State pension forecast & weirdness in gaps!

cfw1994

We are checking into what to 'buy back' to uplift my wife's pension.
Just a curiosity here: nothing of major importance, but we hate a mystery!  Perhaps if I paid more attention to some questions on this forum, we might already know.....

Newcastle Pension Centre had a confusing call with her a while back & posted a letter to clarify, which arrived today.
She is 'between' new rules and old rules....we already bought some back a few years ago, & understand there were differences in numbers for each year.
The weirdness is that under the old scheme, she has 4 years she can buy back (2012/13 to 2015/16)....but if she buys 1 or 2 it adds £0.00 to her pension forecast!   
If she buys 3, it goes up £4.66pw
If she buys 4, it goes up another £5.00pw
The new rules allow her to buy 2018/19 and/or 2019/20, and each would add £5.01....which we will (perhaps obviously!) do.
Future years can also be bought, and she has time, hence why this isn't really important!

However......can anyone explain why buying 2 of the 'old rules' years result in zero uplift to her pension forecast?   Seems/feels like a very weird HMRC anomaly!
As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension".   Did we just make people work longer in the old days?
 

Dazed_and_C0nfused

As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension"

 Anyone claiming 35 years is sufficient either doesn't understand the rules or hasn't made it clear they are only referring to those who are fully under the new rules.  Which is currently the vast minority of the population.

molerat

cfw1994 said:

We are checking into what to 'buy back' to uplift my wife's pension.
Just a curiosity here: nothing of major importance, but we hate a mystery!  Perhaps if I paid more attention to some questions on this forum, we might already know.....

Newcastle Pension Centre had a confusing call with her a while back & posted a letter to clarify, which arrived today.
She is 'between' new rules and old rules....we already bought some back a few years ago, & understand there were differences in numbers for each year.
The weirdness is that under the old scheme, she has 4 years she can buy back (2012/13 to 2015/16)....but if she buys 1 or 2 it adds £0.00 to her pension forecast!   
If she buys 3, it goes up £4.66pw
If she buys 4, it goes up another £5.00pw
The new rules allow her to buy 2018/19 and/or 2019/20, and each would add £5.01....which we will (perhaps obviously!) do.
Future years can also be bought, and she has time, hence why this isn't really important!

However......can anyone explain why buying 2 of the 'old rules' years result in zero uplift to her pension forecast?   Seems/feels like a very weird HMRC anomaly!
As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension".   Did we just make people work longer in the old days?
 

The 2016 starting amount was based on the higher of the old or new system.  The most likely explanation is that her starting amount was based on the old system where only 30 years is useable.  Adding pre 2016 years will force a recalculation of the starting amount. 2 years still does not make the new system amount higher than the old but a third year does by £4.66 and the fourth adds the full new scheme £5.

So her likely best course is to only buy post 2016 years as 2 post 2016 gives the same value as 4 pre 2016.

cfw1994

molerat said:

cfw1994 said:

We are checking into what to 'buy back' to uplift my wife's pension.
Just a curiosity here: nothing of major importance, but we hate a mystery!  Perhaps if I paid more attention to some questions on this forum, we might already know.....

Newcastle Pension Centre had a confusing call with her a while back & posted a letter to clarify, which arrived today.
She is 'between' new rules and old rules....we already bought some back a few years ago, & understand there were differences in numbers for each year.
The weirdness is that under the old scheme, she has 4 years she can buy back (2012/13 to 2015/16)....but if she buys 1 or 2 it adds £0.00 to her pension forecast!   
If she buys 3, it goes up £4.66pw
If she buys 4, it goes up another £5.00pw
The new rules allow her to buy 2018/19 and/or 2019/20, and each would add £5.01....which we will (perhaps obviously!) do.
Future years can also be bought, and she has time, hence why this isn't really important!

However......can anyone explain why buying 2 of the 'old rules' years result in zero uplift to her pension forecast?   Seems/feels like a very weird HMRC anomaly!
As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension".   Did we just make people work longer in the old days?
 

The 2016 starting amount was based on the higher of the old or new system.  The most likely explanation is that her starting amount was based on the old system where only 30 years is useable.  Adding pre 2016 years will force a recalculation of the starting amount. 2 years still does not make the new system amount higher than the old but a third year does by £4.66 and the fourth adds the full new scheme £5.

So her likely best course is to only buy post 2016 years as 2 post 2016 gives the same value as 4 pre 2016.

Aye, we know the best course of action....
Not clear why adding 2 years of the pre 2016 counts for nothing...if the cap is 30 years and she needs 2 more years, why are the first two you pay not counted!
Like I say, just a weirdness.
Dazed_and_C0nfused said:

As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension"

 Anyone claiming 35 years is sufficient either doesn't understand the rules or hasn't made it clear they are only referring to those who are fully under the new rules.  Which is currently the vast minority of the population.

Okay, so we're exposing a minor ignorance; sorry about that.   
But can you explain the above?   Why 2 pre-'16 years count for nothing, the 3rd would add a bit and the 4th a bit more?!

p00hsticks

cfw1994 said:

 Did we just make people work longer in the old days?
 

Well, when the state pension was first introduced in 1908, it was only for the over-70's!

Prior to 2010, men needed 44 NI years to get a 'full' basic state at the age of 65,women needed 39 years to get a pension at 60.

From 2010 the number of years required dropped to 30, but the pension age of women started to be gradually increased to equal that of men, and the SPA of both was eventually increased to 66, with it gradually rising further to 67 by 2029.

