Contracted out Pension

Maryjo_2

I have 50 years full contributions on my national insurance record up to I received my SP Sept 2020 . I was NHS midwife working full time. I retired from NHS at 59 yrs more due to ill health. Following that I claimed grandparents contributions up until I received SP . When I retired last year I received £145.94 weekly for SP.
My query is that I have 2 friends one retired teacher and other retired civil service worker both contracted out receiving £20.00 teacher and £30.00 civil servant per week more and was wondering why this is 

Marcon

Different levels of earnings/length of scheme membership/employment pattern/different SPA - could be any one or more of those, or indeed other factors.

xylophone

On 6/4/16, (introduction of NSP) two calculations were done (individually) for all those below SPA.

Everybody's situation varied according to work/NI history.

Your calculation   (assuming you had around 45 years at 6/4/16)

Old Rules

Full Basic State Pension  2017/17 (because you had at least 30 years) + (Additional State Pension - Deduction for Contracting Out).

Thus £119.30 + (ASP - Deduction for Contracting Out)

New Rules

Full NSP  2016/17 (because you had at least 35 years) - Contracted Out Pension Equivalent.

Thus

£155.65 - COPE.

Your "starting amount" for NSP would have been the higher of the two (almost certainly old rules).

Your COPE would have been on the high side because you were in a contracted out pension scheme for (all?) of your working life.

You would have been able to improve your starting amount through the NI credits received post 6/4/16 up to the tax year before that in which you reached SPA but with a high COPE and few years to SPA, not by enough to reach a full NSP.



https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Above was produced pre introduction but explains the principles.

jamesd

Assuming you only worked in the NHS or other contracted out workplace pension scheme then in April 2016 you would have accrued the full basic state pension and a few or maybe ten or a bit more Pounds of earnings-related state pension, from the years when S2P replaced SERPS. Under old rules you could gain nothing for more than 30 years except earnings-related. So at 59 you stopped work and could then only get credits and with 30 years already could get nothing more under the old rules.

In 2016 the new rules were introduced and you were given the higher of the old rules and new rues calculations as your foundation amount. in your case that will have been old rules. Here, you got lucky: the new rules let anyone who hasn't reached the single tier pension level accrue more state pension through work or credits. From 2016 until the year before you reached state pension age you were accruing 1/35th of the single tier state pension per year of grandparent credits. Then you reached your state pension age and couldn't accrue any more.

There's nothing more you can do to improve your state pension except by suspending claiming it for a while. You're one of the winners from the new single tier pension system with new that ability to increase your state pension even after you stopped working using the credits.

Your friends may have had some time not contracted out working or more years of credits or work before their state pension age since the 2016 changes.