Contracted out

Wentthedaywell?

May I quickly jump in to ask whether you can only contribute NI up to SPA? I appear to be in the unfortunate position not getting a full state pension despite having worked over an unbroken 40 years mostly contracted out. There aren't enough years between the changes and SPA for me to make up the money, even with voluntary contributions. 

Silvertabby

Jojomissy said:

Silvertabby said:

Jojomissy said:

I am trying to help my partner look at pension options now he is reaching age 55.
He has worked in local government since late teens but had a 2 year break working elsewhere in between.
Unfortunately he now has 2 pensions as nobody told him he could combine them when he contacted them when rejoining in 2008. He receives 2 pension statements every year.

I have looked at his state pension and he is 2 years from full £175 pw state pension. It then states he was contracted out which was worth £52 pw but he is adamant he did not contract out. Was this standard with local government pensions and he would not be aware. Also is this included already in his pension forecasts from the statements he receives every year.

His ex wife contracted out but was advised to go to legal and general which it turns out was poor advice and she received a payout to put her back in the correct position. 

I am in ill health so we are looking whether early retirement is feasible.
Many thanks in advance

Combining the 2 LGPS pensions may not necessarily have been the right thing to do, especially if he returned on a similar salary to his old job.

As things stand, his first pension will be due payment from age 60 with no reduction for early payment.  If he takes this from age 55, then the early payment reduction will only be for 5 years (22%) whereas the reductions in respect of his new post will be a lot more.  

Yes, if the records had been combined, then he would have kept his R 85 protections in respect of his pre 2008 service, but by being deferred separately, the value of old record has increased each year in line with RPI/CPI.  Since 2006, this will have given a higher increase than the many years of 1% pay increases levied on the public sector.

All public sector pensions were automatically contracted out of SERPS/SP2.  He hasn't lost out - as Molerat says, it's in his LGPS pension, just not shown on the statements.

If you can post his salary (and hours if part time) as at his date of leaving in 2006 (will be shown on his benefit statements as final pensionable pay) then I'll uprate it so you can compare it with his current salary.  

He left at the end of 2005, original pay is showing as £23,725.

His current salary is around £46,000 and he rejoined in 2008 so approx 2.5 years gap.

He is 55 next year and due to my ill health we would like to move home for an easier pace of life. It looks like they will be asking for voluntary redundancies next year which are currently enhanced but unsure whether his role will be included.

Many thanks for all your help.

He has always worked full time hours.

£23,725 as at December 2005 = £33,767.79 today.

£23,725 as at December 2005 = £25,991 in June 2008.

First thing to clarify is the definition of pensionable pay.  Under CARE, it's not just the contractual salary that counts towards pensionable pay, it's most extras/overtime as well.  Under final salary, however, only actual contractual pay counts.  So, is his current salary of £46,000 contractual or does it include extras?

If it's contractual, then it would indeed be advantageous for the records to be combined, even more so if redundancy is a possibility. 

Now we need to go back to when he re-joined the LGPS in mid 2008.  Was his starting salary in his new post more or less than £25,991? He should have received a letter explaining his options and asking for his decision.  ie, If his new salary was less than £25,991, then the letter should have said that he could leave his first record deferred in order to take advantage of the higher pensionable pay.  On the other hand, if his new salary was more than £25,991 then combining his records would mean that his first post would than have the advantage of his higher salary.

Either way, there would/should have been a form for him to sign and return.  If he opted to keep his benefits seperate, then I'm afraid that's probably the end of it.  However, if he is sure that he was never offered the chance to combine, then it's worth a call to your LGPS to ask if the records may be combined now. 

Dazed_and_C0nfused

Wentthedaywell? said:

May I quickly jump in to ask whether you can only contribute NI up to SPA? I appear to be in the unfortunate position not getting a full state pension despite having worked over an unbroken 40 years mostly contracted out. There aren't enough years between the changes and SPA for me to make up the money, even with voluntary contributions. 

Yes, you contribute to State Pension age but it is only tax years up to the year prior to the one you reach State Pension age in which qualify.

