Why can't I get the maximum State Pension despite paying the max Voluntary Contributions?

tonyl1954

Hi
I am a male aged 67 & started receiving my State Pension on 06/05/2020.
I worked for the NHS for 42 years full time.I retired at 60.

I checked on the Gov site & there were 4 years where I could pay Class 3 Vol Contributions to increase my SP.
Also there was I year (2015/16) I was later informed by the DWP where purchasing Vol Conts would not increase my SP.
This I have done. I paid back in January & have only just received payment form them!!!!

I have checked today on the Gov site & there are 49 years of full contributions & again this 1 year ( 2015/16) where I did not contribute enough

So....my new SP is £161.18 per week from 13/04/22, but why am I not able to get the full SP of  £185.15??
Is it something to do with the NHS contracting out of SSP in 2016??

Thanks!
Tony

p00hsticks

tonyl1954 said:

So....my new SP is £161.18 per week from 13/04/22, but why am I not able to get the full SP of  £185.15??
Is it something to do with the NHS contracting out of SSP in 2016??

Thanks!
Tony

Yes, it is.

When the new State Pension was introduced in April 2016, two calculations were done for everyone, one using the old rules and one the new, and the higher of the two became your 'starting amount'.

In your case, having been contracted out for much of your working life, that would almost certainly have been the one under the old rules, which gave a basic state Pension of (in todays terms) £141.85 (plus potentially some additional state pension for any years you weren't contracted out).

Every NI year you earned / got creditted / bought since April 2016 up to the end of the year prior to you reaching state Pension age adds £5.29 (1/35th of the new state pension maximum amount of £185.15) to that. Hence the four years you bought should have added £21.16 to that starting amount.   (My figures are obviously a bit off somewher as that's not quite what yo uare getting, but in the same ball park).

Unfortunately for you, you didnn't have enough years between 2016 and reaching SPA to be able to fully increase your pension to the new maximum, but by buying the four years you did you have managed to increase what you would have got under the old system by over £20 a week, whcih is not to be sneezed at.....

squirrelpie

What you would have got in state pension is more than made up for in your NHS pension, so the extra four years are effectively a bonus allowing you to double-count those years rather than you missing out on anything by not being able to get the maximum. My wife is in a similar position.

xylophone

Is it something to do with the NHS contracting out of SSP in 2016??

In fact contracting out ended for the NHS (as for all other Defined Benefit Schemes) on 6/4/16.

You mention retiring at age 60 ( presumably between August 2014 and August 2015)?

By that time you had 42 full NI years.

Between 1972 and 1975 you may have accrued a little Graduated Pension (an early form of Additional State Pension).

Between 1978 and 2016, your Pension Scheme was "contracted out"  of the Additional State Pension (SERPS/S2P).

However, it would have had to guarantee you a pension at least as high as you would have received (up to 1997) under SERPS (your Guaranteed Minimum Pension) and to have satisfied the "reference Scheme Test" thereafter.

In effect your Pension Scheme pays your post 1978 additional pension.

You are unlikely to have accrued any SERPS but may have accrued some S2P (depending on your earnings).

At 6/4/16, two calculations were done for you in order to establish your "starting amount" for NSP - it was the higher of

Old rules

Full Basic  of £119.30 (because you had at least the maximum 30 years required) + (Additional State Pension - Deduction for Contracting Out).

New Rules

Full NSP of £155.65 ( because you had at least the maximum 35 years) - Contracted Out Pension Equivalent.

With all those years of contracting out, your COPE would have been quite substantial so that in your case, the higher amount would have been the old rules amount, maybe in the region of  £135 or so.

At 6/4/16 you were some  four years short of SPA.  You  had made no NI contributions since retirement.

The rules did not permit you to make voluntary contributions for years before 6/4/16 (you already had the maximum Basic) but could for years 16/17, 17/18, 18/19 and 19/20 (the last full tax year before you reached SPA).

This was enough to bring you up to around 87% of a full NSP on which you will receive increases in payment under the "Triple Lock" from April 2023.

robinwales

You were contracted out. I'm the same at 69. Got my SP at 65 and had enough years in theory for a full pension. But I'm under the old system and I was contracted out. My wife who was an NHS nurse had her pension from last year at 66 was able to buy three extra years which was definitely worth it at a cost of £3k one off payment. I get £150 a week, she now gets £202. Mind you, my BT pension makes up for it at £22k a year. It's just irksome that she gets more than me for slightly fewer NI years.  

xylophone

she now gets £202.

What was your wife's "starting amount" at 6/4/16?

How many NI years did she have at that point?

p00hsticks

robinwales said:

 My wife who was an NHS nurse had her pension from last year at 66 was able to buy three extra years which was definitely worth it at a cost of £3k one off payment. I get £150 a week, she now gets £202.

Are you sure she's not winding you up ?

As far as I'm aware, if she reached state pension age last year (i.e, falls under the new State Pension rules), then unless she had already accumulated a greater entitlement than the £185.15 nSP maximum when it was introduced in 2016 (unlikely if she was in the NHS and meaning that  she wouldn't have needed to buy any additional years) then £185.15 a week is the most she'd be able to get.

(3 past years would also cost closer to £2k than £3k as well, so the figures definitely are not making sense).