New State Pension starting amount and full record of qualifying years- trial service

fcandmp

So, to reiterate other posts, many thanks for sharing Snowman. My results at age 55 show 39 years of full contributions (but contracted out for many) leading to a forecast of £139 per week, but suggesting I could reach max £151 by continuing to work until 2026. Two questions given other reading on this site. 1. If I accrue further benefits by continuing to work, it only seems I need to work another 4 years or so? Secondly, there is no reference to the cost of buying additional years post April next year. Do we have any idea what the cost of buying additional years will be?

Many thanks

fcandmp

To those concerned about the security of the verification systems, a couple of pointers. 1. Not a good idea to enter all the required data from a internet cafe or hot-spot where the potential for interception is greater. 2 if you can avoid entering this content from a smart phone. if you are doing all this from a home pc / laptop, with up todate security software deployed e.g antivirus, firewall, this should be safe. We can get too paranoid about all this and the benefits of being able to do all this online are tremendous.

jem16

fcandmp wrote: »

Secondly, there is no reference to the cost of buying additional years post April next year. Do we have any idea what the cost of buying additional years will be?

Many thanks

£14.10pw.

See Section 6;

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

SnowMan

fcandmp wrote: »

1. If I accrue further benefits by continuing to work, it only seems I need to work another 4 years or so?

That is correct (although it might be only 3 years you need as the current amounts shown by the online system are at 2015/2016 rates).

Each post April 2016 qualifying year adds 1/35th of the full single tier pension to your starting amount, so based on the 2015/2016 rates that is £4.32 (= 151.25/35) for each post April 2016 year.

And as 139 + (4.32 x 3) = £151.96 you reach the full single tier amount of £151.25pw after 3 post April 2016 qualifying years.

Secondly, there is no reference to the cost of buying additional years post April next year. Do we have any idea what the cost of buying additional years will be?

See above answer by jem16.

fcandmp

Many thanks that's really clear now.

SnowMan

SnowMan wrote: »

I used the help facility to ask if they could tell me what the old and new calculation figure was, as the system only shows the higher of the two.

They rang me up on the next working day and are now going to produce a paper statement based on the new rules (even though I am under age 55), which they will be able to intercept before it is sent out, but will enable them to contact me to tell me the old and new calculation figures.

While I think the calculation on both bases need to be shown automatically on the online system, I was impressed with how quickly they got back to me and they were genuinely listening to what I said, rather than trying to fob me off with "you don't need to know the calculation on both bases'.

I think it all looks very encouraging as a way for people to understand their new state pensions.

I've just received a call back.

They were able to give me a full breakdown of the calculation :beer:

For the old calculation they were able to give me the breakdown into components A, B, C, D and E below

Basic state pension (A) + {additional pension pre 97 (B) - contracted-out deduction pre 97 (C)} + additional pension 97 - 2002 (D) + additional pension post 2002 (E)

For the new calculation they gave me the breakdown into components F, G and H below

Single tier pension before allowing for c/o (F) less Rebate Derived Amount pre 97 (G) less Rebate Derived Amount post 97 (H).


In my case the contracted-out deduction for the old calculation (C) is more than my Rebate Derived Amount ((G) + (H)), When I asked why this was, she was able to explain that in calculating the RDA pre 97 (G) they limit the contracted-out deduction to be no more than the available additional pension (B) and in my case (C) is bigger than (B) by more than the RDA post 97 (H) :T

While not many people are going to want this level of detail, it is extremely impressive that they can both provide this detail while demonstrating a clear understanding of the calculation also to be able to answer questions :T:T

zagfles

SnowMan wrote: »

I've just received a call back.

They were able to give me a full breakdown of the calculation :beer:

For the old calculation they were able to give me the breakdown into components A, B, C, D and E below

Basic state pension (A) + {additional pension pre 97 (B) - contracted-out deduction pre 97 (C)} + additional pension 97 - 2002 (D) + additional pension post 2002 (E)

For the new calculation they gave me the breakdown into components F, G and H below

Single tier pension before allowing for c/o (F) less Rebate Derived Amount pre 97 (G) less Rebate Derived Amount post 97 (H).


In my case the contracted-out deduction for the old calculation (C) is more than my Rebate Derived Amount ((G) + (H)), When I asked why this was, she was able to explain that in calculating the RDA pre 97 (G) they limit the contracted-out deduction to be no more than the available additional pension (B) and in my case (C) is bigger than (B) by more than the RDA post 97 (H) :T

While not many people are going to want this level of detail, it is extremely impressive that they can both provide this detail while demonstrating a clear understanding of the calculation also to be able to answer questions :T:T

I presume for the old rules calculation, if B-C is negative then it's taken as zero? Is that what is meant by the curly brackets in
{additional pension pre 97 (B) - contracted-out deduction pre 97 (C)}

SnowMan

zagfles wrote: »

I presume for the old rules calculation, if B-C is negative then it's taken as zero? Is that what is meant by the curly brackets in
{additional pension pre 97 (B) - contracted-out deduction pre 97 (C)}

Yes if B-C is negative then it is taken as zero in the old calculation.

The curly brackets were just to make it clearer which brackets were paired off.

I didn't want to overcomplicate the formula but the more precise formula is

For the old calculation

Basic state pension (A)
+ max({additional pension pre 97 (B) - contracted-out deduction pre 97 (C)},0)
+ additional pension 97 - 2002 (D)
+ additional pension post 2002 (E)

For the new calculation

Single tier pension before allowing for c/o (F)
less Rebate Derived Amount pre 97 (G)
less Rebate Derived Amount post 97 (H).

and (G) = min ((B),(C))

I'm ignoring graduated retirement benefit (i.e pre 75 additional pension) as that doesn't apply in my case, although that is almost certainly treated as a separate period of additional pension, like the 97 -2002 and post 97 periods are.

zagfles

SnowMan wrote: »

Yes if B-C is negative then it is taken as zero in the old calculation.

The curly brackets were just to make it clearer which brackets were paired off.

I didn't want to overcomplicate the formula but the more precise formula is

For the old calculation

Basic state pension (A)
+ max({additional pension pre 97 (B) - contracted-out deduction pre 97 (C)},0)
+ additional pension 97 - 2002 (D)
+ additional pension post 2002 (E)

For the new calculation

Single tier pension before allowing for c/o (F)
less Rebate Derived Amount pre 97 (G)
less Rebate Derived Amount post 97 (H).

and (G) = min ((B),(C))

I'm ignoring graduated retirement benefit (i.e pre 75 additional pension) as that doesn't apply in my case, although that is almost certainly treated as a separate period of additional pension, like the 97 -2002 and post 97 periods are.

Do you know if H is also capped, perhaps at the amount of ASP you would have earned had you not been contracted out? That would make it consistent with the pre-97 treatment.

SnowMan

zagfles wrote: »

Do you know if H is also capped, perhaps at the amount of ASP you would have earned had you not been contracted out? That would make it consistent with the pre-97 treatment.

Yes the RDA post 97 for someone who is contracted-out is calculated as the extra additional pension they would have earned had they instead been contracted-in.

So that automatically means that the RDA post 97 can't be more than the additional pension they would have earned for the whole period post 97.

Remember that someone who contracted-out post 2002 could still earn some additional state pension as well during that contracted-out period hence the inclusion of the word extra above.