Pension/savings/benefits

[Deleted User]

88Alice_Holt said:

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.  

I’m really sorry but I don’t understand what this means. 

I am thinking I need to put as much as I can in a pension as possible. So what is pension credit entitlement and in what way can I erode it?

AlanP_2

Daliah said:

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.

I am one of the lucky ones but my main point was that the transitional arrangements affect everybody who started paying NI pre-2016 in some way not just those who had built up more SERPS / SP2.

The media are the worst culprits quoting "35 years to get full NSP" when for the vast majority of people "35" is irrelevant.

eskbanker

Deleted_User said:

88Alice_Holt said:

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.  

I’m really sorry but I don’t understand what this means. 

I am thinking I need to put as much as I can in a pension as possible. So what is pension credit entitlement and in what way can I erode it?

https://www.gov.uk/pension-credit explains the basics of pension credits, which, like other means-tested benefits, are influenced by your wider financial circumstances.

[Deleted User]

eskbanker said:

https://www.gov.uk/pension-credit explains the basics of pension credits, which, like other means-tested benefits, are influenced by your wider financial circumstances.

Ah, I did not know about pension credits but I think I do now, thanks 

Daliah

Deleted_User said:

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

This sounds wrong as 29 + 4 = 34, one year short of the minimum 35 years needed for £179.60. Close, but no cigar.

Deleted_User said:

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
 

Could be right but who knows.


I would repeat what I said before: post your state pension forecast on the pension board, or take it into your Citizens Advice Bureau, to have it looked into and explained. But in any case, do not rely on the comments of strangers, including myself, on the Internet.

Daliah

Alice_Holt said

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.  

Pension credit entitlement is only relevant for people who do, or can expect to have a household income below some rather low levels. Somebody in their mid forties, like the OP, will hopefully still be able to make provisions for their household retirement income to be much above the level that qualifies for Pension Credit. To plan for Pension Credit entitlement is definitely a race to the bottom. Obviously a matter of choice, but I wouldn't, and don't know anyone in real life who would enter that race out of choice.