State Pension COD

pteebe

In the early 60's i contracted out of the state pension, but now i am being charged £15.01 per week off my state Pension, can anybody help, please, Thanks, pteebe

xylophone

In the early 60's i contracted out of the state pension,

Do you mean that from 1978 you contracted out of SERPS because you were in a Contracted Out Salary Related pension scheme?

If you were of working age in the sixties then you will be on the old state pension.

The SERPS scheme was introduced in 1978 - employers/employees paid additional NI contributions depending on salary to build up an additional state pension on top of the Basic State Pension.

However, in return for guaranteeing a pension that was at least as great as SERP, the employer could pay a lower rate of employer/employee NI (contract out).

This was the Guaranteed Minimum Pension. (The GMP scheme ended in 1997 with the introduction of a scheme reference test.)

The SERPS scheme was changed to SP2 in 2002.

At State Pension Age, the National Insurance Contributions Office calculated the additional pension you would have earned between 6/4/78 and 5/4/88 and 6/4/88 and 5/4/97 as if you had not been contracted out. (Notional ASP)

From this they deduct the actual GMP you have built up through your occupational pension scheme between 1978 and 1997 - this is the COD - what is left is the amount of additional state pension you accrued in that period.

Linton

I think there is some confusion.  SERPS, which one could be contracted out of, was only implemented in the late 1970s.  So either you have your dates wrong or you are talking about something else.  The only "something else" I can think of was the married woman's pension arrangements which were in place in the 1960s whereby married women could pay less NI as they could claim a pension based on their husband's contributions.

Please confirm what your actual situation is and we should be able to provide an explanation.

Brynsam

pteebe said:

In the early 60's i contracted out of the state pension, but now i am being charged £15.01 per week off my state Pension, can anybody help, please, Thanks, pteebe

Do you mean 'your early 60s' rather than the early 1960s?

If you joined a pension scheme which was 'contracted out', then you continued to build up your basic state pension as normal. During your membership of the scheme, you paid lower NI contributions. 

Instead of building up the additional state pension (first called SERPS, then called the State Second Pension) during your period of scheme membership, the pension scheme you belonged to undertook to pay benefits broadly in line with those which would otherwise have been paid by the state. 

More details here: https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/