State Pension query

xylophone

Obtain an up to date statement after 6 April to establish your foundation amount - then you will know where you are and what you can do about it?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

The above predates the decision to set NSP at £155.65.

p00hsticks

westv wrote: »

Is that 35 NI years excluding or including any contracted out years?

Under the new rules the whole concept of 'contracted in' and 'contracted out' disappears - hence why it is referred to as a 'single tier' (NOT 'single rate') pension.

Any NI years earned after 6/4/16 will be worth 1/35th of the new maximum. So any one who is still 35 years away from retirement or more will get the maximum amount (currently £155.65, but it may be increased annually) as long as they pay enough NI in each of those years.

50Twuncle

What do they mean by :

To protect those who cannot work, we intend to use the same rules for awarding
National Insurance credits in single tier as we use currently for the basic State
Pension."

I am unable to work full time (due to a disability) - willl they make up my NI conts ?

westv

p00hsticks wrote: »

Under the new rules the whole concept of 'contracted in' and 'contracted out' disappears - hence why it is referred to as a 'single tier' (NOT 'single rate') pension.

Any NI years earned after 6/4/16 will be worth 1/35th of the new maximum. So any one who is still 35 years away from retirement or more will get the maximum amount (currently £155.65, but it may be increased annually) as long as they pay enough NI in each of those years.

I see. So those of us who may have done a lot of the 35 years prior to April 16 may receive less if they were contracted out for some/all years?

p00hsticks

50Twuncle wrote: »

Last time that I made a future state pension enquiry (4 or 5 years ago) - I was told - maximum pension will be paid, as you have 30+ years NI contributions - which I took as read and didn't look for employment that would add to my comtributions (working part time) - but the goal posts have now been moved
What effect will my loss of around 3 or 4 years contributions make to my overall state pension ?

Short answer - none.

Long answer;

4 or 5 years ago, your 30 years would have entitled you to the full 'basic' rate pension - currently worth £115.95, plus any additonal (SERPS/S2P) pension y9ou may have built up by being 'contracted in'.

(prior to 2010, the requirement was 44 years for a man, 39 years for a woman, so assuming from your username that you are male, you would only have got 30/44ths of that. )

As at 6/4/16 under the old rules your 30 years still entitles you to £115.95, plus any SERPS/S2P.

Under the new rules, you'd be entitled to 30/35th of £155.95 (whcih I make £133.67) LESS any deductions for times when youi have been contracted out.

As at 6/4/16 your starting amount will be whichever of these figures is the higher, so you won't lose out at all.

Where you may potentially benefit, is if that amount is under the new £155.65 maximum, as you have the opportunity to work or purchase additional NI years up to your State Retirement age, with each year adding a further £4.35 a week (1/35th of £155.65) to your pension, up to the maximum £155.65

p00hsticks

westv wrote: »

I see. So those of us who may have done a lot of the 35 years prior to April 16 may receive less if they were contracted out for some/all years?

Less than the new £155.65 maximum, yes - but not less that you would get under the current rules.

(see my post to 50TWuncle above for a fuller explanation).

bowlhead99

westv wrote: »

I see. So those of us who may have done a lot of the 35 years prior to April 16 may receive less if they were contracted out for some/all years?

Yes. If you have spent time opted out of making full contributions and putting those "Serps" or "s2p" contributions elsewhere to get yourself a workplace or personal pension on the side, you wouldn't simply get the full state one, because the £155 assumes you haven't been doing that.

Instead they review what you would have been on so far, under the old rules and the new, and take the bigger of the two; then gong forward you will earn 1/35th of the new £155 level for every year you contribute going forward, BUT but you might not have reached £155 by the time you are old enough to take the pension. Or you might have reached it before you hit 35 years. It depends on personal circumstances.

Personally, I haven't been contracted out at all, and according to the forecast website I've already built up a reasonable sum over my years of contributions. So when I move on to the new scheme in April I will just need to keep going for about 7 years to get 7/35ths of the £155 added and hit the £155. At that point I won't have done more than about 30 years but will already be maxed out. After that, I could keep working into my 50s and 60s and paying the NI each month but won't be growing my state pension by doing so.

[Deleted User]

I have an estimated forecast for my pension under the new scheme, and full contributions for the old system. I asked the DWP whether I will need to make any further contributions for a full pension with the new system, and the upshot of a lot of very long complicated emails was that they can't tell me until after April 2016.

50Twuncle

jack_pott wrote: »

I have an estimated forecast for my pension under the new scheme, and full contributions for the old system. I asked the DWP whether I will need to make any further contributions for a full pension with the new system, and the upshot of a lot of very long complicated emails was that they can't tell me until after April 2016.

So - as I thought - a typical government !!!! up ?

molerat

It is not difficult to work out if you have a new and old calculations figure, in April you will start with the higher of the two. If it is lower than £155 then you can add more at around £4.25 per year contributed after 2016 up to the max. There may be some scope for (cheaper) pre 2016 years to be added if you do not have a full record.