State Pension - NHS Contracting Out

Soott

I am due to retire in a few months and it has come as a complete shock that I have been a paying lower rate of National Insurance as the NHS contracted out of NI contributions.  Apparently I will be receiving a lower state pension because I have not paid full contributions even though I have been in full time employment for the last 40 years.  I have spoken to all my friends who work in the NHS and most were completely unaware that their state pension will be reduced.  Apparently on 6th Aoril 2016 the rules changed so that those who were contracted out, no longer are.  Cant believe this has been kept quiet.

ZeroSum

It wasn't kept quiet

molerat

Only quiet if you had your ears closed !

What exactly does your state pension forecast show ?  I suspect you will have in excess of £154 which is likely more than you would have got under the old scheme if contracted out.

I reached state pension age last year and am receiving more than I would have under the old system after spending many years contracted out, the post 2016 years and the ability to accrue more than the old 30 years have made it possible.

Silvertabby

It's never been a secret.  All public sector pension schemes were contracted out, and we are all better off for it.  Full details were readily available in your scheme booklet/ other information literature.

Contracting out and the single tier pension has been widely discussed not only on these boards, but also on other financial boards and across the media since the announcement of the single tier pension.

bigadaj

Ignorance is a terrible thing. Their pensions haven't been reduced, they are what they have paid in for, including paying less tax (NI). presumably a few WASPEs included as well. given that these pensions will be under the old system then a full pension can be anywhere between not much over £100 and nearly £300, which of these numbers was the OP and friends thinking they would achieve?

Andy_L

molerat said:

Only quiet if you had your ears closed !

What exactly does your state pension forecast show ?  I suspect you will have in excess of £154 which is likely more than you would have got under the old scheme if contracted out.

I reached state pension age last year and am receiving more than I would have under the old system after spending many years contracted out, the post 2016 years and the ability to accrue more than the old 30 years have made it possible.

In the CS it quite clearly said on the pay slip it was the contracted out rate NI deductions. I'd expect the NHS to have done similiar

xylophone

The scheme "contracted out" until 6/4/16.
https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension

BobQ

Th OP has missed the point. For many years he has paid a lower "contracted out" because his NHS pension undertook to pay a guaranteed minimum pension. Pay in less you get less, its not difficult. But since 2016 he should have been paying the standard NI contribution. OP should check his state pension. His contributions since 2016 will have given him about £4-£5 a week at state retirement age for each year. So his state pension will be about £16 to £20 a week more than in would have been index linked for life.

JoeCrystal

Soott said:

I am due to retire in a few months and it has come as a complete shock that I have been a paying lower rate of National Insurance as the NHS contracted out of NI contributions.  Apparently I will be receiving a lower state pension because I have not paid full contributions even though I have been in full time employment for the last 40 years.  I have spoken to all my friends who work in the NHS and most were completely unaware that their state pension will be reduced.  Apparently on 6th Aoril 2016 the rules changed so that those who were contracted out, no longer are.  Cant believe this has been kept quiet.

A complete shock? Really? I think you are in a win-win situation. You still got a very generous NHS pension scheme, paid less National Insurance contribution than someone who has to pay the full rate and an option to increase your state pension to the full new State Pension of £175.20 per week with post-2016 years. I can't believe that this is not widely known among the NHS staffs.

Amateurretiree

I must admit I retired at 55 three years ago and only found out from a friend after that who retired before me about the Contracted Out malarkey. Also, DH , who retired early at 60 last year, was also contracted out. Both of our SP ‘s stand currently at £150 pw. Obviously we both have the option to buy back lost years, if I remember correctly it’s 3 years each.

I’m afraid we were both ignorant of this fact, there seems to be a widespread falsely held belief if you have thirty years of full employment you will receive full SP.
I don’t blame anyone but myself for not knowing this, I’m the type of person who researches EVERYTHING,I just didn’t look at my pension statements properly, other than my annual pension amount.

Amateurretiree

Should add I’m a retired NHS nurse