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

Muddled_Pensioner

"By way of example, there were men who retired at age 60 after forty years in their occupational scheme who were still entitled to the basic state pension and to Graduated Pension and possibly to some S2P."
You also forgot to mention their Occupational Pension would have topped that up handsomely after 40 years of paying in!

Am I not right in think though, that also under the old regime when you turned 60 as a male you were CREDITED with a further 5 years!

DC and his pals quickly scotched that one not long after they got in first time around.

london11

hi I am 53 and have just taken ill health retirement from the civil service.I have just got my quote and the options are £45,337.15 lump sum and £6,800.60 a year or £23,443.87 and £8,625.04 a year. What do you think is best?

GunJack

london11 wrote: »

hi I am 53 and have just taken ill health retirement from the civil service.I have just got my quote and the options are £45,337.15 lump sum and £6,800.60 a year or £23,443.87 and £8,625.04 a year. What do you think is best?

might be best to start a new thread of it's own for that one

xylophone

Am I not right in think though, that also under the old regime when you turned 60 as a male you were CREDITED with a further 5 years!

See the link in my post.

london11

how do you do that sorry not done this before

Well_excuse_me.

xylophone wrote: »

Steve Webbs advice

£733 sounds like a good investment for £180pa after tax.

bry54

Well_excuse_me. wrote: »

£733 sounds like a good investment for £180pa after tax.

Even better if you're a non-taxpayer.

Penfold2

Hi, I'm hoping someone on here can give me a little advice with regards to my parents. Both will reach the state pension age in the coming years and both will receive the new state pension.

As a result of my dad being contracted out and of both having gaps in their records neither will receive the full amount. I would like to know if it is possible for either or both of them to increase their entitlement by buying Class 3 NICs for their previous missing years.

I'll give you a little background.

My dad reaches the state pension age in July 2017 and has 45 years of contributions. His forecast is for £149.40 PW with an additional COPE entitlement of £47.97 PW giving £197.37 PW in total. He has two incomplete years in his record namely 2012-13 & 2013-14 and since reaching the retirement age for women he is in receipt of National Insurance credits.

My mum reaches the state pension age in November 2019 and has 26 years of contributions. Her forecast is for £115.63 PW and she was never contracted out. All of her contributions were made prior to 1997 and she has made none since. She is not working or receiving credits but may be entitled to carers allowance later this year.

Primarily I would like to know if buying the two missing previous years for my dad and nine previous years for my mum will boost their state pensions to the full £155.65 PW. The impact of my mother receiving carers allowance can wait for another day....

Thank you in advance to anybody who can offer us some advice on this.

SnowMan

Penfold2 wrote: »

My dad reaches the state pension age in July 2017 and has 45 years of contributions. His forecast is for £149.40 PW with an additional COPE entitlement of £47.97 PW giving £197.37 PW in total. He has two incomplete years in his record namely 2012-13 & 2013-14 and since reaching the retirement age for women he is in receipt of National Insurance credits.

I am assuming that the 45 qualifying years are up to the end of 2014/2015 and that the £149.40pw is the state pension earned so far (up to end of 2014/2015).

If so his starting amount must have been calculated as:

OLD RULES
= 30/30 x 119.30 (basic sttae pension) + 30.10 (additional pension)
= 149.40pw

NEW RULES
= 35/35 x 155.65 - 47.97
= 107.68pw

So the starting amount is based on the old rules calculation of £149.40pw

Because your dad already has more than both the 30 and 35 qualifying years that count in the calculation above he can't increase his starting amount calculation at April 2016 by buying pre April 2016 years.

So buying 2012/2013 and 2013/2014 years would be wasted money.

However he will earn an additional 1/35th of the full new state pension i.e £4.45pw from the credit for 2016/2017 for being over pension credit age. So he can expect a state pension of about £153.85pw (= 149.40 + 4.45) in 2016/2017 terms.

My mum reaches the state pension age in November 2019 and has 26 years of contributions. Her forecast is for £115.63 PW and she was never contracted out. All of her contributions were made prior to 1997 and she has made none since. She is not working or receiving credits but may be entitled to carers allowance later this year.

Again I am assuming that is 26 years up to now (and not 26 years up to State Pension Age.

Her starting amount at April 2016 seems to be based on the new rules calculation (without any deduction for contracting-out) as

26/35 x 155.65 = 115.63

She has 3 potential post April 2016 qualifying years (2016/2017, 2017/2018, 2018/2019). If she receives carer's allowance (or gets credits for caring without getting carer's allowance) for a full year then that will increase her starting amount by 1/35 x 155.65pw = £4.45pw for each of those years.

So she should consider buying between 6 and 9 pre April 2016 qualifying years depending on how many post April 2016 qualifying years she will get. And if she has partial credits for one of the post April 2016 years then she will have to work out whether the pre or post April 2016 year is cheaper to buy.

Worst case scenario is she gets no post April 2016 years (and not enough credits to make any of those years cheaper to buy than the alternative pre April 2016 year). In that case she can buy 9 pre April 2016 years at a cost of (using the cheapest 9 years so excluding 2015/2016 which would cost £733.20 for 52 weeks)

2006/2007 - £689
2007/2008 - £689
2008/2009 - £689
2009/2010 - £689
2010/2011 - £626.60
2011/2012 - £655.20
2012/2013 - £689
2013/2014 - £704.60
2014/2015 - £722.80

Total cost - £6,154

That would buy her an extra (155.65 - 115.63) x 52 = £2,081pa gross state pension in 2016/2017 terms.

So unless he has massively reduced life expectancy (or she might qualify for means tested benefits which seems unlikely in this case) then that is an absolute bargain.

As the deadline for buying these pre April 2016 years at the above rates is 5th April 2019, she should hold off purchasing for now until it is clearer whether she will need to buy 6,7,8 or 9 pre April 2016 years.

Penfold2

Thank you for your response Snowman.

I'll clarify those numbers for you. The £149.40 is the projection for 2017 based on him continuing to receive the credits. His his current entitlement is actually for £143.18 PW.

I doubt this makes much difference to your sums though?

Overall then, it seems we can buy the class 3 NICs to boost my mothers pension but there isn't much we can do for my dad.

It's a shame we won't be able to get them both to the maximum but at least dad isn't that far off.