Contracted out pension scheme.. can I put extra in to make up the contributions?

Cazeneca

I have just received my pension statement and am due to receive my state pension in 2023. I have 37 years of contributions but for several years I was in a "contracted out" pension scheme, so won't get the full amount of flat rate pension. I've recently stopped work, so am unlikely to be making any more NI contributions. Can anyone tell me please, can I top up what I have so that I receive the full amount in 2023? If so, how?

magpiecottage

It would depend on your circumstances.

How many years were you Contracted Out for? You need 35 years Contracted In to get the maximum.

jnaylor22

As stated earlier you only need 35 year contracted in (qualifying years) to get the full £151.25 per week.


The best thing for you to do at the present time would be to obtain a State Pension Forecast. This will provide you with an estimate of the state pension you will receive at State Pension Age.


Once you have this you can then apply for a National Insurance Statement from the HMRC to check for any gaps. This will let you know if you can make any voluntary national insurance contributions to build up additional qualifying years.

I'd recommend you check out the State Pension section on the gov.uk website with more helpful information.


(Would post the link but as I'm new to the forums I'm unable!)

greenglide

You need 35 years Contracted In to get the maximum.

It is not as simple as that.

You need to have a pension forecast which includes your "Starting Amount" under the new system - I am not sure whether these are available to "everyone" or whether this still age restricted.

If your Starting Amount from this is less that the nSP maximum then you will be able to make voluntary contributions after 5/4/2016 to bring you up to the maximum. Each years worth of contributions after 5/4/2016 will gain you an extra 1/35 or the maximum amount. The nSP maximum amount will, presumably, be announced in the Autumn Statement next week - it needs to be in place by the second week of December.

xylophone

You are over 55 so can obtain a new state pension statement.

https://www.gov.uk/new-state-pension/overview

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

http://www.thisismoney.co.uk/money/experts/article-3135965/Can-buy-extra-years-National-Insurance-new-flat-rate-state-pension.html

jnaylor22

Thanks xylophone wanted to post these links earlier but I'm restricted!

magpiecottage

greenglide wrote: »

It is not as simple as that.

I am aware of that - it is a starting point, though.

Goldiegirl

greenglide wrote: »

It is not as simple as that.

You need to have a pension forecast which includes your "Starting Amount" under the new system - I am not sure whether these are available to "everyone" or whether this still age restricted.

If your Starting Amount from this is less that the nSP maximum then you will be able to make voluntary contributions after 5/4/2016 to bring you up to the maximum. Each years worth of contributions after 5/4/2016 will gain you an extra 1/35 or the maximum amount. The nSP maximum amount will, presumably, be announced in the Autumn Statement next week - it needs to be in place by the second week of December.

I'm in a very similar situation to the OP, except that my state pension is due in 2026. I've already obtained a pension forecast with my starting amount' so this will be available on request for the OP.

It is my intention to make voluntary NI contributions to bring my pension up to the full flat rate amount by 2026.

SnowMan

Cazeneca wrote: »

I have just received my pension statement and am due to receive my state pension in 2023. I have 37 years of contributions but for several years I was in a "contracted out" pension scheme, so won't get the full amount of flat rate pension. I've recently stopped work, so am unlikely to be making any more NI contributions. Can anyone tell me please, can I top up what I have so that I receive the full amount in 2023? If so, how?

Because you are over age 55 you can obtain a state pension statement to show your starting entitlement under the new state pension scheme.

If this is less than the single tier amount (about £151.25pw) for example because you have been contracted-out for a period, then you can earn 1/35 of the single tier amount, an additional £4.32pw for each qualifying year after 6th April 2016 on top of your starting amount until you reach £151.25pw.

If you are not working (and assuming you don't get credits for any reason) you will need to gain those qualifying years by voluntary class 3 contributions after April 2016.

Cazeneca

Thanks folks. I think I have some further checking to do. I do have my state pension statement which tells me they estimate my state pension will be £133.36 a week. However they don't say how many years out of my 37 qualifying years I have "contracted out". From what you say I should be able to find that out. Out of interest, has anyone been able to pay to top theirs up in a case like mine? Or do you think I will need to pay for extra full years to obtain the full state pension?

greenglide

You need a forecast which gives you the starting amount to tell you whether you already have the maximum under the new system.

There is nothing you can do to increase the amounts until after 5/4/2016 if you are not working. After 5/4/2016 you will be able to pay voluntary contributions which will increase your entitlement. You need a complete year's contributions to count.