Pension forecast confusion

p00hsticks

Thrugelmir said:

squirrelpie said:

Thrugelmir said:

MSE has a guide

https://www.moneysavingexpert.com/savings/state-pensions/

Yes but it's wrong! It's another place that propagates this 35-year myth. So why link to it?

Report the article to the powers that be then.......... little point in questioning me as I haven't read it. Be proactive. Otherwise it simply becomes an endless query that will arise. 

I'm not sure if it's the same article but I pointed out this and other inaccuracies more than nine months ago, as did others

https://forums.moneysavingexpert.com/discussion/6284356/mse-pension-guide-inaccuracies/p1

I haven't checked back to see which (if any) were addressed

DBdoobydoo

The winners in the transition to the new state pension are those who were contracted out & have a DB pension plus are young enough that they able to build up enough contributions to collect a full state pension.

The losers are those like me who were contracted out & have a DB pension but reached state pension age shortly after 2016 & were unable to build up enough contributions to collect a full state pension. My state pension is currently just over £150. I only contributed a couple of years post 2016 & never had the opportunity to contribute any more NI to reach the full state pension.

Ironically I am still working but as I am past state pension age I do not pay NI contributions which is a nice boost to my take home pay. Last year the money I saved by not paying NI was almost as much as I received in state pension (I am a high earner).

p00hsticks

DBdoobydoo said:

The losers are those like me who were contracted out & have a DB pension but reached state pension age shortly after 2016 & were unable to build up enough contributions to collect a full state pension. My state pension is currently just over £150. I only contributed a couple of years post 2016 & never had the opportunity to contribute any more NI to reach the full state pension.

I think the real losers are those who were contracted in (and so were paying a higher NI rate than those like you and me who were contracted out) and had accumulated quite a lot of SERPS/S2P prior to 2016 whilst still relatively young. Their starting amount would have been at or close to the new maximum, and they have now lost any opportunity to improve it further (under the old rules they would have been able to continue building it up to a much higher figure), whilst still possibly facing many years at working age having to pay NI.

CaptSlog

molerat said:

Making up those missing years will likely be one of the best investments you could buy, the equivalent of a 30% annuity.  Buying 2 years will take you up to £182.33 at £5.29 each, the 3rd will only add another £2.82 but still likely worth buying. Check if that final year of work is part full so could be a cheap buy.

Can you tell me where that calculation comes from please?
It becomes quite relevant for Mrs Slog, as her two pension figures are £174.01 and £185.15.
Basically, does she also buy 2 x £5.29?  If so a third year only gets her an extra 58p a week.

Dazed_and_C0nfused

Each post 2016 year adds £5.29 at current rates.

But it is capped at £185.15 so the final year is often limited by the cap.

Thrugelmir

DBdoobydoo said:

The winners in the transition to the new state pension are those who were contracted out & have a DB pension plus are young enough that they able to build up enough contributions to collect a full state pension.

There was an increase in NI contributions though. Those contracted out previously paid a reduced rate. 

Audaxer

CaptSlog said:

molerat said:

Making up those missing years will likely be one of the best investments you could buy, the equivalent of a 30% annuity.  Buying 2 years will take you up to £182.33 at £5.29 each, the 3rd will only add another £2.82 but still likely worth buying. Check if that final year of work is part full so could be a cheap buy.

Can you tell me where that calculation comes from please?
It becomes quite relevant for Mrs Slog, as her two pension figures are £174.01 and £185.15.
Basically, does she also buy 2 x £5.29?  If so a third year only gets her an extra 58p a week.

You said in your first post the figures were £171.75 and £185.15 so that is where the £2.82 for the last year comes from. If the first figure is £174.01 then she would only get 56p a week for the last year's contribution, so agree not worth paying the last year's NI for that amount.

CaptSlog

I've replied to the above twice, but for some reason I've fallen foul of the 'suspicious post filter'.

I didn't realise it was as simple as £5.29 a year and not some calculation.

Thanks for the help everyone.

hyubh

DBdoobydoo said:

The losers are those like me who were contracted out & have a DB pension but reached state pension age shortly after 2016 & were unable to build up enough contributions to collect a full state pension. My state pension is currently just over £150. I only contributed a couple of years post 2016 & never had the opportunity to contribute any more NI to reach the full state pension.

You aren't a loser because you haven't lost what would have been your 'full state pension' due under pre-2016 rules. You just haven't been able to get more state pension than anticipated before the current system became a thing.

What p00hsticks said about the actual losers!