State Pension reduced for me

rorysdad

Hi

I completed a form and sent it in to find out what my State Pension will be when I retire. It came back stating £105 per week - based on 27 years of NI contributions - and that was up until 2014/2015.

I contracted out of SERPS many years ago and I am 55 in October and have two personal pensions.

Past 3 years I have been self-employed.

Should I be doing something to get increase my contributions - eg: voluntarily paying more NI so I get more State Pension at 65?

RD

green_man

Presumably this means that these contracted NI contributions went into your personal pensions boosting their value, this is why you will have had a basic reduction.

If you intend working and paying NI for another 10 + years then you may be in a good position as I believe each year of NI payment after 2016 adds just over £4 to your amount (if it is less than the £155 that seems to be advertised) So you should make up the vast majority of the 'lost' amount and could be in the fortunate position of having a full new pension plus a boost in your personal pension

xylophone

http://www.unitetheunion.org/unite-at-work/pensions/new-state-pension---for-those-previously-contracted-out/

p00hsticks

rorysdad wrote: »

Hi

I completed a form and sent it in to find out what my State Pension will be when I retire. It came back stating £105 per week - based on 27 years of NI contributions - and that was up until 2014/2015.

I contracted out of SERPS many years ago and I am 55 in October and have two personal pensions.

Past 3 years I have been self-employed.

Should I be doing something to get increase my contributions - eg: voluntarily paying more NI so I get more State Pension at 65?

RD

You haven't got the full 30 years contributions to get yourself the full basic pension (currently £115.95) under the current rules, so it woudl be worth checking to see your record to see if you have the opportunity to purchase up to 3 missing years prior to 2016 (although if you are working now you may have one more to add to that alreaady for 2015-16. )

https://www.gov.uk/check-national-insurance-record

This could boost your 'foundation amount' that you take into the new State Pension starting this April. (I'm assuming in saying this that, as you have been contracted out, the £105 figure is that obtained under the current rules, but there's no obvious way of knowing).

As others have said, any NI years that you accumulate (or buy) for years between April 2016 and when you reach State pension age will then add around £4.35 (1/35th of the new £155.95 maximum) to your weekly amount until you reach the maximum.

woolly_wombat

green_man wrote: »

Presumably this means that these contracted NI contributions went into your personal pensions boosting their value, this is why you will have had a basic reduction.

If you intend working and paying NI for another 10 + years then you may be in a good position as I believe each year of NI payment after 2016 adds just over £4 to your amount (if it is less than the £155 that seems to be advertised) So you should make up the vast majority of the 'lost' amount and could be in the fortunate position of having a full new pension plus a boost in your personal pension

Indeed.

In this link Steve Webb helpfully explains why it could be a good idea to pay additional NICs after 5 April 2016 if you've been contracted out:

http://citywire.co.uk/new-model-adviser/news/steve-webb-how-to-boost-new-state-pension-payments/a827032

molerat

woolly_wombat wrote: »

Indeed.

In this link Steve Webb helpfully explains why it could be a good idea to pay additional NICs after 5 April 2016 if you've been contracted out:

http://citywire.co.uk/new-model-adviser/news/steve-webb-how-to-boost-new-state-pension-payments/a827032

A few whingers leaving comments
Quite a clear article - maybe because I already understand the implications - but still fairly clearly put.

jamesd

rorysdad wrote: »

Should I be doing something to get increase my contributions - eg: voluntarily paying more NI so I get more State Pension at 65?

No. Just continue to make your normal self-employed NI payments to ensure that each year counts towards the state pension. You appear to have enough potential working years for there to be no need for you to do more than that. You also appear to have a full NI history for the last six years so would have no opportunity to buy more years anyway.

Check your NI record to ensure that there aren't any correctable gaps.

If you do stop work before your state pension age you should check how much you've built up at that point and continue paying self-employed NI for a low level of self-employment until you get to the maximum level.