I think you are looking at glass half empty when it should be glass half full.

If the rules hadn't changed you would probably be getting the basic State Pension of £134.25/week.

How much will your new State Pension be if you contribute to gain additional qualifying years? 

Jojomissy

Silvertabby said:

Jojomissy said:

Silvertabby said:

Jojomissy said:

I am trying to help my partner look at pension options now he is reaching age 55.
He has worked in local government since late teens but had a 2 year break working elsewhere in between.
Unfortunately he now has 2 pensions as nobody told him he could combine them when he contacted them when rejoining in 2008. He receives 2 pension statements every year.

I have looked at his state pension and he is 2 years from full £175 pw state pension. It then states he was contracted out which was worth £52 pw but he is adamant he did not contract out. Was this standard with local government pensions and he would not be aware. Also is this included already in his pension forecasts from the statements he receives every year.

His ex wife contracted out but was advised to go to legal and general which it turns out was poor advice and she received a payout to put her back in the correct position. 

I am in ill health so we are looking whether early retirement is feasible.
Many thanks in advance

Combining the 2 LGPS pensions may not necessarily have been the right thing to do, especially if he returned on a similar salary to his old job.

As things stand, his first pension will be due payment from age 60 with no reduction for early payment.  If he takes this from age 55, then the early payment reduction will only be for 5 years (22%) whereas the reductions in respect of his new post will be a lot more.  

Yes, if the records had been combined, then he would have kept his R 85 protections in respect of his pre 2008 service, but by being deferred separately, the value of old record has increased each year in line with RPI/CPI.  Since 2006, this will have given a higher increase than the many years of 1% pay increases levied on the public sector.

All public sector pensions were automatically contracted out of SERPS/SP2.  He hasn't lost out - as Molerat says, it's in his LGPS pension, just not shown on the statements.

If you can post his salary (and hours if part time) as at his date of leaving in 2006 (will be shown on his benefit statements as final pensionable pay) then I'll uprate it so you can compare it with his current salary.  

He left at the end of 2005, original pay is showing as £23,725.

His current salary is around £46,000 and he rejoined in 2008 so approx 2.5 years gap.

He is 55 next year and due to my ill health we would like to move home for an easier pace of life. It looks like they will be asking for voluntary redundancies next year which are currently enhanced but unsure whether his role will be included.

Many thanks for all your help.

He has always worked full time hours.

£23,725 as at December 2005 = £33,767.79 today.

£23,725 as at December 2005 = £25,991 in June 2008.

First thing to clarify is the definition of pensionable pay.  Under CARE, it's not just the contractual salary that counts towards pensionable pay, it's most extras/overtime as well.  Under final salary, however, only actual contractual pay counts.  So, is his current salary of £46,000 contractual or does it include extras?

If it's contractual, then it would indeed be advantageous for the records to be combined, even more so if redundancy is a possibility. 

Now we need to go back to when he re-joined the LGPS in mid 2008.  Was his starting salary in his new post more or less than £25,991? He should have received a letter explaining his options and asking for his decision.  ie, If his new salary was less than £25,991, then the letter should have said that he could leave his first record deferred in order to take advantage of the higher pensionable pay.  On the other hand, if his new salary was more than £25,991 then combining his records would mean that his first post would than have the advantage of his higher salary.

Either way, there would/should have been a form for him to sign and return.  If he opted to keep his benefits seperate, then I'm afraid that's probably the end of it.  However, if he is sure that he was never offered the chance to combine, then it's worth a call to your LGPS to ask if the records may be combined now. 

Many thanks for all your help.

His salary has always been just contractual salary. He would have restarted in 2008 on less than the £25991 figure you stated. His salary now is the same every month other than yearly incremental increases.

He is adamant he has never received a form and definitely not signed one. It is just phone calls when he changed address etc he enquired why they were separate and they just said it is too late to combine them.

So looking at the information and knowing he will retire early whether that be around 56 or wait until slightly later, would you say it is best to keep them separate and leave it without looking into it further?

Thank you so much for this. I have asked him to enquire but his head is all over the place due to WFH and ongoing health issues with us both.

