Pension Act 2007 and Old HRP

a&akay

My very recent State Pension Forecast says that I have 20 years' HRP and a further 10 proper qualifying years. I am 55. Under the new Act I naively assumed that, with it changing to only 30 years in 2010, I no longer need to make any additional Cl 3 contributions. The Pension Advisory Service have emailed me to say that old HRP is only given 0.5 qualifying years for every HRP year under the new Act ie I need 10 more years. I can find no reference to this anywhere. Can anyone point me to definitive guidance where this is confirmed. If so I will resume my Cl 3 payments!

seven-day-weekend

I don't know the answer to your question, but would be very interested in seeing an answer myself .

I presume that this scenario does not apply to me as my retirement date is January 2010? I have 25 qualifying years and 13 years HRP.

a&akay

I had to be vague as this part of the new regulations is still being clarified. The laws only changed in July 2007. Nobody knows the answer to this question for sure yet. My figure was strictly for illustration purposes only. We all have to wait and see.

To re-inforce this, the Pension Service computer for state pension forecasts is being programmed for the changes and will not be ready for 14 months!! I regret we will all have to wait on this issue.

Martin Cuthbert
Information & Guidance Team
direct dial 020 7630 2267
The Pensions Advisory Service. Registered Office 11 Belgrave Road London SW1V 1RB:company limited by guarantee no 2459671, registered in England & Wales.

Pensions helpline: 0845 601 2923 General office: 020 7630 2250 Fax: 020 7233 8016
E-mail: [EMAIL="enquiries@pensionsadvisoryservice.org.uk"]enquiries@pensionsadvisoryservice.org.uk[/EMAIL] Web site: www.pensionsadvisoryservice.org.uk

Advice given by The Pensions Advisory Service is an opinion given in good faith on the basis of the documents and information made available but The Pensions Advisory Service cannot be held responsible in law for opinions expressed, nor should any such opinion be regarded as grounds for legal action



From:
Sent: 19 September 2007 14:39
To: Martin Cuthbert
Subject: Re: State Pensions


Thanks for your reply. Apologies for coming back with a further clarification but it is key to my prospective pension amount. You say 'if' in your reply. Is this actually the factor that definitely applies under the new regualtions or is this still under debate ie 1 HRP year will equate to half a pension qualifying year?

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Original Message

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From: [EMAIL="Martin.Cuthbert@PensionsAdvisoryService.org.uk"]Martin Cuthbert[/EMAIL]

To:

Sent: Wednesday, September 19, 2007 2:18 PM

Subject: State Pensions

Dear Mrs

Thank you for your email regarding your state pension.

Under the old system 20 HRP years would have reduced your target record for a full basic state pension. Instead of getting a full basic state pension after 39 years (assuming State Pension Age of 60) you could deduct the 20 hrp years to get a target of 19 years for the same purpose, except the minimum target even after HRP could not fall below 20 years.

Under the new system, each past year of HRP award will be reduced and then treated as a tax year with a full National Insurance record. In this example, if each HRP year is treated as a 6 month credit, your 20 years will become 10 years. Add the years you have bought and I regret you still need to pay voluntary contributions. I must stress this is only an example to illustrate the system.

I would suggest you contact the Pension Service directly with this question so they can check your record. Their number is 0845 606 0265.

Yours sincerely

Martin Cuthbert

Information & Guidance Team

direct dial 020 7630 2267

The Pensions Advisory Service. Registered Office 11 Belgrave Road London SW1V 1RB:company limited by guarantee no 2459671, registered in England & Wales.

Pensions helpline: 0845 601 2923 General office: 020 7630 2250 Fax: 020 7233 8016

E-mail: [EMAIL="enquiries@pensionsadvisoryservice.org.uk"]enquiries@pensionsadvisoryservice.org.uk[/EMAIL] Web site: www.pensionsadvisoryservice.org.uk

Advice given by The Pensions Advisory Service is an opinion given in good faith on the basis of the documents and information made available but The Pensions Advisory Service cannot be held responsible in law for opinions expressed, nor should any such opinion be regarded as grounds for legal action

Not much to go on then for such an important issue as trumpeted by the Government.

sharnad

seven-day-weekend wrote: »

I don't know the answer to your question, but would be very interested in seeing an answer myself .

I presume that this scenario does not apply to me as my retirement date is January 2010? I have 25 qualifying years and 13 years HRP.

No it wouldnt apply to you

vix2000

I'm more confused than ever now after reading this.

I got a pension forecast a couple of year ago which said I had 12 qualifying years. I assumed there was a mistake as I was under the impression that you got hrp for every year you recieved child benefit.

As my oldest was born in 1979, next 1983 and youngest 1991 and still getting child benefit as in full time education I had naively assumed I would have full credits. I am 51 yrs old, by the way. Is there a maximum limit or something?

Can anyone enlighten me as to what my situation should be regarding pension credits as I am a bit concerned now. Thanks.

