State Pension forecast less than full amount - NOT contracted out

maryroberts

Thought I’d start a new thread although it’s a similar situation to the one from yesterday about receiving a full State Pension. The difference is that my husband has never been contacted out.

Husband is 57 – for much of his working life he’s been self-employed & had a few years living abroad, therefore he has gaps in his NI record. His online State Pension forecast shows that he has 19 years of NI contributions, and will have a further 9 years’ if he works until 2026. He is saving to pay the shortfall between 2008-12 (approx. £689 for each year). 2012-15 is still ‘under investigation’ but he will also pay that shortfall once they advise the amounts needed (he was self employed after returning to UK by this time). Since 2015 he’s been full time PAYE which makes things simpler.

My query is this – his forecast states: if you contribute to 05/04/26 you will receive £132.69 a week. You can improve your forecast by paying the shortfall in your NI record. The most you can increase your forecast to is £144.92 a week.

Please can anyone explain why the most he can increase my forecast to is less than the full state pension, which we understand is around £159 a week? He has not been contracted out at any point in his working life.

If he currently has 19 years of NI contributions and will have a further 9 years’ by 2026, plus 4 years once the shortfall is paid for 2008-12, and a further 3 years from 2012-15 pending amount due, that makes a total of 35 years contributions which should mean he is entitled to a full state pension?

We've written to The Pension Service in Wolverhampton but are still awaiting a reply, so thought we’d ask the knowledgeable folk on this Board.

xylophone

https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

Have a look at the chart on page 6.
and read the accompanying notes.

At 6/4/16 his starting amount was calculated as the higher of

Old Rules

19(?)/30 x £119.30 + SERPS/S2P

New Rules

19(?)/35 x £155.65

He can top up as indicated in the chart/notes and pay his contributions through employment up to his SPA but will still not reach the full NSP?

maryroberts

Thank you, Xylophone. I have read the chart & notes but I still don't really understand why he will never reach the full state pension - is it because he had such a big NI shortfall as of 06/04/16 even though he's trying to repay it all gradually?

It seems he still has 7 years' shortfall to pay - if he didn't pay all of this, presumably he would receive even less than £144.92 per week? In other words, I'm trying to make sure that it's worthwhile him paying back all the 7 years' shortfall, that he's not paying it to no avail.

xylophone

He can only achieve a maximum of around £103 (26/30 x £119.35) by topping up - this plus 9 post 2016 years brings him to around £144?

Jerben

From the on-line forecast... what is his current amount? (ie NI contributions to 5.4.17).

Jerben

xylophone wrote: »

He can only achieve a maximum of around £103 (26/30 x £119.35) by topping up - this plus 9 post 2016 years brings him to around £144?

According to the OP's numbers, his starting amount (in 2016), would have been based on 18 years.

maryroberts

xylophone wrote: »

He can only achieve a maximum of around £103 (26/30 x £119.35) by topping up - this plus 9 post 2016 years brings him to around £144?

Thanks again Xylophone. I thought the calculation would be under the new rules (as it's the higher figure) (26/35 x £155.65) = £115.62 plus 9 post 2016 years = around £40.95 = £156.57 (I've probably understood that wrong!)

Does this mean that each year worked post 2016 is worth about
£4.55 per week? I'm trying to understand the calculations. Are pre-2016 years (which he is topping up) worth less? (I calculate £3.97 per week?)

maryroberts

Jerben wrote: »

From the on-line forecast... what is his current amount? (ie NI contributions to 5.4.17).

Hello Jerben - his forecast to date = 19 years contributions. We paid one year's shortfall in Aug 2016 (£689) and one more year's shortfall in Sept 2017 (£689). So as of April 2016 his contributions would have been 16 years.

molerat

What is his current amount in £ ?
Which post 2006 years are not complete ?
Is 2016-17 showing as complete ?
Which years did you buy ?
Is there a COPE amount shown anywhere ?

Jerben

maryroberts wrote: »

Hello Jerben - his forecast to date = 19 years contributions. We paid one year's shortfall in Aug 2016 (£689) and one more year's shortfall in Sept 2017 (£689). So as of April 2016 his contributions would have been 16 years.

Sorry, I meant what was his amount in £ from the statement up to 5.4.17?


Exactly which years were the Aug 16 and Sept 17 shortfall contributions for?


Does his NI record on the statement reflect these extra two years?

maryroberts

molerat wrote: »

What is his current amount in £ ?
Which post 2006 years are not complete ?
Is 2016-17 showing as complete ?

Hello Molerat, I've just logged onto his State Pension summary:-

2016-17 and 2015-16 are showing as complete/full years.

It says - Your forecast is £132.69 per week
Estimate based on your NI record to 5th April 2017 is £91.66 per week.
Forecast if you continue to contribute to 5th April 2026 is £132.69 per week.
You can improve your forecast - you have shortfalls in your NI record that you can fill and make count towards your State Pension.
The most you can increase your forecast to is £144.92 per week.
View gaps and the cost of filling them:-

2008-12 (4 years) - Year is not full - pay voluntary contributions of £689
2012-15 (3 years) - we are checking this year to see if it counts towards your pension.....(he was self employed so hopefully the voluntary contributions will be a lower amount)

2006/7 and 2007/8 are the 2 years we have already paid voluntary contributions (paid in Aug 16 & Sept 17 respectively). Yes, his current NI record shows these 2 years as full years from voluntary contributions. (I made sure of this soon after they cashed the cheques :rotfl:)