Silvertabby

Jojomissy said:

Silvertabby said:

Jojomissy said:

Silvertabby said:

Jojomissy said:

I am trying to help my partner look at pension options now he is reaching age 55.
He has worked in local government since late teens but had a 2 year break working elsewhere in between.
Unfortunately he now has 2 pensions as nobody told him he could combine them when he contacted them when rejoining in 2008. He receives 2 pension statements every year.

I have looked at his state pension and he is 2 years from full £175 pw state pension. It then states he was contracted out which was worth £52 pw but he is adamant he did not contract out. Was this standard with local government pensions and he would not be aware. Also is this included already in his pension forecasts from the statements he receives every year.

His ex wife contracted out but was advised to go to legal and general which it turns out was poor advice and she received a payout to put her back in the correct position. 

I am in ill health so we are looking whether early retirement is feasible.
Many thanks in advance

Combining the 2 LGPS pensions may not necessarily have been the right thing to do, especially if he returned on a similar salary to his old job.

As things stand, his first pension will be due payment from age 60 with no reduction for early payment.  If he takes this from age 55, then the early payment reduction will only be for 5 years (22%) whereas the reductions in respect of his new post will be a lot more.  

Yes, if the records had been combined, then he would have kept his R 85 protections in respect of his pre 2008 service, but by being deferred separately, the value of old record has increased each year in line with RPI/CPI.  Since 2006, this will have given a higher increase than the many years of 1% pay increases levied on the public sector.

All public sector pensions were automatically contracted out of SERPS/SP2.  He hasn't lost out - as Molerat says, it's in his LGPS pension, just not shown on the statements.

If you can post his salary (and hours if part time) as at his date of leaving in 2006 (will be shown on his benefit statements as final pensionable pay) then I'll uprate it so you can compare it with his current salary.  

He left at the end of 2005, original pay is showing as £23,725.

His current salary is around £46,000 and he rejoined in 2008 so approx 2.5 years gap.

He is 55 next year and due to my ill health we would like to move home for an easier pace of life. It looks like they will be asking for voluntary redundancies next year which are currently enhanced but unsure whether his role will be included.

Many thanks for all your help.

He has always worked full time hours.

£23,725 as at December 2005 = £33,767.79 today.

£23,725 as at December 2005 = £25,991 in June 2008.

First thing to clarify is the definition of pensionable pay.  Under CARE, it's not just the contractual salary that counts towards pensionable pay, it's most extras/overtime as well.  Under final salary, however, only actual contractual pay counts.  So, is his current salary of £46,000 contractual or does it include extras?

If it's contractual, then it would indeed be advantageous for the records to be combined, even more so if redundancy is a possibility. 

Now we need to go back to when he re-joined the LGPS in mid 2008.  Was his starting salary in his new post more or less than £25,991? He should have received a letter explaining his options and asking for his decision.  ie, If his new salary was less than £25,991, then the letter should have said that he could leave his first record deferred in order to take advantage of the higher pensionable pay.  On the other hand, if his new salary was more than £25,991 then combining his records would mean that his first post would than have the advantage of his higher salary.

Either way, there would/should have been a form for him to sign and return.  If he opted to keep his benefits seperate, then I'm afraid that's probably the end of it.  However, if he is sure that he was never offered the chance to combine, then it's worth a call to your LGPS to ask if the records may be combined now. 

Many thanks for all your help.

His salary has always been just contractual salary. He would have restarted in 2008 on less than the £25991 figure you stated. His salary now is the same every month other than yearly incremental increases.

He is adamant he has never received a form and definitely not signed one. It is just phone calls when he changed address etc he enquired why they were separate and they just said it is too late to combine them.

So looking at the information and knowing he will retire early whether that be around 56 or wait until slightly later, would you say it is best to keep them separate and leave it without looking into it further?

Thank you so much for this. I have asked him to enquire but his head is all over the place due to WFH and ongoing health issues with us both.

All things considered, it would be beneficial to combine.  It's worth speaking to the LGPS to claim that as he wasn't given the option at the time, he should be allowed to combine now.

