SIPP Question

nigelbb

Dazed_and_confused wrote: »

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).

It is also possible that you will never be able to get £168.60 depending on when you retire & whether you were contracted out.

Audaxer

sanfairyanne wrote: »

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?

To clarify, 4 months ago did you make 6 years worth of voluntary payments? If so I think the important thing is what years these payments relate to. As the link you highlighted says, each qualifying year after 5 April 2016 adds £4.82 per week. My concern would be if some of your voluntary contributions related to payment for years where you had gaps in payments before 5 April 2016, as I'm not sure whether these payments would have added £4.82 per week. I think the only way to know for sure is if you can manage to check your statement online.

sanfairyanne

Ok i was able to get onto the system to access my forecast. My estimate is currently £90.91. I did at some point opt out and I see a COPE figure of £5.02. I assume this is added to my weekly pension? My forecast shows i have 20 years paid.
In March i paid six years. All but 17/18 were before 06/04/16.
15/16 and 16/17 were problematic (this is what took hours on the phone). My cheque for that period was cashed but it never showed up on my forecast and despite promises from HMRC it still shows as ‘not full years’.
Incidentally, prior to paying the six years contributions I had 14 years on my forecast so one would assume it wasn’t for nothing.
Once i get back to the UK in October I’ll need to find out why on earth 2015-2016 and 2017-2018 are still not showing. I have proof that I paid for this. Sorry it’s just such a headache, especially when you’re away from the UK with shockingly slow wifi.

Dazed_and_confused

According to your forecast you need 17 more years to get to the new State Pension.

You get £4.81 per year so an extra 16 years adds £76.96. That takes you to £167.87. The seventeenth year just adds the final £0.77 to make it up to £168.60

I see a COPE figure of £5.02. I assume this is added to my weekly pension?

No, it isn't added to your (State) Pension.

You should be entitled to a company pension (the one you were contracted out from) and the £5.02 will effectively be part of the pension they pay you.

You won't normally see this figure actually mentioned anywhere in relation to the company pension and chances are you will get more than that although there is no guarantee of this.

sanfairyanne

Ok thanks Dazed and Confused. I just need to get the two missing years sorted out and I should be ok. That’ mix up has something to do with me paying mariners national insurance for those two years. I sort of expected the COPE figure to be separated from the DWP. I vaguely recall opting out when I worked in the 80’s in a factory. I was young and just did as I was told. I don’t actually remember opting back into the state system. I don’t know what would have been better and I guess I never will. Thanks again for your help, and everyone else. Financial worries can really become depressing.

jamesd

sanfairyanne wrote: »

I don’t actually remember opting back into the state system. I don’t know what would have been better and I guess I never will.

For contracted out workplace pensions you were contracted back in to the earnings- related part of the state pension as soon as you moved to a job where the pension wasn't contracted out.

You can be sure that what you did was best, so you can relax about that.

The reason you can be sure is the way the single tier state pension works. A person who wasn't contracted out just accrued more state pension and ends up reaching the single tier cap sooner, then getting no more increases for extra years. Someone who was contracted out both gets state pension increases for more years before reaching the cap and gets the part of the work pension that's due to contracting out.

sanfairyanne

Jamesd,
Much appreciated, thanks for taking the time to explain.