State pension and contracting out

YaniB_2

Thanks to everyone who replied. Sorry guys the last 2 posts do confuse me as I struggle with all the jargon surrounding pensions. I did transfer cash from my company scheme around 26 years ago to a Prudential section 32.
My statement says this has a GMP of £6800 at 65. It also has around 40k built up from a redress amount I received due to mis-selling. I have been informed this cannot be used in any way to make the £6800 GMP and will be a separate fund I can use to buy additional pension.


Hope this helps clarify a little.

xylophone

As far as I can see, in your case, with your 38 qualifying years, you will certainly have had a right to a full state pension of £119.30.

You seem to have been contracted out of SERPS up to 1990 - presumably you have been contracted in since?

It is most likely that the DWP did use the correct revaluation method for your GMP, so that any SERPS earned pre 1997 would have been reduced to a negative amount ( because Fixed Rate gives a higher figure than Full rate).

Therefore your old rules calculation would be £119.35 + S2P earned from 2002 - 2016 - the figure for your Starting Amount (£144) seems to fit with this scenario.

With regard to the S32 -




On leaving your employer in 1990, you would have been provided with a statement of deferred benefits showing your pre 88 GMP, post 88 GMP and the excess.

You transferred your benefits to a S32 with Prudential.

http://www.financialadvice.net/s32_buy_out_plan/zone/1288

At some point you made a complaint and received redress - the redress was paid into a separate policy which Prudential cannot use to "frank" your GMP.

Prudential must pay you at least your revalued GMP at GMP age (65 for a man/60 for a woman).

However, once the pension is in payment, there is no obligation to index link pre 88 GMP or post 88 GMP above 3% CPI.

You can obtain state pension statements as required in the years leading up to SPA so you can keep checking as you go.

YaniB_2

Ok.


You are correct in that the Pru suggested I contract back in. This was a good number of years ago , possibly 10+ from memory.


So basically are we saying the figures are correct @ 144 and in 3 years time that will have risen to 155 ?
So any other pensions I have will have no effect on the figures above I.e.
I will also get my GMP of 6800 @ 65 plus any additional pension from the 40k separate fund?

xylophone

Read the link re S32 - the Pru must pay you at least your GMP - the separate policy cannot be used to cover the GMP so will give additional benefits.

The Starting Amount seems to fit but you can check this again with DWP - it can be increased up to the full NSP but not beyond - that is that you will continue to pay NI beyond the three years required up to SPA if you are employed but it will not increase the State pension.

According to something I read recently from a firm dealing with GMP revaluations, in 2018 HMRC intends to inform all deferred members of contracted out schemes how their contracted-out liabilities affect their state pensions.

YaniB_2

Ok.
Many thanks to those who replied to my questions.


Yani

k6chris

Hi all, I am still confused by this. In very simple terms;

My April 2016 SP forecast says £155.65 at SP age, £140.50 a week up to April 2016, 4 years more NI contributions via work to make the lower amount into the higher amount.

Website also says COPE estimate is £64.93 a week.

My DB pension provider says "As a result of being contracted out of SERPS you have an entitlement to a GMP. The amount of GMP is INCLUDED in the figures quoted in the pension certificate"

I am trying to work out how much additional money I will receive when I reach SP age. Is it;

1) + £155.65 a week (assuming I have the 4 more years of NI contribution)

2) + £90.72 a week ( £155.65 - £64.93)

3) some other figure because COPE and GMP are different things - if so is it likely to nearer to one of the figures above.

Unhelpfully, in the example given on the .GOV website "After 6 April 2016, Margaret’s estimated Starting Amount for the new State Pension is £135.65 a week (using the new scheme rules). She currently has 35 qualifying years. Her statement also gives an estimated COPE amount of £20 a week and explains that adding the 2 together is £155.65 a week".

My estimate is the £155.65 a week, if it was £90.72 it would make sense, hence my confusion!

HELP!!

jamesd

Ignore the COPE. It has nothing to do with what the state pension will pay you.

You will get the £155.65 state pension and on top of that your other pension will pay you at least the GMP, which is roughly the £64.93 COPE, though in reality it will normally pay you much more than that.

Lucy_Lastic

I have 44 years NI contributions (checked on line) and yet my state pension forecast is showing as £147.07 rather than £155.65.

My retirement date is Nov 2020.

Any idea why the calculator is not showing the maximum state pension?

Silvertabby

I have 44 years NI contributions (checked on line) and yet my state pension forecast is showing as £147.07 rather than £155.65.

My retirement date is Nov 2020.

Any idea why the calculator is not showing the maximum state pension?

Because some of those 44 years were contracted out (ie, you paid reduced NI because you were in a occupational/private contracted out pension.)

Is £147.07 your foundation amount as at April 2016, or is it your maximum State pension forecast for 2020?

Lucy_Lastic

Silvertabby, thank you.

£147.07 is the forecast for 2020.

I've got 42 years full NI contributions, surely that is way over what I need for the maximum pension?