Pension/savings/benefits

Albermarle

Deleted_User said:

Thank you to everyone whose replied to this post. I am in a calmer state of mind and I have a clearer understanding of what I need to do. 

My to do list is to:
1. Join work pension asap (do not cash in)
2. Open a help to save account (start saving where I can)
3. Open a Sipp (only if I have multiple jobs and can’t join them up)

For Point 3) another possibility is to pick one of your existing pensions and transfer other pensions into that ( just check first that is OK )

For you whether you in future consolidate pensions into a SIPP, or an ex workplace pension will make little difference . Both will tidy up your arrangements.

jamesd

Your new plan looks good. If I pretend that you're 47 now an extra £100 fro you and employer going into a pension can be expected to grow to about £39,000 by age 67. This assumes 4.5% plus inflation growth and that you increase the 100 by inflation each year, then it's in today's money.

That amount would let you live on it for four years while deferring claiming your state pension. Under the current rules you get 5.8% added for each year deferred, so on a £9,500 state pension four years of this is an extra £2,204 a year or £42.38 a week. The extra increases with the CPI measure of inflation and is paid for life. You also get all of the annual increases that happened when deferring.

Pension pots don't count as savings for UC until you access the money or reach pension credit age so no need to worry about that yet. But it's better: your personal pension contributions are deducted from your income when working out what UC you're entitled to, so as well as employer help and tax relief you'll get more UC.

Daliah

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

Deleted_User said:

I am in my mid forties 

Given your age, I cannot think of any reason why you should not get the maximum new state pension once you have 35 full NI years (and have reached your state pension age). Obviously, you'll have to pay NI (through work or voluntary), and/or get NI credits, for a few more years to accrue 35 NI years but once you have those when you reach your state pension age, you should be entitled to the maximum new, flat rate, state pension. 

If you are uncertain about this, post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained.

Note: If you are working, and earning above the Lower Earnings Level (£120/wk, IIRC), you will continue to pay NI until you reach your state pension age, even if you have 35 NI years. Important to understand that NI buys you entitlement to certain benefits other than state pension, and that 20% of your NI contributions go to the NHS, plus there will be the 1.25% uplift for care / NHS from next April. Living on state pension alone is also not an enjoyable retirement, so I agree with others, you really should look into works pensions / SIPP.

p00hsticks

Daliah said:

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

Deleted_User said:

I am in my mid forties 

Given your age, I cannot think of any reason why you should not get the maximum new state pension once you have 35 full NI years (and have reached your state pension age). Obviously, you'll have to pay NI (through work or voluntary), and/or get NI credits, for a few more years to accrue 35 NI years but once you have those, you should be entitled to the maximum new, flat rate, state pension.

If you are uncertain about this, post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained.

You can't make the assumption that they'll qualify with 35 years contributions just from their age unless they're still in their teens. The OP started their working life prior to the introduction of the new state Pension in 2016 and so fall under transitional rules - they may need more or less than 35 years depending on thir individual record (in particular if prior to 2016 they have been contracted in or out, and what additional pension they had accrued). As you say they need to check their state pension forecast and use that to see how many more years they need. 

Alice_Holt

Once you have savings of over £6k  a tariff reduction is applied to UC.
Savings of over £16k will end UC and any other means-tested benefits such as council tax reduction.
https://www.entitledto.co.uk/help/Savings-and-other-capital-overview-Universal-Credit

ISA's (and LISA's) count as savings for UC.
However a SIPP (and other pensions) do not, as you cannot access them.

It would seem sensible to start with an emergency fund up to, say, c. £5-6k (perhaps using Help to Save), and then switch your contributions into a pension scheme. 
https://www.gov.uk/get-help-savings-low-income

Make sure you contribute into any workplace pension to maximise your employers contributions.
https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/contribution-matching


As movingforwards mentioned get a state pension forecast, and take a view on whether any additional pension contributions via a SIPP would only serve to erode any potential Pension Credit entitlement.  

jamesd

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

It's exactly 35 years for someone who first paid NI or got credits in April 2016.  For everyone else 35 is just chance and most will need more (if they were in contracted out of the earnings-related part final or average salary schemes) or less (if not contracted out, because of the earnings-related part of the pre-2016 system). Everyone got the higher of the two calculations for them in April 2016. Just get and rely on the forecast. It's right.

Daliah

p00hsticks said:

Daliah said:

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

Deleted_User said:

I am in my mid forties 

Given your age, I cannot think of any reason why you should not get the maximum new state pension once you have 35 full NI years (and have reached your state pension age). Obviously, you'll have to pay NI (through work or voluntary), and/or get NI credits, for a few more years to accrue 35 NI years but once you have those, you should be entitled to the maximum new, flat rate, state pension.

If you are uncertain about this, post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained.