[Edit] and I forgot to say that the introduction of the new State Pension in 2016 saw the number of required years for the maximum rise to 35 for those starting out their working lives (those who already had years under the old system are under transitional rules and the number of years will dpend on their individual details).

molerat

Not clear why adding 2 years of the pre 2016 counts for nothing...if the cap is 30 years and she needs 2 more years, why are the first two you pay not counted!

Like I say, just a weirdness.

How many pre 2016 years does she have ?

If she already has 30 and her starting amount is based on the old system then any pre 2016 years bought can not add to the old system calculation. They will though add to the new system calculation but will not show a benefit until the new system amount overtakes the old.

Dazed_and_C0nfused

cfw1994 said:

molerat said:

cfw1994 said:

We are checking into what to 'buy back' to uplift my wife's pension.
Just a curiosity here: nothing of major importance, but we hate a mystery!  Perhaps if I paid more attention to some questions on this forum, we might already know.....

Newcastle Pension Centre had a confusing call with her a while back & posted a letter to clarify, which arrived today.
She is 'between' new rules and old rules....we already bought some back a few years ago, & understand there were differences in numbers for each year.
The weirdness is that under the old scheme, she has 4 years she can buy back (2012/13 to 2015/16)....but if she buys 1 or 2 it adds £0.00 to her pension forecast!   
If she buys 3, it goes up £4.66pw
If she buys 4, it goes up another £5.00pw
The new rules allow her to buy 2018/19 and/or 2019/20, and each would add £5.01....which we will (perhaps obviously!) do.
Future years can also be bought, and she has time, hence why this isn't really important!

However......can anyone explain why buying 2 of the 'old rules' years result in zero uplift to her pension forecast?   Seems/feels like a very weird HMRC anomaly!
As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension".   Did we just make people work longer in the old days?
 

The 2016 starting amount was based on the higher of the old or new system.  The most likely explanation is that her starting amount was based on the old system where only 30 years is useable.  Adding pre 2016 years will force a recalculation of the starting amount. 2 years still does not make the new system amount higher than the old but a third year does by £4.66 and the fourth adds the full new scheme £5.

So her likely best course is to only buy post 2016 years as 2 post 2016 gives the same value as 4 pre 2016.

Aye, we know the best course of action....
Not clear why adding 2 years of the pre 2016 counts for nothing...if the cap is 30 years and she needs 2 more years, why are the first two you pay not counted!
Like I say, just a weirdness.
Dazed_and_C0nfused said:

As an aside...she has 32 full years to date, needs to get another 6 years to be fully paid up....& whilst I understand there is a difference, that is quite a difference from the 'claims' that "you'll need 35 qualifying years to get the full new State Pension"

 Anyone claiming 35 years is sufficient either doesn't understand the rules or hasn't made it clear they are only referring to those who are fully under the new rules.  Which is currently the vast minority of the population.

Okay, so we're exposing a minor ignorance; sorry about that.   
But can you explain the above?   Why 2 pre-'16 years count for nothing, the 3rd would add a bit and the 4th a bit more?!

I don't think I could explain it any more succinctly than molerat.

No doubt xylophone will be along later to go into more detail 🙂

cfw1994

molerat said:

Not clear why adding 2 years of the pre 2016 counts for nothing...if the cap is 30 years and she needs 2 more years, why are the first two you pay not counted!

Like I say, just a weirdness.

How many pre 2016 years does she have ?

If she already has 30 and her starting amount is based on the old system then any pre 2016 years bought can not add to the old system calculation. They will though add to the new system calculation but will not show a benefit until the new system amount overtakes the old.

Hmmmm....okay, so she has exactly 30 pre-2016 years...
...and yet they then let her buy more years which would add money.
As I put at the start:
  if she buys 1 or 2 it adds £0.00 to her pension forecast  
  if she buys 3, it goes up £4.66pw
  if she buys 4, it goes up another £5.00pw

Clearly she won't buy those ones....but I cannot fathom WHY adding 3 or 4 would add some money, yet 1 or 2 would not!
(to reiterate - this is a mild irrelevance in things, but we do hate a mystery!)

Dazed_and_C0nfused

It could be something like this,

Current starting position

Old rules = £130
New rules (net of COPE) = £139
New rules are better

Old rules + 1 extra year = £134
New rules (net of COPE) = £139
New rules are better

Old rules + 2 extra years = £138
New rules (net of COPE) = £139
New rules are better 

Old rules + 3 extra years = £142
New rules (net of COPE) = £139
Old rules are better 

Old rules + 4 extra years = £146
New rules (net of COPE) = £139

Old rules are better 

molerat

Dazed_and_C0nfused said:

Pretty much but you have got your old and new back to front

Linton

In 2016 the calculation of accrued SP was made under both systems and the higher of the two was taken as the basis for the future.    The old system based on 30 years for the SP won out. Adding one extra pre-2016 year did not affect the old scheme calculation but it increased the amount due under the new scheme calculation based on 35 years.  But not by enough.  SImilarly for the second year.  However when you added the 3rd year the new scheme overtook the old scheme. The 4th year added more.

This effect would only work in the way described if your wife had exactly 30 years NI or possibly a year more.   If she had less than 30 years adding an extra year would have increased the old rules calculation and so increased her SP.  She could not have had more than 31 years NI as otherwise adding the 4th year wuld not have increased the calculation based on the new scheme rules.

Hope this makes it clear!