New State Pension Guide

roxy28

molerat wrote: »

They can only make voluntary contributions for the years up until April 2018 as they retire in the 2018-19 tax year.

Thanks.

So its 2 years then 16/17 and 17/18 which would add £4.45 per week for each year, so £8.90 added to the present forecast of £141 plus the annual SP rises till their 2019 SP date.

julianhodgearepants

thunder65 wrote: »

I am 65 years old today, having paid a NI contribution for close on 45 years - 37 years as a Civil Servant, 8 years in the private sector. I finally received a pension award 5 days ago after applying over two months previously. Like so many others it came as a shock that I wasn't going to receive the maximum £155.65 that I assumed everyone was getting having contributed to the system all of my working life. A pensions forecast several years ago also confirming that I had sufficient contributions for a full pension and I couldn't improve on the situation. I never gave it another thought when they announced the new changes to simplify pensions, being an ex Civil Servant I should have known it would be anything other than simple. To get to the point I have been awarded £137.83 per week, almost £18 per week short of what I expected but judging by some posts a lot better than how others have ended up. I realise I was contracted out as a Civil Servant but my real annoyance apart from the money is there is absolutely no explanation in the award letter as to how the amount as been arrived at and I have no way of knowing if it has been correctly assessed. Like winning the lottery just be thankful for the payout!

I also hit the magic retirement date last week and even though I have 37 qualifying years I have been awarded £121.50 p.w.

Although I wasn't expecting the much trumpeted £155 having been contracted out for much of my working life I find it hard to believe my reduced NI payments were worth £34.00 p.w. in lost pension.

To those who say you earned a higher return from your occupational pension because of the reduction in NI's then this is not the case as my pension was already final salaried.

So maybe your figure isn't too bad after all? Like you I am also annoyed that the letter gives no indication as to how the figure was arrived at.

Silvertabby

To those who say you earned a higher return from your occupational pension because of the reduction in NI's then this is not the case as my pension was already final salaried.

Julian - there isn't a standard factor for all final salary pension schemes. Your final benefits depend not only on your final pay and total service, but also the accrual rate of your pension scheme (ie, 1/49th, 1/60th, 1/80th etc). The accrual rate is linked to the affordability of the pension scheme.

When you were contracted out, not only did you pay 1.2% less National Insurance, (which is more than you might think - about £25 per month for someone on £25K per annum) but your employer also paid 3.4% less. Without this rebate, it is highly likely that your employer's pension contributions would have been less, meaning either you would have had to pay more or the accrual rate of the scheme would have been reduced.

minty777

Silvertabby wrote: »

Julian - there isn't a standard factor for all final salary pension schemes. Your final benefits depend not only on your final pay and total service, but also the accrual rate of your pension scheme (ie, 1/49th, 1/60th, 1/80th etc). The accrual rate is linked to the affordability of the pension scheme.

When you were contracted out, not only did you pay 1.2% less National Insurance, (which is more than you might think - about £25 per month for someone on £25K per annum) but your employer also paid 3.4% less. Without this rebate, it is highly likely that your employer's pension contributions would have been less, meaning either you would have had to pay more or the accrual rate of the scheme would have been reduced.

Which is the best accrual rate for the employee?

molerat

julianhodgearepants wrote: »

I also hit the magic retirement date last week and even though I have 37 qualifying years I have been awarded £121.50 p.w.

Although I wasn't expecting the much trumpeted £155 having been contracted out for much of my working life I find it hard to believe my reduced NI payments were worth £34.00 p.w. in lost pension.

To those who say you earned a higher return from your occupational pension because of the reduction in NI's then this is not the case as my pension was already final salaried.

So maybe your figure isn't too bad after all? Like you I am also annoyed that the letter gives no indication as to how the figure was arrived at.

Your actual COPE is probably way more than that, mine is £74.82 after spending the majority of my working life contracted out. You could have put that NI savings into a pension and made it work for you.

Silvertabby

Which is the best accrual rate for the employee?

Other factors apply but, generally, the lower the fraction the better.

ie
Assuming 20 years service and a final pensionable pay of £20K

1/49th = £20K / 49 x 20 = £8163.27 annual pension

1/60th = £20K / 60 x 20 = £6666.66 annual pension.

There are far more accrual rates on the go than the ones I have quoted. Even the different schemes in the public sector use different accrual rates.

minty777

Silvertabby wrote: »

Other factors apply but, generally, the lower the fraction the better.

ie
Assuming 20 years service and a final pensionable pay of £20K

1/49th = £20K / 49 x 20 = £8163.27 annual pension

1/60th = £20K / 60 x 20 = £6666.66 annual pension.

There are far more accrual rates on the go than the ones I have quoted. Even the different schemes in the public sector use different accrual rates.

What happens to the accrual rate if for example you have been in a DB pension for say 25 years and for 10 years the accrual rate was 1/60th and 15 years at 1/75th?

Tor_Brexit

Silvertabby wrote: »

We did get our stamp paid, but had to 'sign on' every two weeks and show details of our job search activities. At the 3 month point, at which time I had been interviewed for a job but hadn't been informed that I had got it, we were called in for a 'special interview'. Silly me thought that the young minnie had actually read my file. Wrong - she just rabbited on about how I couldn't be too picky, and that if I didn't get a job in the next two weeks they would either insist that I took any job, or they would stop my 'benefits'. I' d had enough of this, so I told her that I would pay my own NI and asked her how I should go about paying it. She didn't have a clue.

I got to three months too, with very similar results.
When it was suggested I was too picky I said I fancied a 9 to 5 job, in an air conditioned office, with a good pension, paid holidays, plenty of sick leave, needing very little knowledge of anything, dealing with customers who couldn't really complain if I wasn't very good.

I never went back.

If I could face the humiliation I could accrue £4 odd a week pension for the next five years, lets be generous and call it £25. Less income tax that is £20 a week.
Problem is I would need to attend the JCP 130 times.
Sod that for a game of soldiers.

Silvertabby

What happens to the accrual rate if for example you have been in a DB pension for say 25 years and for 10 years the accrual rate was 1/60th and 15 years at 1/75th?

Minty - the first 10 years would be calculated on a 1/60th basis, and the remainder at 1/75th. There are laws in place to prevent the retrospective reduction of final salary pension benefits already 'banked'.

Was the accrual rate reduced in order to keep your scheme financially viable?

Silvertabby

If I could face the humiliation I could accrue £4 odd a week pension for the next five years, lets be generous and call it £25. Less income tax that is £20 a week.
Problem is I would need to attend the JCP 130 times.
Sod that for a game of soldiers.

Tor - me too. I've recently retired at 60 and, as I've always been contracted out, I'm toying with the idea of paying voluntary contributions to bump up my State pension from the expected £119 per week. There's no way I'm signing on - I'm not going through all that again.