LGPS ASP Newsletter

Wig

My partner just got a newsletter telling her that her LGPS was contracted out of the ASP all these years, and the new single tier State Pension is being introduced and as a result of being contracted out she may not receive the full State pension when reaching SPA.

Should we be concerned? We did not know she was contracted out or the ramifications of that.

She was born in January 1966

Should we be looking at getting a pension forecast and a NI contributions history with a view to topping up the last 6 years?

And can I ask who would have qualified for the ASP under the old scheme before the New state pension rules were introduced, i.e. was it only higher earners or what?

jem16

Wig wrote: »

Should we be looking at getting a pension forecast and a NI contributions history with a view to topping up the last 6 years?

Getting a pension forecast is always wise and should certainly be done. She can use this site to get a forecast;

https://www.tax.service.gov.uk/checkmystatepension

However topping up for the last 6 years would be a waste of money as it only covers entitlement to the basic state pension and not the Additional state pension.

However your partner will be entitled to at least the basic state pension provided she has at least 30 years so far. If she continues to work after April 2016 she will begin to build up extra pension as contracting out for DB schemes stops then. She will then be in the fortunate position of having the benefit of being contracted out in her LGPS pension plus is very likely to reach the maximum flat rate pension anyway.

And can I ask who would have qualified for the ASP under the old scheme before the New state pension rules were introduced, i.e. was it only higher earners or what?

No it was everyone who wasn't contracted out.

saver861

Wig wrote: »

My partner just got a newsletter telling her that her LGPS was contracted out of the ASP all these years, and the new single tier State Pension is being introduced and as a result of being contracted out she may not receive the full State pension when reaching SPA.

Should we be concerned?

It depends on what you are concerned about. She won't 'lose' any pension. She, like many others, wont get the full £155 as was the expectation of many.

If she has 30 years CO NIC's she will get the the current max basic state pension which is currently £115. She would have got that anyway whether the changes were happening or not. So she is not 'losing' anything as such but will have to work longer or buy more NIC's to increase the £115.

Wig wrote: »

We did not know she was contracted out or the ramifications of that.

As above there is no negative ramifications - might not be as positive as expected though!!

Wig wrote: »

Should we be looking at getting a pension forecast and a NI contributions history

Yes

Wig wrote: »

with a view to topping up the last 6 years?

Depends on what you mean by topping up. If she has 30 years pre 2016 then no point. The new 35 years only applies from April 2016.

Wig wrote: »

And can I ask who would have qualified for the ASP under the old scheme before the New state pension rules were introduced, i.e. was it only higher earners or what?

Mostly private sector workers. Are you clear on your own pension situation?

Wig

saver861 wrote: »

Are you clear on your own pension situation?

Absolutely not clear on my own.

Just so I understand my partner's position

If she retires with 30 years (although at present we think she only has about 24 years), she would get a proportion of the New State Pension of atleast the value of the old Basic rate pension (currently £115)

If she retires with 35 years or more (atleast 5 years of which were earned after 2016) she will get the full rate of New State Pension (currently £155)

?

pandora205

I must admit (I'm in LGPS too) I hadn't realised that the full state pension didn't apply to us, and that contributing to an occupational pension was considered 'opting out' until I got a state pension forecast. I think I only heard the higher state pension part when the new arrangements were proposed.

There is no way to top up to £155 state pension to my knowledge. I have over 40 years NI contributions (and 37 in LGPS) and that hasn't made a difference.

saver861

Wig wrote: »

Absolutely not clear on my own.

That should be near top of your to do list then!!

Wig wrote: »

Just so I understand my partner's position

If she retires with 30 years, she would get a proportion of the New State Pension of atleast the value of the old Basic rate pension (currently £115)

Yes - that is pretty much it. Assuming all 30 years were contracted out.

Wig wrote: »

If she retires with 35 years or more (atleast 5 years of which were earned after 2016) she will get the full rate of New State Pension (currently £155)

?

Not quite. Each additional year of the new pension is worth £4.40. So if she does another five years she will have £115 + 5*£4.40. Total = £137.

She would need around another eight new pension years to make the £155.

Someone starting work in April 2016 and works for 35 years will get the full £155 (equivalent at the time).

(Note these numbers are slightly off. £115 is the current state pension rising to £119 in April. but you get the idea.)

Wig

Ok cool, we will get those reports for both of us and start new threads.

hyubh

pandora205 wrote: »

I must admit (I'm in LGPS too) I hadn't realised that the full state pension didn't apply to us, and that contributing to an occupational pension was considered 'opting out'

A person opts out of an occupational scheme (like the LGPS) but contracts out of the State Second Pension (S2P)/SERPS. Under the current (old) state pension system, if you were to opt out of the LGPS you would be automatically contracted back in to S2P.

There is no way to top up to £155 state pension to my knowledge. I have over 40 years NI contributions (and 37 in LGPS) and that hasn't made a difference.

It would be unfair for it to - the original idea of SERPS was to provide a (contributory) salary-related pension scheme for workers who did not benefit from one provided by their employer, not provide a bonus amount to every worker's state pension. If you still have a few years to go to SPA like the OP's partner however, the new system actually allows you to 'double dip' when the old one did not.

jem16

pandora205 wrote: »

There is no way to top up to £155 state pension to my knowledge. I have over 40 years NI contributions (and 37 in LGPS) and that hasn't made a difference.

There is a way after April 2016 either by continuing to work or paying voluntary NI contributions.

saver861

jem16 wrote: »

There is a way after April 2016 either by continuing to work or paying voluntary NI contributions.

Yes but only up to spa. If pandora has over 40 years NI then thats likely to put her in her early 60's at least. In which case, she will either be drawing pension or very close to it so won't get much chance to top up new pension years.

On the other hand, if she started work at 16 then she has plenty of time to get additional new pension years!!

jem16

saver861 wrote: »

Yes but only up to spa. If pandora has over 40 years NI then thats likely to put her in her early 60's at least.

Not necessarily. I have 41 years Ni and still have 6.5 years till spa. Didn't start work till age 21 either.

I can't quite get to the full £155 but I can get close.