New rules

Silvertabby

“ I was contracted out from day 1 (April 1978) until I retired earlier this year. I've just requested a full State pension forecast (SPA is 66) and I'm curious to see what S2P top up I'll get, if any. I worked part time from 2003 until I retired, so I'm assuming that I will be classed as low(ish) paid. Whatever it is, I will still consider anything over the old basic State pension of £119 per week to be a bonus.
Originally posted by Silvertabby ”
I would enquire if you had time to get up to the full £155.65 by paying a few years of voluntary NICs as you'd only have to live to 70 to be quids in, but as it's rude to ask a Lady's age I won't.

Triumph - what a gent! I'm 60 and a bit, and don't intend to take up any further paid employment. I'm seriously considering the voluntary NICs, but not until I'm nearer 66 - don't see any point in paying now, as I'd be giving up my capital without any return.

Lorrie65

I am new to forums so please excuse me if I am not following the correct procedure. I made a startling discovery which I think (and I hope I'm wrong and someone can correct me) that you lose any qualifying years over 30 when switching to the new system?? I am a 51 year old woman. I recently got a state pension forecast which told me I had 31 qualifying years and would receive £131.48 a week with an estimated COPE amount of £30.08. I queried the number of qualifying years and was awarded an extra year. However, on getting an updated forecast the estimate hadn't changed. I queried this with the Pension Helpline. They explained that calculations showed I would have been better off under the old system and had therefore been awarded a starting amount based on what I would have received under the old system. They explained that the maximum qualifying years I could earn under the old system was 30, so gaining the extra year had, in fact, been pointless. In 2014/15 I had a part year which would cost around £282 to make a full qualifying year but I was advised against doing this as it would not improve my state pension. To improve it and get a full state pension, as I have no intention of returning to work, I have to make voluntary contributions to buy another 6 years in the new system at a current cost of £733.20 a year. Those two extra qualifying years I had under the old system are lost. I cannot transfer these to the new system. Can anyone verify this? If so, it sort of explains a couple of other forum users dilemmas as well.

roxy28

Silvertabby wrote: »

I'm seriously considering the voluntary NICs, but not until I'm nearer 66 - don't see any point in paying now, as I'd be giving up my capital without any return.

Dad is the same age as you and was thinking the same, but if leaving it so late to pay VC, is it possible class 3 may cost more than the £14.10p per week at present so adding to the cost?

Also can you only pay one tax year at at time which would rule out paying a lump sum for say 3/4 years all at once? close to your SP date.

molerat

Lorrie65 wrote: »

I am new to forums so please excuse me if I am not following the correct procedure. I made a startling discovery which I think (and I hope I'm wrong and someone can correct me) that you lose any qualifying years over 30 when switching to the new system?? I am a 51 year old woman. I recently got a state pension forecast which told me I had 31 qualifying years and would receive £131.48 a week with an estimated COPE amount of £30.08. I queried the number of qualifying years and was awarded an extra year. However, on getting an updated forecast the estimate hadn't changed. I queried this with the Pension Helpline. They explained that calculations showed I would have been better off under the old system and had therefore been awarded a starting amount based on what I would have received under the old system. They explained that the maximum qualifying years I could earn under the old system was 30, so gaining the extra year had, in fact, been pointless. In 2014/15 I had a part year which would cost around £282 to make a full qualifying year but I was advised against doing this as it would not improve my state pension. To improve it and get a full state pension, as I have no intention of returning to work, I have to make voluntary contributions to buy another 6 years in the new system at a current cost of £733.20 a year. Those two extra qualifying years I had under the old system are lost. I cannot transfer these to the new system. Can anyone verify this? If so, it sort of explains a couple of other forum users dilemmas as well.

You are mis understanding how it works.

At April 16 you were given a starting amount which is the higher of your entitlement under the old or new systems, you have not lost anything and the April 16 amount is at least what you would have received if the system had not changed. Those extra years over 30 did not count under the old system anyway.

Your starting amount is the higher of 30 x £3.98 = £119.30 + additional pension of £12.18 = £131.48 or 31 x 4.25 = £131.75 - COPE of £30.48 = £101.27 meaning you are better off using the old system calculation. You are now able to increase that amount with voluntary contributions (or by working), very good value for money and something you would not have been able to do under the old system.

Silvertabby

“ I'm seriously considering the voluntary NICs, but not until I'm nearer 66 - don't see any point in paying now, as I'd be giving up my capital without any return.
Originally posted by Silvertabby ”
Dad is the same age as you and was thinking the same, but if leaving it so late to pay VC, is it possible class 3 may cost more than the £14.10p per week at present so adding to the cost?

Also can you only pay one tax year at at time which would rule out paying a lump sum for say 3/4 years all at once? close to your SP date.
Last edited by roxy28; Today at 5:33 PM.

Thanks Roxy - I thought I would be able to pay 3 or 4 years all at once. Will see what my actual State pension forecast is and look at my options.

molerat

roxy28 wrote: »

Dad is the same age as you and was thinking the same, but if leaving it so late to pay VC, is it possible class 3 may cost more than the £14.10p per week at present so adding to the cost?

Also can you only pay one tax year at at time which would rule out paying a lump sum for say 3/4 years all at once? close to your SP date.

For post 2016 years you can pay at the historical rate for the year up until 2 years after the end of the year concerned, for 2016-17 you must pay before 5 April 2019. After that they are charged at the current amount for the year you are paying them in up until 6 years after the end of the year, again for 2016-17 by April 5 2023. You can pay as many years, within those time limits and before your SP date, as you have the cash for in one go.

fifeken

zagfles wrote: »

Yes you get some S2P post 2002 even if contracted out if your earnings were below the "secondary earnings threshold" which was £34,300 last year, see here for previous years: http://adviser.royallondon.com/pensions/technical-central/rates-and-factors/ni-limits/low-and-secondary-earnings-thresholds/

Also pre 1997 you accrued SERPS whether contracted out or not - but if contracted out a "contracted out deduction" (COD) was applied. This was usually the same as SERPS but there were some circumstances where they'd be different, eg deferred pensions

None of this seems to apply to me so I still can't fathom why I've got as much additional pension under the old rules as I have. I don't really need to understand it, but it niggles me that I don't.

zagfles

fifeken wrote: »

None of this seems to apply to me so I still can't fathom why I've got as much additional pension under the old rules as I have. I don't really need to understand it, but it niggles me that I don't.

You'll probably find that some of your company pension wasn't contracted out. The FS scheme I'm in was contracted in initially then contracted out in the late 80's, so people who started in the 70's do have a lot in SERPS, and SERPS is revalued with earnings not inflation so early years SERPS can be quite significant.

xylophone

None of this seems to apply to me

Your starting (foundation) amount for NSP will be the higher of your entitlement when calculated under old and new rules.

You appear to have started work age 16 in around 1979.

You have 37 years of contributions.

You were contracted out for only some of those years.

It would appear therefore that AP accrued in your contracted in years (together with what you may have accrued under S2P even if contracted out) was high enough to give you a foundation (starting) amount slightly in excess of full NSP even after the Contracted Out Deduction.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf