Pleasantly surprised by pension forecast - it can't be right!

Silks

I've had a rather chequered career, with long periods of teaching and aid work abroad, interspersed with university, unemployment and, for the last 20 years, something resembling a proper job. To compound this f ecklessness I decided, last summer, to opt out of work and become a kept man.

It was with some trepidation, then, that I logged onto the government website to see how little I was going to get under the new state pension.

This told me that, despite only having 27 years of full NI contributions, the amount based on my contributions to April 2015 is £160 a week. This may rise to £167 per week if I continue to make NI contributions for the next 8 years..

Now, I can't see how this can be. Too few years of NI and yet more than the flat rate... Seems illogical. I did contract out, but for no more than a year or two and I can't see this as making too much difference.

Anybody have any ideas why my projection should be so high? Or am I simply reading it all wrong? Could it be just a glitch in the "Beta" website?

xylophone

https://www.gov.uk/government/publications/application-for-a-state-pension-statement

Try the above to check?

https://www.gov.uk/new-state-pension/overview

SnowMan

Nothing there to suggest anything obviously wrong.

Your State Pension earned to date (up to April 2015) has been calculated (ignoring rounding) as

= 27/30 x 119.30 (basic) + additional state pension
= 107.37 + 52.63
= £160pw

If you have been earning a reasonable salary and only have very limited contracted-out periods then you could have earned £52pw of additional pension.

You won't be able to earn any further state pension after April 2016, because you have already earned more than the full single tier pension of £155.65pw.

The difference between £160pw and £167pw is based on an an assumption that you earned some basic state pension and additional pension for 2015/2016 (nothing to do with post April 2016 years)

It might be worth buying, through class 3 contributions, up to 3 missing pre April 2016 years if you have missing years and are in time to purchase them (2006/2007 to 2015/2016) which will get you up to 30 qualifying years and your state pension up to about £172pw (= 119.30 + 52.63). No rush as you've got until 5th April 2019 before the cost goes up, and an ultimate 5th April 2023 deadline.

Although you can't accrue any extra state pension after April 2016, the first £155.65pw of what you have earned so far will increase currently in line with the triple lock (higher of earnings inflation, price inflation and 2.5%) and the bit above £155.65pw in line with CPI price inflation.

greenglide

the amount based on my contributions to April 2015 is £160 a week. This may rise to £167 per week if I continue to make NI contributions for the next 8 years..

It is possible that you have £160, especially if you have never been contracted out. This would be based on the "old rules". There is no way that further contributions can increase this amount because it is already above the nSP maximum of £155.65. The £167 is therefore wrong. (but Snowman has possibly explained this)

I would apply for a hard copy version by phone or online to confirm this.

SnowMan

greenglide wrote: »

I would apply for a hard copy version by phone or online to confirm this.

I'd definitely second that suggestion.

Silks

Thanks, both.

Why the need for a hard copy, though? Sounds a bit alarming. Might they backtrack?

SnowMan

Silks wrote: »

Thanks, both.

Why the need for a hard copy, though? Sounds a bit alarming. Might they backtrack?

The online system is a beta system, so it is still being tested. Although I expect your figures are OK, getting a paper statement should be more reliable (as paper statements aren't subject to beta testing).

xylophone

See post 2 above.

bob_a_builder

Mine came out at £171.39 !!! and that was a paper one done back in march 2015
and it even says " we have made deduction because you have been contracted out ....."
Another 2 years to go before I find out the true number !

bigfreddiel

I will be able to update this thread with an actual amount vs the forecast in July, only three months to go.

Cheers fj

missbiggles1

My pension was over 40% higher than I was expecting - lots of people don't appreciate the amount you get through SERPS/S2P.