote: »

The state pension statement figure you mention in post 13, should be very close to your dad's starting amount at April 2016. It could be marginally more or even less, and then there is the (triple lock) increase to basic state pension to add on to take you into 2016.

The statements (necessarily) don't take into account 2015/2016 as a potential qualifying year, but as your dad already has more than 35 years then that won't really change the figures.

If the figure on the recent statement is is less than the single tier amount, about £151.25pw, then your dad will be able to add £4.32pw for each qualifying year after April 2016 until the single tier amount of £151.25pw is reached.

If the figure on the statement is more than about £151.25 then he will keep the extra above £151.25pw, but won't be able to earn any more state pension from qualifying years after April 2016. The first £151.25pw will increase with earnings (and currently the triple lock) and the bit above £151.25pw will increase with prices (CPI) before and after SPA.

Thanks again thats really helpful.

coyrls

SnowMan wrote: »

I don't think that is very good. Even where the new scheme calculation is lower then you at least want to know what the amount is, and as earlier mentioned there can be scenarios where paying voluntary contributions for pre April 2016 years can switch things so that the new basis is higher.

If your old scheme amount is over £151.25pw then it doesn't really matter as the new scheme calculation always has to be no higher than £151.25pw.

(edit: you are aware that statements that allow for the new calculation also are only available to those over age 55?)

No, it's not very good but as my old scheme amount is indeed over £151.25pw, it doesn't, as you say, make any difference to me.

Yes I am aware they are only available to those over 55 (I'm 59).

[Deleted User]

I've been doing some reading to try to catch up on this issue.
I read that this reaching SPA after 6 April 2016 with 30 QY but less than 35 QY may be able to buy extra years under the new. scheme at a special discounted rate. Does anyone know anything about this? Detail seems scarce. Apparently it will be cheaper before 2019, going up in cost then.

molerat

If you have less than 35 years you can buy any missing 2006 - 2016 years at special rates to make up to 35 but as discussed above that may not be worth it if contracted out. https://www.gov.uk/voluntary-national-insurance-contributions/rates

Irrespective of how many years you have once you have the starting amount you should be able to purchase however many post 2016 years needed at whatever rate is decided upon to make up the £ shortfall. I have not seen anything about preferential rates and I doubt there will be.

[Deleted User]

http://www.moneysavingexpert.com/savings/state-pensions

See very last paragraph of this guide.

SnowMan

Deleted_User wrote: »

I've been doing some reading to try to catch up on this issue.
I read that this reaching SPA after 6 April 2016 with 30 QY but less than 35 QY may be able to buy extra years under the new. scheme at a special discounted rate. Does anyone know anything about this? Detail seems scarce. Apparently it will be cheaper before 2019, going up in cost then.

http://www.moneysavingexpert.com/savings/state-pensions

See very last paragraph of this guide.

The bit you are referring to is

I'm affected by the rule change, and only have 30 years of NI contributions. What do I get?

If you've only got 30 years' contributions and you're retiring on or after 6 April 2016, then you're not going to get the full amount of flat rate state pension. But you can buy the extra years you need and get a discount if you're affected.


You have up until 5 April 2023 to make payments. If you make contributions after 5 April 2019 you may pay higher rates. Again, this is complicated and we'll have more on this when we fully update the guide.

I think this is just a badly worded page in the MSE article.

Firstly they seeem to miss that somebody with 30 qualifying years and at least £35.30pw of additional state pension will get at least the full amount of flat rate state pension as £151.25pw = £115.95 (full basic state pension) + £35.30pw

I think they also are getting confused with the scenario where someone has 30 qualifying years and the new scheme calculation is higher than the current (old) scheme calculation and so the new scheme calculation forms their starting amount at 6th April 2016.

In that scenario the person can purchase additional missing pre April 2016 qualifying years which will increase their starting amount.

I think the discounted rates refers to the fact that the rates for these pre April 2016 qualifying years were frozen in around early 2013 at the rates that then applied (rather than current rates) provided contributions were paid before 6th April 2019.


In your own case your starting amount is based on the old scheme calculation and even if you purchase any missing pre April 2016 years it seemed clear that it would still be based on the same old scheme calculation without any increase in starting amount.

So in your case you can't buy extra years pre April 2016 and get extra pension.