New State Pension Guide

jem16

ChrisEd said:

New state pension is the old basic state pension plus old additional pension. Need 35 qualifying years to get full new state pension but if you a been paying into Company Pension you may have opted out of the additional bit.  

The new state pension has no additional pension element. It's a flat rate that has been set just above the Pension Credit level to avoid the need to claim Pension Credit. However most people currently have a mix of contributions under old and new system and xylophone has posted how it works.

falcon4us

I reached SPA in January 2020 at 65 and 8 months of age. I have 30 years of full NI contributions with gaps from 2003 having emigrated to Australia.

In August 2016 the estimate was $121.31 with a COPE of $30.66 and sorry for $ read GBP - it's an Aussie keyboard!

Late 2019  I contacted the Futures Group for a forecast and was told I would receive $131.40 but this could be improved to $149.84 if gaps in my NI record were plugged. 

I then requested and received a detailed letter from DWP in November 2019 stating the following:

Pay 1 year receive $140.21 ($780) 
Pay 2 years receive $145.02 ($741)
Pay 3 years receive $149.84 ($761.80) 

Payments covered 2016-17, 2017-18 and 2018-19.  Cost in brackets. I decided to pay 3 years as it seemed good value.

In February I receive a letter from DWP after 1 payment saying I will receive $141.03. (0.82p indexation?)

I made 2 further payments and by March 2020 I'm receiving $145.85.  I queried this figure as I expected $149.84 but was told that the 'benefit' figures provided in their letters of November 2019 and February 2020 were wrong.

The 'correct' benefit figures are now $136.22 for 1 year, $141.03 for 2 years and $145.85 for 3 years.

No apologies or explanation of how this error has occurred. I did request a mandatory reconsideration but this appears to have been ignored and they've also stopped replying to my follow up e-mails.

All they could suggest before stone walling me was to raise a complaint and I might be compensated for 'distress & confusion'

What do people think? How has this occurred and are the sums now correct?
Thank you for reading and grateful for your comments.


 

molerat

If the £121.31 figure from 2016 is correct then so is the £131.40 from 2019 and the added years figures of £136.22, £141.03 and £145.85.  Something seems to have gone wrong with the £131.40 to £149.84 calculation, that jump is £18.44 which does not compute to 3 years so how they got to that is anyone's guess. Also there would have been no indexation increase due on the £140.21, it was the same financial year as the quote, so again who knows how they calculated £141.03 although that does equate to the correct + 2yr figure.

xylophone

At 6/4/16
£119.30 + ( Additional State Pension - deduction for contracting out). Old Rules
This seems to have given a figure of £121.31.

(30/35 x £155.65) -  £30.66. New Rules  This would have given only £102.75.
Your starting amount was the higher of the two.

The figure of £121.31 for 2016 is quite plausible  - you were contracted out of SERPS (Additional State Pension up to 2002) but may have accrued a little S2P in 2002/3.

If you had not made any voluntary contributions, the figure of £131.40 in 2019 would have been correct (increase 2.5%,    3%,    2.6% ).

However, you did make voluntary contributions for 16/17, 17/18. and 18/19 - (three years)

This increased the £131.40 by  £14.45 to £145.85.

Each year purchased gave you 1/35 of   £168.60 (NSP 2019/20).

3/35 x £168.60 = £14.45.

falcon4us

@molerat & xylophone

Thank you for looking at the figures, it gives me confidence they may have finally got it right. 

However, I do wonder how often these errors occur with lifetime consequences and no ownership by DWP...

xylophone

However, I do wonder how often these errors occur with lifetime consequences and no ownership by DWP...

I would imagine that for the most part DWP get it right.

That said, there have been  problems over the years  particularly with GMP/COD and with women's pensions  in cases where they are entitled to claim on a spouse's contributions.

Are you now living in Australia or have you come back to the UK?

https://www.theguardian.com/money/2020/mar/14/frozen-pensions-australia

falcon4us

Is there any explanation of the 'incorrect' DWP GBP 8.81 figure being the difference between the pay 1 year figure of GBP 140.21 and the start figure of GBP 131.40?  Is this just likely to be a keying error?

Also my maximum attainable figure of GBP 149.84 was quoted both on the UK GOV online service and by the Futures Group so maybe I'm one of the 360,000?

https://www.thisismoney.co.uk/money/pensions/article-7100019/State-pension-data-blunder-means-3-given-WRONG-online-forecasts.html

The difference between all the other figures seem to be GBP 4.82 which is 1/35 of the GBP 168.60 NSP figure.

I'm still In Australia (Melbourne)...perhaps I shouldn't worry too much about the GBP 3.99/week difference in DWP figures when the lack of indexation has such a profound effect as per your link.

Correct me if I'm wrong but 'triple lock' has already given an increase from GBP 168.60 to GBP 175.20 for the 2020-21 tax year. Having said that aren't there grumbles about triple lock being too expensive?

Two points generally not mentioned by the press: 

Firstly the GBP:AUD exchange rate which has generally been in favour of the AUD over the years adds to the pain. When we arrived sterling was worth around $2.50.  Today it's $1.79 with a high of $2.60 in 2008 and a low of $1.45 in 2013.

Secondly most UK pensioners without other means are able to top-up the UK pension with the Australian equivalent. However this pension is income and asset tested. This gradually increases year on year to fill the UK pension (income) shortfall and is indexed to cpi.

Crucially the PPOR is exempt so there are many pensioner couples (not me!) living in multi million dollar homes in receipt of a full Australian pension of $1423.60/fortnight so nearly GBP 400/week as long as their savings/assets are less than $401,500.

There is no inheritance tax here for now but the above 'strategy' has created grumbles for years with no political party prepared to grasp the nettle.

xylophone

I can only imagine that there must have been a keying in error at some point.

Correct me if I'm wrong but 'triple lock' has already given an increase from GBP 168.60 to GBP 175.20 for the 2020-21 tax year. Having said that aren't there grumbles about triple lock being too expensive?

Yes, NSP for the current tax year (20/21) is £175.20.  And yes, there are grumbles but as of the moment, TL is still in place.

Crucially the PPOR is exempt so there are many pensioner couples (not me!) living in multi million dollar homes in receipt of a full Australian pension of $1423.60/fortnight so nearly GBP 400/week as long as their savings/assets are less than $401,500.

I suppose the argument is that they can't spend the PPR on the groceries.

With regard to IHT, relative acted as exor for his relative's estate - one of the residuary beneficiaries lives in Australia - the testator had only the standard IHT allowance (£325,000) - to set against the value of the estate, with tax at 40% levied on every penny over that sum.

Australian beneficiary was absolutely horrified when she received the accounts and saw what had disappeared into the HMRC maw......

As for no indexation for pensioners in certain countries, yes, it's not fair.....but I can't see the system changing.

Cloak_2

If my spouse has qualified for the new flag rate and I reach star pension age in 4 years, with over 35 qualifying years, will i also get the full flat rate ?

jem16

Cloak_2 said:

If my spouse has qualified for the new flag rate and I reach star pension age in 4 years, with over 35 qualifying years, will i also get the full flat rate ?

All depends on whether you were contracted out or not and whether or not you will manage to make it up by then. Get yourself a state pension forecast and come back with the details.