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

zagfles

magpiecottage wrote: »

It would depend on your circumstances.

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

35 years contracted in won't necessarily get you the full single tier pension if you also have contracted out years.

It might sound daft - but 35 years contracted in and nothing else gets you the full single tier, guaranteed.

But if you have 35 years contracted in plus 10 years contracted out, a deduction will be applied ("rebate derived amount") to the full single tier under the new rules calculation.

It is likely that the "old rules" calculation would give you more than the single tier (basic plus SERPS/S2P), but depending on earnings/timing might not. Someone with 35 years contracted in and 10 years contracted out could get less state pension than the full single tier.

GibbsRule_No3

I got my forecast today. Based on 45 years and still working, 2020 pension date. They have docked £39.23 per week for my contracted out years.

Money_saving_maniac

Can you pay voluntary contributions to cover off the contracted out years?

This is all such a mess, do not ask me how ordinary people are supposed to understand this...

greenglide

Can you pay voluntary contributions to cover off the contracted out years

As has been stated above several times you can pay voluntary contributions after 5/4/2016 which will increase your pension under nSP until you reach the maximum.

If you are still working and paying contributions after 5/4/2016 (contracting out ends then for everyone) each year worked will have the same effect.

It is not "a mess", but lots of people seem determined not to understand anything pension related and seem incapable of reading about it. Do you understand the old system? Why not?

Goldiegirl

GibbsRule_No3 wrote: »

I got my forecast today. Based on 45 years and still working, 2020 pension date. They have docked £39.23 per week for my contracted out years.

It's not exactly that they have docked money, it's more like you are getting what you have paid for.

I imagine you will have been contracted out for the majority of those 45 years, so it's almost certain that you are in an excellent final salary pension scheme.

You now have 4 years where you can build your state pension by approx £17.28 per week (£4.32 for each year worked)

So it's a positive situation - an excellent private pension and a bit more than you would have had on your state pension.

Don't forget, as contracting out ends in April next year, your NI will increase, to pay for the extra pension you are building.

bigchipper

greenglide wrote: »

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.

Has it been determined how much a year's voluntary contributions will cost?

JezR

One of the items for the Autumn statement next Wednesday (or the associated documents).

ScoobyZ

GibbsRule_No3 wrote: »

I got my forecast today. Based on 45 years and still working, 2020 pension date. They have docked £39.23 per week for my contracted out years.

45 years of working, paying NI and Tax and they are making deductions on you pension, based on the the fact you have contracted out and contributed to another scheme in order to secure your financial future when retired and not rely on benefits.......says it all really.

penwise

What happens to some one after 2016 who will was made redundant and is now self employed with very low earnings and the projected starting point on April 2016 was 109/ wk ? Can they make voluntary contributions?

bigadaj

ScoobyZ wrote: »

45 years of working, paying NI and Tax and they are making deductions on you pension, based on the the fact you have contracted out and contributed to another scheme in order to secure your financial future when retired and not rely on benefits.......says it all really.

Not really accurate.

No tax or ni was paid on the contributions into the pension, that's the incentive to invest and save for your future and retirement.

The money hasn't been lost, it's just coming from a different source, the alternative is for people to get paid twice for the same level of input, high is a bit unrealistic.

Relying on benefits is never wise when you have the resources to avoid them, and the benefits bill is getting cut so the opportunity to live on them will get tougher.

This is without considering that many, probably the vast majority of, people who fall into this situation will have benefitted from the majority of their contributions being employer rather than employee. Non contributory pensions even in many cases.