State Pension - contracted out

50Twuncle

I am trying to get a definite answer to a common question from HMRC but can't.

I have 2 years lacking on my NI contributions to get a full state pension (having been contracted out all of my working life_
I am just 2 years short of the required 35 years NI contributions to receive maximum payments - with a average cost of £750 per year to pay to make up the full 35 years

I am told (on line estimator) that I will receive only £124.38 per month - which does nor tally with the missing years (£159.55*33/35) works out at £146.70 !
I have asked HMRC for their calculations - but keep on running in to a brick wall

The pension advisory service - reckon that I will need to make an extra 5 or 6 years NI contribution payments to achieve a max state pension - so that's a total of 38 or 39 years needed ?? (What has happened to 35 years contributions)
All that I want is someone to say - "Pay £x per year and you WILL receive a max state pension"...

So it appears that not only does someone on a contracted out pension need to have the correct number of years contributions - but the must also be the correct type of contributions ??

Malchester

I think that you need 35 years contributions at the full NI rate to get the top rate of pension. Any years when you were contracted out meant a lower level of NI contributions thus a lower level of pension. I was contracted out for 10 years but will get full pension because, by the time I retire I will have been able to contribute 35 years at the full NI rate.

BLB53

There are two separate calculations made when working out the entitlement...one for NI and the other for years when contracted out.

molerat

At April 2016 the number of years you had became a bit irrelevant, you were given a starting amount. This is based on the higher of the old 30 year amount + S2P or the new 35 year amount - COPE. You can then make this up with post 2016 contributions if short of the full amount. The 35 year full pension is only completely relevant to those starting their working life after April 2016. You will receive no less than you had already accrued under the old scheme with the double bonus of receiving the pension you were contracted out into plus the ability to make up the state pension. Wins all round.

greenglide

The number of years, in total, is irrelevant for this.

Your entitlement up to April 2016 was calculated using the new and old rules. You have the higher of these results.

To get the maximum amount you will need to contribute another five years as PAS have said. These can by by working or voluntary contributions.

Note that buying any pre 2016 years (if you have any gaps in them) wouldn't work.

p00hsticks

50Twuncle wrote: »

I am told (on line estimator) that I will receive only £124.38 per month - which does nor tally with the missing years (£159.55*33/35) works out at £146.70 !

I presume you mean £124.38 per WEEK, not month ?

As molerat has said, a 'starting amount' was calculated for you by the Pension Service (not HMRC) in April 2016, when the new State Pension was introduced - it's been discussed many times before on this board, and will be affected by your detailed NI record.

Going forward from then , any post-2016 years earned/bought will simply get you 1/35th of the nSP amount.

And as long as you are far enough from State Retirement Age to get those extra years, you will actually come out of it rather well - a payment of £750 for an additional £4.50 odd pension a week for life is pretty good value if you have an average lifespan.