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New State Pension Guide

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  • anothermam2
    anothermam2 Posts: 19 Forumite
    Thanks for your help. I am certainly not aware of being contracted out and the fact that I have a full record of contributions for 31 years makes me think I was not. Unless the quote does not recognise contracted out years.
  • SnowMan
    SnowMan Posts: 3,680 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Thanks for your help. I am certainly not aware of being contracted out and the fact that I have a full record of contributions for 31 years makes me think I was not. Unless the quote does not recognise contracted out years.

    You can have 31 full qualifying years for basic state pension purposes, but have been contracted-out for some of those years.

    One option to resolve things is to send the DWP a message through the online system (while logged in). The message would be.
    As I have 31 qualifying years so far, and have never been contracted-out I was expecting my amount based on contributions to 5th April 2015 to be at least 31/35 x 155.65 = £137.86pw. Please can you explain why the amount showing is only £119.30pw
    When I sent them a message once they got back to me quite quickly
    I came, I saw, I melted
  • jem16
    jem16 Posts: 19,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Thanks for your help. I am certainly not aware of being contracted out and the fact that I have a full record of contributions for 31 years makes me think I was not. Unless the quote does not recognise contracted out years.

    I have 43 years, all of which full but I have been contracted out for all of them.

    Do you have a company/works pension?
  • anothermam2
    anothermam2 Posts: 19 Forumite
    You have me thinking. I was on a lower tier pension which possibly answers some of the problem. (It was a long time ago!)
    However I think to get the £119 quoted I would have had to of contributed for 27 years which still does not tally. I worked for 13 years from the age of 16
    Thanks again, I think I need to do more delving and have a stiff drink.
  • jem16
    jem16 Posts: 19,609 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You have me thinking. I was on a lower tier pension which possibly answers some of the problem. (It was a long time ago!)

    Can you explain lower tier pension?
    However I think to get the £119 quoted I would have had to of contributed for 27 years which still does not tally. I worked for 13 years from the age of 16

    No you would need 30 years, most of which have been contracted out. Then your pension would have been based on the old rules rather than the new rules as that calculation was higher.
  • anothermam2
    anothermam2 Posts: 19 Forumite
    There was a lower tier and higher tier pension. I dont know what it meant but I paid in less than a higher tier contributer. I was young and not interested so I have no clue what this involved. The folly of youth! I assumed it just gave me a smaller private pension but now I wonder if it has affected the state pension.
  • anothermam2
    anothermam2 Posts: 19 Forumite
    It was a company pension by the way.
  • anothermam2
    anothermam2 Posts: 19 Forumite
    Trawled through paperwork and I was contracted out... You were right! Thanks for helping me along with this, much appreciated. I now am a little less confused. It will be interesting to find out how much I will have to pay to up my pension to £155.
    I assumed that my contracted out years would show on the statement...silly me.
  • SnowMan
    SnowMan Posts: 3,680 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    edited 8 April 2016 at 8:01PM
    Trawled through paperwork and I was contracted out... You were right! Thanks for helping me along with this, much appreciated. I now am a little less confused. It will be interesting to find out how much I will have to pay to up my pension to £155.
    I assumed that my contracted out years would show on the statement...silly me.
    At least it is clearer now although unfortunately it is going to cost you quite a bit more to get you up to £155.65pw than you were hoping.

    You will need to buy 9 post April 2016 years to get you up to £155.65pw since

    119.30 + (4.45x 8) + 0.75 = 155.65

    The first 8 years get you £4.45pw each and the last about £0.75pw (ignoring rounding errors). Buying 2016/2017 will cost you £733.20 and the cost is not known for subsequent years. But at the 2016/2017 cost, 9 years will cost you about £6,600 (= 9 x 733.20) so it will likely over time be something in excess of that.

    It is possible that there may be an alternative to buy 4 pre April 2016 years in place of some of the post April 2016 years. However it is also possible that buying 4 pre April 2016 years will be wasted money and won't help you at all. The reason for this is as follows:-

    Your starting amount at April 2016 (£119.30) is based on the higher of an old rules calculation and a new rules calculation (both allowing for pre April 2016 years)

    We have now worked out that the old rules calculation must be higher (because you were contracted-out), and you can't increase the old rules starting calculation by buying more pre April 2016 years (because you already have the 30 years that maximises this calculation).

    However if the new rules calculation is only marginally lower than the old rules calculation then it is possible that by buying extra pre April 2016 years you can increase your new rules calculation (where 35 years maximises the calculation) above the old rules calculation. If so you may be able to buy 4 pre April 2016 years in place of some of the post April 2016 years.

    That probably sounds a bit complicated. What you need to do is to ask the DWP (Future Pensions Centre) what your starting amount is on the new basis (albeit the old rules figure is higher) and what COPE (Contracted Out Pension Equivalent) has been applied for the new rules calculation.

    If you report back the answers then we can make the explanation of the decision much simpler.


    One thing that comes out of looking at your position, is the woeful inadequacy of the DWP information in particular in providing no breakdown of the starting amount calculation (and the un-necessary problems that then causes). The DWP have been told time and time again that they need to provide a breakdown of figures but through what can only be described as incompetence they fail to do so.
    I came, I saw, I melted
  • greenglide
    greenglide Posts: 3,301 Forumite
    Part of the Furniture Combo Breaker Hung up my suit!
    Yes it is definitely woefull!

    The online beta system is obviously an HMRC product and at least does admit that old rules and new rules exist. However it is not at all clear what their figures actually mean. It wouldn't take much to fix this if they tried.

    The DWP forecast was dead right, well presented and told you what you wanted to know at the time. Then they removed the details (to make it clearer according to a certain poster here) and it certainly wasn't a sensible idea.

    But government departments end to do this.
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