Just be aware that I have dealt with similar claims in the past, but they failed if there had been evidence on the record to say that the option letter had been issued (to the correct address).

I'm not saying this is the case here, but more than one LGPS member has told me that the only pensions letter they are interested in is the one that says how much will be actually paid.  Everything else is 'boring tripe' and goes straight into the bin.

Jojomissy

Silvertabby said:

Jojomissy said:

Silvertabby said:

Jojomissy said:

Silvertabby said:

Jojomissy said:

I am trying to help my partner look at pension options now he is reaching age 55.
He has worked in local government since late teens but had a 2 year break working elsewhere in between.
Unfortunately he now has 2 pensions as nobody told him he could combine them when he contacted them when rejoining in 2008. He receives 2 pension statements every year.

I have looked at his state pension and he is 2 years from full £175 pw state pension. It then states he was contracted out which was worth £52 pw but he is adamant he did not contract out. Was this standard with local government pensions and he would not be aware. Also is this included already in his pension forecasts from the statements he receives every year.

His ex wife contracted out but was advised to go to legal and general which it turns out was poor advice and she received a payout to put her back in the correct position. 

I am in ill health so we are looking whether early retirement is feasible.
Many thanks in advance

Combining the 2 LGPS pensions may not necessarily have been the right thing to do, especially if he returned on a similar salary to his old job.

As things stand, his first pension will be due payment from age 60 with no reduction for early payment.  If he takes this from age 55, then the early payment reduction will only be for 5 years (22%) whereas the reductions in respect of his new post will be a lot more.  

Yes, if the records had been combined, then he would have kept his R 85 protections in respect of his pre 2008 service, but by being deferred separately, the value of old record has increased each year in line with RPI/CPI.  Since 2006, this will have given a higher increase than the many years of 1% pay increases levied on the public sector.

All public sector pensions were automatically contracted out of SERPS/SP2.  He hasn't lost out - as Molerat says, it's in his LGPS pension, just not shown on the statements.

If you can post his salary (and hours if part time) as at his date of leaving in 2006 (will be shown on his benefit statements as final pensionable pay) then I'll uprate it so you can compare it with his current salary.  

He left at the end of 2005, original pay is showing as £23,725.

His current salary is around £46,000 and he rejoined in 2008 so approx 2.5 years gap.

He is 55 next year and due to my ill health we would like to move home for an easier pace of life. It looks like they will be asking for voluntary redundancies next year which are currently enhanced but unsure whether his role will be included.

Many thanks for all your help.

He has always worked full time hours.

£23,725 as at December 2005 = £33,767.79 today.

£23,725 as at December 2005 = £25,991 in June 2008.

First thing to clarify is the definition of pensionable pay.  Under CARE, it's not just the contractual salary that counts towards pensionable pay, it's most extras/overtime as well.  Under final salary, however, only actual contractual pay counts.  So, is his current salary of £46,000 contractual or does it include extras?

If it's contractual, then it would indeed be advantageous for the records to be combined, even more so if redundancy is a possibility. 

Now we need to go back to when he re-joined the LGPS in mid 2008.  Was his starting salary in his new post more or less than £25,991? He should have received a letter explaining his options and asking for his decision.  ie, If his new salary was less than £25,991, then the letter should have said that he could leave his first record deferred in order to take advantage of the higher pensionable pay.  On the other hand, if his new salary was more than £25,991 then combining his records would mean that his first post would than have the advantage of his higher salary.

Either way, there would/should have been a form for him to sign and return.  If he opted to keep his benefits seperate, then I'm afraid that's probably the end of it.  However, if he is sure that he was never offered the chance to combine, then it's worth a call to your LGPS to ask if the records may be combined now. 

Many thanks for all your help.

His salary has always been just contractual salary. He would have restarted in 2008 on less than the £25991 figure you stated. His salary now is the same every month other than yearly incremental increases.

He is adamant he has never received a form and definitely not signed one. It is just phone calls when he changed address etc he enquired why they were separate and they just said it is too late to combine them.

