New State Pension Guide

jamesd

EdGasket wrote: »

Well it looks to me as though those contracted out will lose out because with annuity rates so low the private pension will not make up the shortfall in the basic state pension.

There is no shortfall in the Basic State Pension from contracting out. It's not and never has been affected by contracting out.

Only a mug or mis-selling victim buys a standard annuity at normal retirement ages and pension pot sizes. Deferring the state pension pays around twice as much.

More than 90% of those who contracted out are expected to be better off, partly because they can double dip/have their cake and eat it, getting both state pension and the contracted out money, since they just continue to accrue more state pension until the flat rate cap is reached, whole the person not contracted out just reaches the cap sooner and gets nothing for those extra years.

GunJack

jamesd wrote: »

More than 90% of those who contracted out are expected to be better off, partly because they can double dip/have their cake and eat it, getting both state pension and the contracted out money, since they just continue to accrue more state pension until the flat rate cap is reached, whole the person not contracted out just reaches the cap sooner and gets nothing for those extra years.

This is me exactly. 31 yrs NI at Apr 16, contracted-out all working life (20yrs PCSPS deferred and 9 yrs industry DB/now career ave), with some AP for 1988-1997 whilst C/O. Starting rate for newSP = £139-odd. Only need 4 years post-Apr 16 for full Single-Tier, but 18 yrs working life before SPa. So, I gain from the newSP and two C/O pensions, but will have paid 13-14 yrs of NI for no pension gain.

What the extra NI years ARE good for is if you end up unemployed or whatever where you may need to claim benefits, and eligibility is dependant on NI contributions - this is something that is not mentioned and could be lost with the focus being on only the pensions aspect.

greenglide

This is wrong: "As additional state pension will no longer exist from April 2016". It continues to exist and is what is accrued when deferring. What ceases in April 2016 is accrual of new ASP from the earnings-related part of the S2P system.

Technically AP does cease with nSP. Under nSP the increments earned from deferring are called "Extra State Pension" not "Additional Pension". It does "feel" the same though.

You can also inherit AP and increments from a deceased spouse provided the spouse was getting an old rules pension - these are called "Extra State Pension (Inherited)".

Nothing from an nSP pension is inheritable except, I believe, reinheritance of AP & Incs from a deceased spouse (new rules) who inherited AP from a deceased spouse (old rules) and subsequently re-married and then died!

GunJack

greenglide wrote: »

Nothing from an nSP pension is inheritable except, I believe, reinheritance of AP & Incs from a deceased spouse (new rules) who inherited AP from a deceased spouse (old rules) and subsequently re-married and then died!

I thought the newSP was supposed to be simpler :rotfl:

greenglide

The old pension was fairly simple until they changed it in the sake of "simplicity".

All these changes are "simple" if you can ignore all that went before. It is always "transitional protection" and the governments ongoing desire to simplify things that make them so complicated!

jamesd

GunJack wrote: »

I thought the newSP was supposed to be simpler :rotfl:

It's simpler in about 110-120 years from now when the last person entitled to payments under the old rules has died. Until then it and the transitional protection issues make it even more complicated than before for anyone trying to understand most of it.

It is at least somewhat simpler for anyone who first accrues any state pension entitlement under the new rules: you're going to get much less than you would under the old rules if you have a fairly full working life, do something about it now to make up for the uncapped earnings-related portion that you're never going to get.

LXdaddy

jamesd wrote: »

This is wrong: "As additional state pension will no longer exist from April 2016". It continues to exist and is what is accrued when deferring. What ceases in April 2016 is accrual of new ASP from the earnings-related part of the S2P system.

Added later: though see greenglide's note about the name change for deferred money, the previously accrued money or deferral money still doesn't go away, it's just renamed.

<pedantic>
Under the "old" pension the increase from deferring is called "Extra Pension" https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372517/dwp024-102014.pdf
"Additional Pension" relates to the amount from SERPS/S2P
</pedantic>

greenglide

It is, isnt it!

Under old rules DWP refer to it in the First Payment advice as
Extra - Basic Pension
- Additional Pension
- Shared Additional Pension

But don't actually say what it is or where it comes from though. The "Uprating of Contracted-Out Deduction Increments" is even better, this is any inflation proofing of a GMP in a contracted out scheme.

The entitlement notice tries a bit harder "Extra pension for putting off retirement".

(It is sad that I have actually read these even though it is not my pension!)

GunJack

greenglide wrote: »

It is, isnt it!

Under old rules DWP refer to it in the First Payment advice as
Extra - Basic Pension
- Additional Pension
- Shared Additional Pension

But don't actually say what it is or where it comes from though. The "Uprating of Contracted-Out Deduction Increments" is even better, this is any inflation proofing of a GMP in a contracted out scheme.

The entitlement notice tries a bit harder "Extra pension for putting off retirement".

(It is sad that I have actually read these even though it is not my pension!)

!!!!!!, they really DO set out to confuse people, don't they ???

LXdaddy

GunJack wrote: »

!!!!!!, they really DO set out to confuse people, don't they ???

I'm not sure it is actually "company policy" but it certainly seems to achieve confusion whether designed to do so or not.


There's nothing like consistency is there?