39 years paying NI and still short of 30% of state pension, who new this could happen!

SuejC

This guide is really really useful, primarily (I think) because most people don't know about the state pension shortfall they face!  I wish it had been around when I first started enquiring to HMRC and DWP.

I worked for 39 years, full time, with no breaks and retired early after being made redundant.  I think our company contracted me out of SERPS for a few years.  I always thought, as the government told us, that I would have a full state pension.  Of course I also thought I would receive it at 60, because they told us!!

Last year I went onto the pension calculator to find I would only get 70% of what is now a full state pension.  I contacted the pension people and they confirmed this but said that I can pay extra "voluntary" contributions from 2016 (this was when the rules changed apparently!).  I managed to work out that if I live to take my state pension for 3 years I will break even.  So I have now paid HMRC a large lump sum and am paying for the next two years (until I am 66) a direct debit amount monthly.
What annoys me is that I didn't know.  When I complained that I hadn't been told & could have missed this, HMRC said "it was made public at the time, 2016, so I am deemed to have been told!  My opinion of their ways of working are very low!

Oh & they told me that as my voluntary contributions are "voluntary"  the amount cannot be taken into account when calculating any benefits in the future, should I qualify.

molerat

If you had come on here anytime from 2015 you would have been put in the picture about the new pension.  Your pension amount was exactly what you had already accrued under the old pre 2016 scheme, in fact you have gained and can make your pension amount that you earned under the pre 2016 scheme up to the new scheme full amount at a very reasonable cost.  Unfortunately a lot of people believed what was printed in the tabloid press at the time.

Marcon

SuejC said:

This guide is really really useful, primarily (I think) because most people don't know about the state pension shortfall they face!  I wish it had been around when I first started enquiring to HMRC and DWP.

I worked for 39 years, full time, with no breaks and retired early after being made redundant.  I think our company contracted me out of SERPS for a few years.  I always thought, as the government told us, that I would have a full state pension.  Of course I also thought I would receive it at 60, because they told us!!

Last year I went onto the pension calculator to find I would only get 70% of what is now a full state pension.  I contacted the pension people and they confirmed this but said that I can pay extra "voluntary" contributions from 2016 (this was when the rules changed apparently!).  I managed to work out that if I live to take my state pension for 3 years I will break even.  So I have now paid HMRC a large lump sum and am paying for the next two years (until I am 66) a direct debit amount monthly.
What annoys me is that I didn't know.  When I complained that I hadn't been told & could have missed this, HMRC said "it was made public at the time, 2016, so I am deemed to have been told!  My opinion of their ways of working are very low!

Oh & they told me that as my voluntary contributions are "voluntary"  the amount cannot be taken into account when calculating any benefits in the future, should I qualify.

There was indeed a great deal of coverage in the press/media about the 2016 state pension changes. Who knew? Rather fewer people than the government would like to believe. Given the number of questions asked here about state pension forecasts and the number of years needed for a full pension, universal understanding still has a long way to go...

xylophone

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


 An information sheet  for the general public produced a couple of years before the introduction of the new scheme.

More detail here

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 

It appears that you ceased employment pre introduction but had accrued 39 years by 6/4/16.

At that date, two calculations were done for you.

Old Rules

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

New Rules

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

Your "starting amount" was the higher of the two.

The COPE (shown on your pension forecast) was used only once to enable this calculation to be done.

Therefore if you had done nothing about voluntary contributions, you would have received exactly the state pension to which your contributions entitled you.

As your starting amount was under a full NSP and you had a number of years to go before reaching SPA, you had the opportunity to increase it up to the full amount through post 2016 contributions or credits.

Are you now in receipt of the pension to which the COPE relates?

german_keeper

What annoys me is that I didn't know.  When I complained that I hadn't been told & could have missed this, HMRC said "it was made public at the time, 2016, so I am deemed to have been told!  My opinion of their ways of working are very low!

Changes to the benefits system are not communicated individually to everybody in the country. Imagine the cost of that to the taxpayer. There is something in law that says something like all citizens are expected to take reasonable steps to be aware of their entitlements.

There will of course be occasions, such as the current drive to get the last few million affected by the change from legacy benefits to Universal Credit, where those affected will be contacted directly, although even that process was started by general publicity of the situation. 

Big changes affecting lots of people, such as any major change to the state pension will always receive widespread publicity, news and consumer programmes on television and radio, websites, newspapers and more. As far as I am aware that is deemed sufficient in law for people to be reasonably made aware of the situation.  

p00hsticks

SuejC said:

I worked for 39 years, full time, with no breaks and retired early after being made redundant.  I think our company contracted me out of SERPS for a few years.  I always thought, as the government told us, that I would have a full state pension.  Of course I also thought I would receive it at 60, because they told us!!

So when you started your working life, the rules were that - as a woman - you needed 39 years NI contributions to get a basic State Pension of (in todays term) £141.85 a week from the age of 60.

Men had to make another 5 years NI contributions and could only claim at the later age of 65, which is partly why the age limits were changed - to both reflect the sex inequality and the fact that people are living longer (when the state pension was first introduced in 1908 it was means tested, only available from the age of 70 and if you were 'of good character' !)

The introduction of the new state pension didn't reduce the amount of pension you would have got under the old rules, but rather has given you the opportunity to increase that amount by up to around £50 a week in return for making voluntary contributions at a very attractive rate in return for what you get.

msallen

I do love a good ignorant ill-informed rant.

dunstonh

 I always thought, as the government told us, that I would have a full state pension. 

What do you mean by full state pension?  There was no such thing under the old rules.   You could qualify for a maximum basic state pension.  But SERPs/S2P/Graduated never had a maximum.

The basic state pension is much lower than the new state pension.   So, you could easily have qualified for the maximum basic state pension but not the higher amount offered under the new state pension.  You haven't got less.  You have the opportunity get more.

Of course I also thought I would receive it at 60, because they told us!!

I think you will find that they never told you it would be 60.  They published information that said it was 60.  They also published information when it was increased.  Just as they published information when the new state pension came in.

What annoys me is that I didn't know.  When I complained that I hadn't been told & could have missed this, HMRC said "it was made public at the time, 2016, so I am deemed to have been told!  My opinion of their ways of working are very low!

The changes were well publicised, but they cannot force you to take an interest in these things.

As with all benefits, the information is published for those that are interested.