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

neilvw

chris_m wrote: »

Is that actually deductions though?
I thought that contracted out people weren't contributing towards their 2nd/Additional State Pension, so surely it's less additions rather than a reduction of the Basic State Pension?

The way it's worked out is Gross Additional Pension (what someone would have got in SERPS etc had they always been contracted in) minus contracted out deductions, so it's not as simple as you imply. Someone on low to moderate earnings could earn some S2P in the latter years even while contracted out, for example.

The basic state pension isn't affected by contracting out.

Contracted out data is, under the new state pension, for the first time being used to calculate the level of basic state pension payout. Previously, errors relating to contracted out information would not have affected state pension payments.

Reference to BSP here is misleading as the BSP will no longer exist.

Note the last sentence is wrong: c/o DID and DOES affect "state pension payments".

A very badly written article.

EDIT to add: agree with Xylophone.

SkyeKnight

Parking_Trouble wrote: »

Bit of a pain getting through the Experian Id&V checks but got there in the end. Useful to see the figures.

41 years of full contributions, at £119 today, on track for £155.
I have been contracted-out for quite a while but presumably done enough by the time I am 66.

There are lots of people on here saying they are going to get to the full state pension when they retire even though they were contracted out, because they are going to make over 35 years full contributions. I'm in the same position, I've got 5 years contracted out but will make over 40 years of full contributions by the time I retire as well.

My understanding was that I will never get the full state pension - the contracted out years will always be subtracted off (and it's quite a big amount taken off). When they originally proposed the new pension they made it sound like anyone with over 30 years full contributions would get the full pension, but they definitely announced that wasn't the case. Has there been yet another U-turn that I'm not aware of?

zagfles

SkyeKnight wrote: »

There are lots of people on here saying they are going to get to the full state pension when they retire even though they were contracted out, because they are going to make over 35 years full contributions. I'm in the same position, I've got 5 years contracted out but will make over 40 years of full contributions by the time I retire as well.

My understanding was that I will never get the full state pension - the contracted out years will always be subtracted off (and it's quite a big amount taken off). When they originally proposed the new pension they made it sound like anyone with over 30 years full contributions would get the full pension, but they definitely announced that wasn't the case. Has there been yet another U-turn that I'm not aware of?

No, there's been no change, this was always the case. You start off with a foundation amount in April 2016. If you've already got 30 years with some years contracted out, the minimum this will be is the current basic state pension.

You can then increase this in future years by 1/35th of the full single tier pension for NI credits after April 2016. So if you work 10 years after April 2016, you will get a full single tier pension.

People in this position are very lucky, as they can have their cake and eat it. They get the benefit of the contracted out pension plus a full state pension. Those who've never been contracted out can't get any more state pension once they're over 35 years.

SkyeKnight

zagfles wrote: »

No, there's been no change, this was always the case. You start off with a foundation amount in April 2016. If you've already got 30 years with some years contracted out, the minimum this will be is the current basic state pension.

You can then increase this in future years by 1/35th of the full single tier pension for NI credits after April 2016. So if you work 10 years after April 2016, you will get a full single tier pension.

People in this position are very lucky, as they can have their cake and eat it. They get the benefit of the contracted out pension plus a full state pension. Those who've never been contracted out can't get any more state pension once they're over 35 years.

Thank-you, I think I finally get it.

So I think the confusion is if you retire this year with 40 years full-contributions and 5 years contracted out you will get a lower pension (? right?) but if you say do 10 years with 5 contracted out, then work a further 25 years after 2016 you should reach the full pension despite having exactly the same NI record. Is that correct? If so it doesn't seem very fair (but is very complicated).

zagfles

SkyeKnight wrote: »

Thank-you, I think I finally get it.

So I think the confusion is if you retire this year with 40 years full-contributions and 5 years contracted out you will get a lower pension (? right?) but if you say do 10 years with 5 contracted out, then work a further 25 years after 2016 you should reach the full pension despite having exactly the same NI record. Is that correct? If so it doesn't seem very fair (but is very complicated).

Possibly, it would depend on how much the 5 years of SERPS/S2P was worth.

But yes, there are some strange anomilies, for instance someone reaching SPA later this year with 35 years contracted in only, and nothing else, would definitely get a full single tier pension, but someone with 35 years contracted in plus 5 years contracted out would get less than the full single tier! A better NI record but a worse pension!

greenglide

There are lots of people on here saying they are going to get to the full state pension when they retire even though they were contracted out, because they are going to make over 35 years full contributions. I'm in the same position, I've got 5 years contracted out but will make over 40 years of full contributions by the time I retire as well.

It seems strange that 5 years of contracting out should have a significant impact on your pension under the new rules.

Have you ever had a forecast of your state pension before the new rules came about? If so how much additional pension did it show?

Have your not contracted out years been low paid so that the Geaduated Pension, SERPs and S2P was consistently low? Was the contracting out period at a particularly high pay? Were you self employed during the not contracted out period?

Self employment would explain this, the self employed were particularly poorly treated during the SERPS and S2P years.

bigfreddiel

Following the article in the Telegraph on Saturday I checked my sp again, at the moment, it's estimated to be £153/week, after April 16 the estimate I'd £155.77/week.

I've been contracted out for about 17 years and have 46yrs of NI contributions. I've been contracted in for the past 3 years and am due my sp in a few months in July. Should be interesting to see what it actually is. fj

t0rt0ise

Mine has changed since last time I looked. It seems to have been corrected. It was saying that in the 4 years I've got left after this April, I'd get an extra £11, now it's saying £16 something which is more likely to be right.

So for anyone who thinks theirs was wrong, it is worth having another look.

Edit: mine still doesn't quite add up. They've added just about £4 for each extra year and it should be £4.44. Oh well, it's nearly right! One more go and they may get it!

GunJack

I'm not a pensions expert by any means, but some of the (often basic) misunderstandings posted on here are scary. The biggest one at the mo seems to be the lack of understanding of entitlement pre- and post-April 2016, and how that further years NI from 16-17 onwards can add to the starting amount.....

greenglide

They must have fixed something as it no longer tries to project my amounts beyond my SPa date of May this year.

The amount I am offered has gone up as well(!) from £158.29 to £162.49.

There is still something weird though as it thinks it is £161.64 based on my 2015 NI record going up to £162.49 if I continue contribute. Continuing to contribute, in my case, would earn nothing as I am contracted out and have a full contributions record. If anything an extra may actually reduce the amount as it could increase the COD? Their is no rate change for nSP between the 2015 / 2016 year (6th April is in the 2015 / 2016 year) and the 2016 / 2017 year (from 11th April 2016).