State pension

radhadee

I thank you all for advice re paying extra two years to get full pension apparently no brainier?? Why I cannot see this?? I’ve already paid 44 years no one is giving ME back the extra years ? Yet I’m to pay two years contributions. My best Buddy to rub salt in my wounds got full pension and extra taking her up to 192 a week. Presumably as she was on benefits? It just does not seem a fair system at all. I probably will pay but just having a hard time understanding it………??
something to do with serps contracting out but for those years I did pay NI ??

Dazed_and_C0nfused

My best Buddy to rub salt in my wounds got full pension and extra taking her up to 192 a week. Presumably as she was on benefits?

Or more likely she was a high earner in some non contracted out years.  She may well be a loser under the new system as she has no opportunity to increase her State Pension irrepsective of how many post 2016 years she contributes for.

Whereas you would be a winner, paying less NI for some years and now getting the opportunity to make your pension upto the standard new State Pension amount.

radhadee

But she’s getting that now! I’m not so how does it make me a winner? I really don’t comprehend 

TadleyBaggie

You would have got far less in the pre April 2016 system. 

xylophone

My best Buddy to rub salt in my wounds got full pension and extra taking her up to 192 a week. Presumably as she was on benefits?

You mean that your friend receives around seven pounds a week more than a full new state pension.

This is unlikely to be related to her benefit status.

For her (as for you) two calculations were done at 6/4/16 (inception of new state pension).

Old rules

NI years/30 (max) x £119.30 (Full Basic State Pension) + (Additional State Pension - (where applicable) Deduction for Contracting Out.

New Rules

NI years/35 (max) x £155.65 (Full New State Pension) - (where applicable) Contracted Out Pension Equivalent.

Your starting amount (Foundation Amount) was the higher of the two.

It would seem that your friend was either never contracted out or was contracted out only for a short period.

Therefore at 6/4/16, her starting amount was already higher than a full new state pension.

Even had she been working and paying (or being credited) with NI, she could not increase her SP - it would simply revalue each year, the amount equivalent to full NSP under the triple lock, the balance by CPI.

In your case, it would seem that you spent much of your working life in a contracted out pension scheme - this meant that you did not accrue SERPS (although you may have accrued some S2P).

You benefit from a pension from your scheme and also from the opportunity to increase your NSP up to the full amount through post 6/4/16 contributions/credits.

Below was produced pre introduction to set out the principles of the new system.

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