National Insurance con

misuel1955

I retired from the NHS in 2015 and have over 40 years NIC contributions. Having checked on line this week at HMRC I was astonished to find that I have a shortfall in NIC and in order to receive the full State Pension in 2021 I need to pay the shortfall or receive a lower pension. Why is this so and what is the point of having more than the qualifying years of NIC contributions to the day I retired aged 59 in 2015?:(

drumtochty

You will have a full old style pension circa £125 a week, that is what your NI paid for as you were contracted out and any SERPS etc you would have earned was not paid to you via the state pension as you paid lower NI contributions, Your NHS pension pays you your lost SERPS etc.


No con at all you get yor £125 a week, that you are contracted to get.


If you want to get the new state pension value of circa £164 a month, you have to earn the differance at circa £4.50 a week in your state pension for every year worked since April 2016.


A simple google search would have pointed this out to you.

Mnd

Because you were contracted out and have your private pension.

It's not a con, you paid reduced national insurance contributions to put towards your pension.

My wife is in the same position, she has worked 42 years but still needs 3 years to get to full state pension, but she does have her personal pension pot of £65k as well

xylophone

At 6/4/16 two calculations were done

30/30 x £119.30 + (Additional State Pension - deduction for contracting out).

(35/35 x £155.65) - Contracted Out Pension Equivalent.

Your starting amount was the higher of the two.

If the starting amount was less than a full new state pension, you have the opportunity of making voluntary contributions from 2016 to your SPA to improve your pension.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

Brynsam

A failure of understanding is understandable - but that doesn't make it a con.

misuel1955

Many NHS staff attended pre retirement workshops and at no time was the fact that our NIC would not entitle us to the full State Pension. Surely this should have been a valid topic for discussion so staff could be given the opportunity to pay a shortfall if they wanted to

Mnd

That's not anything we can have any control over,
Its still not a con

molerat

You were never going to get a "full" pension because you never paid for it, a pre 2016 "full" pension is, at today's rates, about £293. You were, the same as you are now, going to get the pension you were entitled to as well as an extremely good employer pension. What you will get under the new scheme is no less than what you were going to get before the changes. Even better you can now pay some extra and get even more at an extremely good rate, something you were not able to do under the old system. You could have done that if you had continued working and contributing NI as well. No doubt many pre 2016 retirement workshops were not really up to speed on the new rules coming in, even DWP & HMRC were not too sure what was happening.

dunstonh

Many NHS staff attended pre retirement workshops and at no time was the fact that our NIC would not entitle us to the full State Pension.

They would have got the full basic state pension. However, when the rules changed to the single state pension, they would build new entitlement for a higher amount based on the number of years in the new scheme.

Surely this should have been a valid topic for discussion so staff could be given the opportunity to pay a shortfall if they wanted to

Were these meetings to discuss the NHS pension or state pension?
Were these meetings before the new state pension or with the old state pension?

System

I think the only con is in the very free banding-about of the expression "flat-rate state pension".
The government ought to have recognised that in ordinary language flat-rate means everyone gets the same rate, not that some people's are flatter than others.
There are doubtless good reasons for that, as explained in previous posts, but it's still a bit disengenuous.

p00hsticks

Clifford_Pope wrote: »

I think the only con is in the very free banding-about of the expression "flat-rate state pension".
The government ought to have recognised that in ordinary language flat-rate means everyone gets the same rate, not that some people's are flatter than others.
There are doubtless good reasons for that, as explained in previous posts, but it's still a bit disengenuous.

To be fair, I think the government has always referred to it as a 'single tier' pension rather than a 'flat rate' one - it's the popular press that seem to prefer the term 'flat rate'.

The main omission when discussing the new state pension is in pointing out that if you started your working life before it was introduced there are transitional rules that mean you may get more or less than the headline amount and require more or less than the 35 years.