Contracted out - impact child benefit

Hedrun1

I didn't find out until I retired but my occupational pension contracted me out of full pension contributions. The government gateway has full NI listed against every employment year. However I'm 7 yrs short for new full state pension. 
Those in receipt of child benefit get their stamp paid. So should I not get full pension for those 17 years ( not contracted out rate) and how do I check this. ? Can anyone shine a light? Thank you

Linton

Hedrun1 said:

I didn't find out until I retired but my occupational pension contracted me out of full pension contributions. The government gateway has full NI listed against every employment year. However I'm 7 yrs short for new full state pension. 
Those in receipt of child benefit get their stamp paid. So should I not get full pension for those 17 years ( not contracted out rate) and how do I check this. ? Can anyone shine a light? Thank you

You would have had no choice about being contracted out if you wanted to be a member of most DB pension schemes.

Yes, you should get the full pension for those 17 years for which you received NI credits but you will also lose some of your SP for the years you were contracted out.  Depending on the exact circumstances people who were working pre 2016 may receive more, the same, or less SP than the standard amount.

The only way of improving the situation is to pay voluntary NI for recent years pre-SP age for which you did not pay any or sufficient NI.  Are there any? Which particular years you can pay for and gain any benefit depends on the exact circumstances.

Hedrun1

Thank you for reply. The government gateway is so vague in its info. It shows I have 36 yrs full NI but says I need to top up another 8 for full state pension = 44 yrs. I know 30 employment yrs were contracted out years but they all show as full. Age 16 - 18 shows 59 weeks , 58 weeks and 52 weeks of contributions. (All pre full time employment. ).Strange as there are only 52 weeks in a year!!!! The rest state NI on - then that years income. It's as clear as mud how they calculate the entitlement. There is no change in the record over the child benefit years when I was also in full employment.
Is there a standard figure for the percentage contracted out. eg paying 40% or 60,%, of NI contribution per contrasted out year?
Thanks

xylophone

I didn't find out until I retired but my occupational pension contracted me out of full pension contributions. 

You misunderstand - both you and your employer paid full Basic State Pension contributions - you were contracted out of State Earnings Related Pension/S2P. 

https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/the-new-state-pension-transition-and-contracting-out-fact-sheet

The CB NI credits give a full year.

On 6/4/16, two calculations were done for you

Old Rules

NI years/30 x (Full Basic SP) +  (Additional State Pension - Deduction for Contracting Out)

New Rules

(NI years/35 x Full New State Pension) - Contracted Out Pension Equivalent.

Your "starting amount" for new state pension was the higher of the two.


If your starting amount was lower than a new state pension, there was the possibility of improving your position    see this (produced at inception of NSP).

 https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

You have obtained a state pension forecast?

https://www.gov.uk/check-state-pension

What exactly does it  say?

Linton

Hedrun1 said:

Thank you for reply. The government gateway is so vague in its info. It shows I have 36 yrs full NI but says I need to top up another 8 for full state pension = 44 yrs. I know 30 employment yrs were contracted out years but they all show as full. Age 16 - 18 shows 59 weeks , 58 weeks and 52 weeks of contributions. (All pre full time employment. ).Strange as there are only 52 weeks in a year!!!! The rest state NI on - then that years income. It's as clear as mud how they calculate the entitlement. There is no change in the record over the child benefit years when I was also in full employment.
Is there a standard figure for the percentage contracted out. eg paying 40% or 60,%, of NI contribution per contrasted out year?
Thanks

"Full" has nothing to do with whether you were contracted in or out.  It means that you have sufficient NI to count.  What it counts for depends on whether you were contracted in or out.

Exactly what difference being contracted out makes depends on the rules in place at the time which changed several times. So for practical purposes unless you want to do some very detailed research you will have to take DWP's word for it.

I dont know about your 16-18 weeks but would hazard a guess that everyone of that age in full time education was credited with 52 weeks but some would also have paid NI from part time/holiday working.

xylophone

Re pre 2010  juvenile credits 

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim41210

If you were working full time in your CB years  and earning the relevant amount, then you would not have needed NI credits - you would have been covered by your own contributions.

How many full years did you have at 6/4/16?

What is the amount of COPE shown on your state pension forecast?

Hedrun1

Thank you. Finding it complicated. It shows I have 36 yrs contributions but need 7 years more contributions to reach full state pension. I understand this and know I can buy this should I choose. And understand that the contracted out portion is paid to me in my occupational pension. 
What I was trying to get to amongst other things. I wasn't credited with NI during child benefit years as I was contributing enough through employment income. 
If I hadn't been working full time but instead a stay at home parent would those years credited been at full whack. Where as because my contributions were contracted out was I paying less towards my state pension during those years as well as the rest of my contracted out years.?
Thank you for all the comments it is appreciated 

dunstonh

If I hadn't been working full time but instead a stay at home parent would those years credited been at full whack. Where as because my contributions were contracted out was I paying less towards my state pension during those years as well as the rest of my contracted out years.?

If you had been in receipt of child benefit, then yes, you would have the equivalent of contracted in qualification.    However, it is more likely that the contracted-out benefit has been more beneficial to you.

Depending on how you contracted out, you either have the occupational pension paying you more or a pension fund with an increased amount to take as you wish.

xylophone

You don't say which years were  CB years.

Between 1978 and 2010 a system known as Home Responsibilities Protection was in operation.

The change to NI Credits came in 2010.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/223101/hrp_15062011.pdf

Home Responsibilities Protection (HRP) was available in respect of the tax years 1978/79 to 2009/10 if insufficient National Insurance contributions had been paid or credited to make the year a qualifying year for basic pension (and its equivalents in widow’s and bereavement benefits) purposes, where the person:

•   was receiving Child Benefit in respect of a child under the age of 16;

•   was caring for a severely disabled person for a minimum of 35 hours per

  week;

•   was receiving a carers premium to income support;

•   in the case of years 2003/04 to 2009/10, was a foster parent.

  HRP was not a National Insurance credit, it operated by reducing the number of years of National Insurance contributions or credits required for entitlement to a basic pension (and its equivalents in widow’s and bereavement benefits) to a minimum of

  20.

• 1. For people reaching pension age from 6 April 2010 onwards years of HRP were converted into years of National Insurance credits and from April 2010 HRP was replaced by weekly National Insurance credits for people who are:

     •   receiving Child Benefit for a child under the age of 12; 

Hedrun1

Gosh it is complicated.My child benefit was in early 90's so HRP time. 
Thank you so much for explaining. Effectively my NI contributions were sufficient to continue towards my state pension during those years so would have therefore continued as normal not covered by the HRP. 
Yes the contracting out I presume has topped up my occupational pension.

xylophone

Yes the contracting out I presume has topped up my occupational pension.

Not exactly.

See https://forums.moneysavingexpert.com/discussion/comment/79214832/#Comment_79214832