ALIBOBSY

hrp does not actually pay your credits or conts for the year. What happens is every full tax year you get child ben (or ica) you get 1 years hrp listed on your NI report. These years only apply if you did not get any other credits or pay any other credits during those years ie. not working or on any other benefits or paying voluntary credits. When your pension is calculated they take the number of full years NI you have and divide by the number of years the state require you to have to get 100%, usually for a women this would be 39 (if retiring at 60) the hrp reduces this figure so making your paid years worth more as it gives you a higher % overall. However you may have had a married womens reduced rate election at some point and any period this applied would not count towards your pension at all.
What does your forecast say ie. how many years you have already how many years HRP listed etc. Usually a forecast will list what you hold currently and then give you a prediction of what you will be due when your retire based on your current situation. Also remember if you are divorced/widdowed or married to a partner who will be in rec of retirement pension when you retire the amount you are due may be increased as well. Its a while since I did pension awards so I can't remember if HRP years were limited, but I rarely saw any higher than 12 yrs in total. Don't think it was.
ali x

PS re the new regs usually when any regs were amended it will only apply from a certain date not retrospectively and in the past there has usually been a transitional period where people are transitionally protected. Seems a bit harsh to change the way HRP is used and effectively devalue it. Could this be classed as sexist as the vast majority effected by it will be female.

ALIBOBSY

Just thought as well if pension forecasts are going to be issued incorrectly for 14 months how miss leading ie that!!!!! Like the OP said you could think you were all set up and suddenly the goal posts are moved. Does anyone know what legislation has brought this HRP amendment in?
ali x

ALIBOBSY

Ok found the act itself just having a read. Initially can see it applies to those due to retire on or after 6th April 2010. The number of years required to get a full pension in your own right is reduced to 30 and you can claim the extra top up for wives off their partners ni conts even if they haven't actually claimed their pension yet, eg they have defferred their pension because they are continuing working.
ali x

ALIBOBSY

OK this seems to be the relavent sections

3 Contributions credits for relevant parents and carers
(1) After section 23 of the SSCBA insert—
“23A Contributions credits for relevant parents and carers

(1) This section applies to the following benefits—
(a) a Category A retirement pension in a case where the contributor concerned attains pensionable age on or after 6th April 2010;
(b) a Category B retirement pension payable by virtue of section 48A below in a case where the contributor concerned attains pensionable age on or after that date;
(c) a Category B retirement pension payable by virtue of section 48B below in a case where the contributor concerned dies on or after that date without having attained pensionable age before that date;
(d) a widowed parent’s allowance payable in a case where the contributor concerned dies on or after that date;
(e) a bereavement allowance payable in a case where the contributor concerned dies on or after that date.
(2) The contributor concerned in the case of a benefit to which this section applies shall be credited with a Class 3 contribution for each week falling after 6th April 2010 in respect of which the contributor was a relevant carer.
(3) A person is a relevant carer in respect of a week if the person—
(a) is awarded child benefit for any part of that week in respect of a child under the age of 12,
(b) is a foster parent for any part of that week, or
(c) is engaged in caring, within the meaning given by regulations, in that week.
(4) Regulations may make provision for a person’s entitlement to be credited with Class 3 contributions by virtue of falling within subsection (3)(b) or (c) above to be conditional on the person—
(a) applying to be so credited in accordance with the prescribed requirements, and
(b) complying with the prescribed requirements as to the provision of information to the Secretary of State.
(5) The contributor concerned in the case of a benefit to which this section applies shall be credited with 52 Class 3 contributions for each tax year ending before 6th April 2010 in which the contributor was precluded from regular employment by responsibilities at home within the meaning of regulations under paragraph 5(7) of Schedule 3.
(6) But the maximum number of tax years for which a person can be credited with contributions under subsection (5) above is—
(a) in the case of a benefit mentioned in subsection (1)(a) to (c) above, 22;
(b) in the case of a benefit mentioned in subsection (1)(d) or (e) above, half the requisite number of years of the person’s working life.
(7) The table in paragraph 5(5) of Schedule 3 (requisite number of years of a working life of given duration) applies for the purposes of subsection (6)(b) above as it applies for the purposes of the second condition set out in paragraph 5(3) of that Schedule.
(8) For the purpose of determining entitlement to a benefit to which this section applies, a week that falls partly in one tax year and partly in another is to be treated as falling in the year in which it begins and not in the following year.

ALIBOBSY

As I read it future HRP will be awarded as class 3 "proper" conts on a weekly basis, which is fairer for people like me (At home with bump number 3 due in 2 wks) from April 2010.
Existing HRP is dealt with in the last few lines (5) onwards.
You get 52 class 3 credits ie one full year for every full year of exisiting HRP. Not 0.5 years a full year. However this is limited to 22 years for basic "your own conts" pensions ie cat a and for married womens increases ie cat b pensions. Widdowed parents and people on bereavement benefit only get half the years.
Will check out the table re working life as per section (7) now.
ali x

ALIBOBSY

Ok the table mentioned in section (7) is just dealing with the transitional periods when the minimum pension ages go up. I don't get to retire till I am 67
Hope the info makes things clearer I think the advisory service have got the wrong end of the stick. Sat at home willing contractions to start here lol so gave me something to keep my brain ticking over whilst the other kids are at school
Ali (and big bump number 3) x