State Pension Forecast

DancingBadger

Apologies for asking a question already posed by many posters on this board, but after getting a bit cross-eyed trawling through countless threads I haven't really got definitive answers.

OH has just turned 62 and has another four years until he reaches SPA. An online pension forecast in April 2014 states his projected SP as £218.33 and goes on to mention a possible reduction due to contracting out.

As he's decided to semi-retire (working possibly 3-4 days a month at most), he's obtained another online forecast today, which estimates £237.12 pw at age 66. It also states he cannot improve the forecast any more (he has 45 qualifying years) and will need to pay NI (if working until June 2021) to fund other state benefits and fund the NHS, etc.

Questions:

1. Am I correct in thinking that if he fully retires for the next four years and therefore doesn't make any further NI contributions, the forecast will remain the same?

2. It appears forecasts obtained after April 2016 no longer make any mention of COPE. Is this because the contracted out calculation has already been factored into forecasts made after April 2016?

3. (Tongue in cheek) For planning purposes, is it safe to assume his SP will be as forecast from June 2021?

Silvertabby

1. Yes. Even if he continues to work/pay NI it won't increase (except for cost of living increases).

2. Yes

3. Maybe (plus cost of living increases) Change that to 'probably' if he has checked his NI conts years/contracted out years (he can't have many of those, if any) and they are correct as at April 2016.

molerat

1.

2. Contracting out would be mentioned if he had been (unless of course this well above new max amount which we have rarely heard here brings about another variation of the forecast). The earlier forecasts had a blanket "if contracted out" statement.

3.The first £159.55 will increase with the triple lock and the remainder will increase with CPI going forward.

Dazed_and_confused

Disagree on point 1, the forecast will increase each year in line with whatever increase the government chooses to give us.

This April the standard new State Pension forecast amount increased by £3.90/week.

Silvertabby

3.The first £159.55 will increase with the triple lock and the remainder will increase with CPI going forward.

Are you sure? This is under the old rules, so I think only the £122 per week basic State pension will increase by the triple lock (for as long as it applies), with CPI for the remainder.

molerat

Calculated under old rules but paid under new.

Can't immediately find a .gov link but https://www.moneyadviceservice.org.uk/en/articles/the-state-pension-rules-and-changes-explained

If you had built up substantial entitlement to Additional State Pension this might mean that you have already earned a pension under the old system which is worth more than £159.55 a week.
If this applies to you, you will get the full new State Pension amount and you’ll also keep any amount above this as a ‘protected payment’ which will increase by inflation.

which seems to be a cut and paste from nidirect.gov.uk

xylophone

See https://www.gov.uk/new-state-pension/how-its-calculated


If your starting amount is more than the full new State Pension

The part of your starting amount which is above the full new State Pension is called your ‘protected payment’. This is paid on top of the full new State Pension.

Annual increases

The new State Pension increases each year by whichever is the highest:


earnings – the average percentage growth in wages (in Great Britain)

prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)

2.5%

If you have a protected payment, it increases each year in line with the CPI.

jem16

DancingBadger wrote: »

1. Am I correct in thinking that if he fully retires for the next four years and therefore doesn't make any further NI contributions, the forecast will remain the same?

The forecast is assuming that your husband continues to pay NI until state pension age. If he does not pay any NI then that figure will reduce.

Forecasts usually give two figures;

1. Entitlement built up as of when the forecast was issued.

2. An estimate of what could be achieved if you continue to pay NI until state pension age.

Figure under 1 would rise only with inflation. Figure under 2 would reduce if no NI was being paid.

xylophone

The forecast is assuming that your husband continues to pay NI until state pension age. If he does not pay any NI then that figure will reduce.

The OP's husband's "starting amount" was already in excess of full NSP at 6.4.16.

He will have to continue to pay NI if earning over LEL but this will not increase the state pension - the state pension will only increase as indicated post 7 above.

http://www.roffeswayne.com/wp-content/uploads/2014/06/Changes-to-the-UK-State-Pension-from-6-April-2016.pdf

Your starting amount exceeds the full new state pension

The excess above the new full state pension is protected and this ‘protected payment’ will be made in addition to the full state pension. Any qualifying years after 5 April 2016 will not increase your State Pension.

jem16

xylophone wrote: »

The OP's husband's "starting amount" was already in excess of full NSP at 6.4.16.

Apologies - I misread the figure as £137.12 as opposed to £237.12.

OP - please ignore my last post.

DancingBadger

Thank you all for your responses.

1. We're not really concerned whether this latest forecast will increase (although it would be nice, of course); just that it won't decrease over the next four years if he decides to retire completely - which seems to be the case.

2. OH thinks he contracted out of SERPS in 1983 to go into a final salary scheme and never opted back in. That scheme closed and was replaced with a DC scheme. In 2005, he was made redundant has been freelancing since then. This is the bit which is unsettling. I was hoping this latest forecast would have taken account of all this, especially as his NI record is all "full", with the exception of 2012/13 for reasons we don't understand.