So looking at the information and knowing he will retire early whether that be around 56 or wait until slightly later, would you say it is best to keep them separate and leave it without looking into it further?

Thank you so much for this. I have asked him to enquire but his head is all over the place due to WFH and ongoing health issues with us both.

All things considered, it would be beneficial to combine.  It's worth speaking to the LGPS to claim that as he wasn't given the option at the time, he should be allowed to combine now.

Just be aware that I have dealt with similar claims in the past, but they failed if there had been evidence on the record to say that the option letter had been issued (to the correct address).

I'm not saying this is the case here, but more than one LGPS member has told me that the only pensions letter they are interested in is the one that says how much will be actually paid.  Everything else is 'boring tripe' and goes straight into the bin.

Thank you for that.
I will get him to speak to them and let you know how he gets on.

Thanks again

Wentthedaywell?

Dazed_and_C0nfused said:

Wentthedaywell? said:

May I quickly jump in to ask whether you can only contribute NI up to SPA? I appear to be in the unfortunate position not getting a full state pension despite having worked over an unbroken 40 years mostly contracted out. There aren't enough years between the changes and SPA for me to make up the money, even with voluntary contributions. 

Yes, you contribute to State Pension age but it is only tax years up to the year prior to the one you reach State Pension age in which qualify.

I think you are looking at glass half empty when it should be glass half full.

If the rules hadn't changed you would probably be getting the basic State Pension of £134.25/week.

How much will your new State Pension be if you contribute to gain additional qualifying years? 

True, there's the glass half full approach I suppose! It's not a big difference - £8,897 (if I make a couple of years of voluntary contributions) as opoosed to £9,110.

30072009

My pension forecast shows 41 years of full contribution with another 3 years to contribute in order to receive a full pension.
That appears simply to put me under the old scheme of 44 years, which I can now understand.
The forecast also refers to "You've been in a contracted out pension scheme"  I haven't For a 3 year period my wife and I set up a ltd company and did not pay any any national insurance as we did not earn a wage sufficient to require us to do so, on the advice of a financial advisor and our accountant.     

My wife is due to receive her pension in November 2022. Her pension forecast shows that she has 39 years of full contributions,
(which I believe was the full requirement for a woman under the old system)
but 8 years when she did not contribute and her forecast refers to her having opted out and paying into another pension scheme. the simple fact is that she simply retired from work due to depression and we lived on my income alone. And did not claim any benefits.
Her forecast is considerably less stating she will receive a pension of only £142.56  Can the pension forecast be wrong in assuming she was paying into another pension scheme. ? We have tried to contact the future pensions department but due to COVID staffing issues they will not speak or deal with anyone unless you are within 6 months of your pension date. 
If she has 39 full years which her forecasts shows why is she not due to the full pension? Can anyone please advise why this might be? 
Another more simple question, there are two years on my wife pension history when there was a shortfall of just over £100 can my wife be specific and pay just these two amounts in order to make them count towards her pension?
Kind regards
[Removed by Forum Team].

Dazed_and_C0nfused

You are both under transitional rules, neither the old scheme or new scheme rules will apply to either of you.

You both have a starting amount at April 2016 and if this was less than the standard "new" State Pension at that time you could add additional years.  The maximum you could achieve was £175.20 (current tax year value).

Each additional year is currently worth £5/week with the proviso that you cannot exceed £175.20.

If you post the actual forecast (the full details) then others will no doubt be able to help with what your best options are.

For a 3 year period my wife and I set up a ltd company and did not pay any any national insurance as we did not earn a wage sufficient to require us to do so, on the advice of a financial advisor and our accountant.  

You don't have to pay any NIC to gain a qualifying year.  You need to have been paid income of the appropriate amount to be eligible for a qualifying year AND have filed details under the Real Time Information system (or whatever was in place before 2013 if it was that long ago).

xylophone

Please can you state exactly what each pension  forecast says?

And are you certain that neither you nor your wife ever worked for an employer offering a contracted out pension scheme?

You may think this an odd question but there have been other posts indicating that the poster simply  hadn't realised that his workplace pension scheme was contracted out.