SIPP Question

sanfairyanne

Thanks Dazed and Confused

I spent hours because of a mix up. They lost cheques I had mailed to them. It was only after I proved via my bank that they listened. In the end I told them i was recording the conversation. I then refused to put the phone down until my problem was rectified.

I’m 49 later this year. I remember that i have 23 years paid now, hence my assumption that i needed 12 more. Actually that’s not an assumption that’s what I was told.
TriathNanEilean makes a good suggestion; using the post, unfortunately that’s out of the question where I am currently living.

sanfairyanne

Four months ago while trying to back pay voluntary contributions I was told I had 17 qualifying years. I was also told I could pay 6 years voluntarily which would take me to 23 years. I paid around £689 for each year (some years cost a little less).
I now read here https://www.gov.uk/new-state-pension/how-its-calculated
“Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.82 a week to your new State Pension”

This seems to mean that I’ll get £4.82 per week which is £250 a year. So from this it appears to me as though I’ve been shafted. I paid £689 to get an extra £250 a year on my pension.
Perhaps someone can clarify this?

NoMore

You paid £689 ONCE to get an extra £250 PER YEAR

You planning on only being to claim for less than 3 years ?

Dazed_and_confused

I’m 49 later this year. I remember that i have 23 years paid now, hence my assumption that i needed 12 more. Actually that’s not an assumption that’s what I was told.

It could be you do need another 12 years. But that would be coincidence, not down to the "you need 35 years to get the new State Pension" system now in place.

This seems to mean that I’ll get £4.82 per week which is £250 a year. So from this it appears to me as though I’ve been shafted. I paid £689 to get an extra £250 a year on my pension.
Perhaps someone can clarify this?

You are overlooking quite an important factor here.

You have made a single payment of £689.

DWP will pay you £250/year for as long as you live. And will increase it by inflation each year. Under the current rules by a minimum of 2.5% I think.

So in year two they will pay you £256.25. Year 3 £262.65 etc. You could be getting this pension for 30+ years.

If you can find a better guaranteed investment for your £689 please share as we'd all be interested to know about it!

MallyGirl

Exactly- as long as you claim SP for more than 3 years then you are in profit. It was a good deal

nigelbb

Dazed_and_confused wrote: »

It could be you do need another 12 years. But that would be coincidence, not down to the "you need 35 years to get the new State Pension" system now in place.



You are overlooking quite an important factor here.

You have made a single payment of £689.

DWP will pay you £250/year for as long as you live. And will increase it by inflation each year. Under the current rules by a minimum of 2.5% I think.

So in year two they will pay you £256.25. Year 3 £262.65 etc. You could be getting this pension for 30+ years.

If you can find a better guaranteed investment for your £689 please share as we'd all be interested to know about it!

An even better guaranteed investment is if you worked abroad & were able to purchase added years with Class 2 self-employed NI contributions at a cost of about £150 for each additional year.

sanfairyanne

I’m making a rushed reply here as I’m in a bit of a hurry. I should spend a bit of time today contemplating the last few replies.
I think initially I got angry because despite going through a lot of hoops none of this was explained to me by the people at HMRC. They never once mentioned the new system. I can in fact prove that as I recorded our phone conversations. I was told I had 23 years and only needed 12 more. Then Audaxer (much earlier) tells me this isn’t true and that “not everyone who pays in 35 years gets the full amount”.

xylophone

At 6/4/16, two calculations were done

Old Rules

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

New Rules

(NI years/35 x £155.65) - Contracted Out Pension Equivalent (if any).

The higher of the two was your "starting amount" for New State Pension.

See

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

sanfairyanne

Thanks Xylophone I’m rushing to work so will look more later. I was just able to access my records for qualifying years. There are years showing as “year not full” despite my paying for these in March. I must get back to this later. Thanks bery much

Dazed_and_confused

I was told I had 23 years and only needed 12 more. Then Audaxer (much earlier) tells me this isn’t true and that “not everyone who pays in 35 years gets the full amount”.

The new system has two basic scenarios in place at present,

1) You are entirely under the new rules and 35 years is required to get to the maximum.

2). You aren't entirely under the new rules i.e. you had already started building up contributions under the previous system. In which case transitional rules apply and you might get the new State Pension of £168.60 with 35 years but that would really be a coincidence.

You could get £168.60 with just say 30 years. Or you might need 40 years. Or you might have already built up say £200. In which case you keep the £200 (+ any inflation increases) but cannot increase it any more.

What you need to do now before anything else is find out your forecast (the whole not just the top line).