You can't make the assumption that they'll qualify with 35 years contributions just from their age unless they're still in their teens. The OP started their working life prior to the introduction of the new state Pension in 2016 and so fall under transitional rules - they may need more or less than 35 years depending on thir individual record (in particular if prior to 2016 they have been contracted in or out, and what additional pension they had accrued). As you say they need to check their state pension forecast and use that to see how many more years they need. 

The transitional rules are essentially dead straight forward - only people who would have received more under the previous rules would be subject to those, and this has been determined for the affected people back in 2016. But from what the OP posted (e.g. time out for children etc), it is most unlikely that they would have accumulated lots of SERPS/S2P, which could have made them subject to the pre-2016 rules.

Even if someone who started their working life before 2016 would fall under the old rules, they would not need more than 35 NI years for a full basic (i.e. old) state pension. In fact, they would need to have only 30 NI years but their basic SP amount would be lower than the max new SP.

I maintain that I cannot think of any reason why the OP should not get the maximum new state pension once they have 35 full NI years (and have reached their state pension age). But yes, they need to go by their personal state pension forecast, which is why I suggested they should have their forecast explained to them.

AlanP_2

Daliah said:

p00hsticks said:

Daliah said:

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

Deleted_User said:

I am in my mid forties 

Given your age, I cannot think of any reason why you should not get the maximum new state pension once you have 35 full NI years (and have reached your state pension age). Obviously, you'll have to pay NI (through work or voluntary), and/or get NI credits, for a few more years to accrue 35 NI years but once you have those, you should be entitled to the maximum new, flat rate, state pension.

If you are uncertain about this, post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained.

You can't make the assumption that they'll qualify with 35 years contributions just from their age unless they're still in their teens. The OP started their working life prior to the introduction of the new state Pension in 2016 and so fall under transitional rules - they may need more or less than 35 years depending on thir individual record (in particular if prior to 2016 they have been contracted in or out, and what additional pension they had accrued). As you say they need to check their state pension forecast and use that to see how many more years they need. 

The transitional rules are essentially dead straight forward - only people who would have received more under the previous rules would be subject to those, and this has been determined for the affected people back in 2016. But from what the OP posted (e.g. time out for children etc), it is most unlikely that they would have accumulated lots of SERPS/S2P, which could have made them subject to the pre-2016 rules.

I've got more than 40 full years so far and still need to pay NI for 3 more years to get full NSP so the transitional arrangements affect everyone with pre and post 2016 contribution years.

Daliah

AlanP_2 said:

Daliah said:

p00hsticks said:

Daliah said:

Deleted_User said:

I also thought it was 35 years. But having looked at our forecast, it didn’t add up to 35 years. So I am now assuming that this is the transitional arrangement mentioned above. So am I right in thinking I need to work towards the years in my forecast and not the 35 years I originally thought?

Deleted_User said:

I am in my mid forties 

Given your age, I cannot think of any reason why you should not get the maximum new state pension once you have 35 full NI years (and have reached your state pension age). Obviously, you'll have to pay NI (through work or voluntary), and/or get NI credits, for a few more years to accrue 35 NI years but once you have those, you should be entitled to the maximum new, flat rate, state pension.

If you are uncertain about this, post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained.

You can't make the assumption that they'll qualify with 35 years contributions just from their age unless they're still in their teens. The OP started their working life prior to the introduction of the new state Pension in 2016 and so fall under transitional rules - they may need more or less than 35 years depending on thir individual record (in particular if prior to 2016 they have been contracted in or out, and what additional pension they had accrued). As you say they need to check their state pension forecast and use that to see how many more years they need. 

The transitional rules are essentially dead straight forward - only people who would have received more under the previous rules would be subject to those, and this has been determined for the affected people back in 2016. But from what the OP posted (e.g. time out for children etc), it is most unlikely that they would have accumulated lots of SERPS/S2P, which could have made them subject to the pre-2016 rules.

I've got more than 40 full years so far and still need to pay NI for 3 more years to get full NSP so the transitional arrangements affect everyone with pre and post 2016 contribution years.

Sounds like you are one of the lucky ones who, like their employer, paid lower NI as you were in a contracted-out works pension scheme, and you appear to be young enough to make up the COPE deduction without an impact on your works pension. 

Having more than 40 NI years is not a direct result of the transitional arrangements. Everyone in employment pays NI if they have not reached their state pension age yet, many can get automatic NI credits, or pay voluntarily for them, up to their state pension age. It is not unusual for people to have close to 50 NI years, or even more. If we all stopped after 35 NI years, there would be a big, or even bigger, black hole in both, the NHS and the state pension budgets.

[Deleted User]

Because of the previous conversations. Here is my pension forecasts: 

Person 1 
29 full years contributions
4 years to pay in order to receive £179.60 p/w pension

Person 2 
22 full years contributions
9 incomplete years contributions (only just applied for NI credits for childcare years)
10 years to pay in order to receive £179.60 p/w pension