State Pension - NHS Contracting Out

StephenM_2

I've been in a private sector DB pension for 36 years, contracted out until 2016. I certainly wasn't ignorant of this and was happy to save on NI over the years. Didn't  the OP notice their NI went up in 2016 and wonder why.
As it happens I need 5 more contribution years to get full state pension (including this year), and 6 more contribution years to SPA. So I may get the full state pension anyway.

Linton

As you are below state pension age you can also make a voluntary NI contribution every year for the next few years up to but not including the year in which you reach SPA or have accrued the maximum SP.  This is an amazingly good deal since the cost is recovered in increased SP in 3-4 years.

p00hsticks

Linton said:

As you are below state pension age you can also make a voluntary NI contribution every year for the next few years up to but not including the year in which you reach SPA or have accrued the maximum SP.  This is an amazingly good deal since the cost is recovered in increased SP in 3-4 years.

The OP says they are 'retiring' in a few months - it's not clear if this is because they are actually reaching state pension age, but if so the option to buy further years may not be available to them. 

dunstonh

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. 

It shouldn't be a shock as it was in the scheme booklet if you had chosen to read it.

However, it is pretty well recognised that NHS workers are one of the most pension illiterate workforces out there.

Marcon

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.

What a pity that you don't seem to have understood the massive benefit your NHS pension is - ditto the retired nurse who posted later in this thread.

Being contracted out meant you paid lower NI (which boosted your tax home pay) and - spoiler alert - being contracted out has NO impact on your basic state pension, so talking about 'incomplete years' as a result of being contracted out is nonsense. It only impacted on your SERPS/Second State Pension.

Dox

Amateurretiree said:

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.

Your basic state pension isn't affected by being contracted out, so if you have 'gaps' in your basic state pension, it is for other reasons.

Linton

p00hsticks said:

Linton said:

As you are below state pension age you can also make a voluntary NI contribution every year for the next few years up to but not including the year in which you reach SPA or have accrued the maximum SP.  This is an amazingly good deal since the cost is recovered in increased SP in 3-4 years.

The OP says they are 'retiring' in a few months - it's not clear if this is because they are actually reaching state pension age, but if so the option to buy further years may not be available to them. 

Sorry, it wasnt clear that I was replying to Amateurretiree who did give their age.

Amateurretiree

Dox said:

Amateurretiree said:

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.

Your basic state pension isn't affected by being contracted out, so if you have 'gaps' in your basic state pension, it is for other reasons.

I don’t understand this . On my pension forecast on the Gov website it says my pension is only £149 per week, I know this isn’t the full amount. I worked full time in the NHS for 33 yrs so can’t think of any other reason .
And as I have previously stated , I consider myself extremely lucky to have my NHS pension, especially in these uncertain times .

molerat

The basic state pension for 30 pre 2016 years, the maximum you could receive, at the current rate is £134.25 and that amount could not be reduced by contracting out.  At April 2016 a calculation was done using both the new and old systems and you were given the higher of the two, generally if contracted out it was the old scheme amount, so you got at least what you already had.

Purchasing post 2016 years to fill the gap is extremely good value, far better than anything you could buy on the open market.

Amateurretiree

Oh I see now I retired in 2017 so I have slightly over the basic pension I was thinking the basic pension was the £175 per week. I knew I wasn’t getting that due to COPE

Still got 9 yrs to go!