State Pension vs Early Retirement

Silvertabby

Audaxer said:

Qyburn said:

I guess there's no harm showing the actual figure.  What it says is ..

"Your forecast
    is not a guarantee and is based on the current law
    is based on your National Insurance record up to 5 April 2022
    does not include any increase due to inflation
 £199.18 is the most you can get
You cannot improve your forecast any more. "

NI history says I have 42 years full contributions up to and including 2021/22 and six part years.

You are in a very good position in that your forecast is already over the maximum new State Pension which is currently £185.15. I have 46 years full contributions and still have 3 years voluntary contributions to make to get to the maximum.

Actually, Qyburn is one of the losers under the new pension scheme.  If SP2 accrual hadn't stopped in 2016, they may have gone on to rack up well over £200 per week State pension.

People just don't seem to realise that the long term aim of the new State pension is to save money - ie, capped at £185 per week instead of the £300 plus it could have been for (contracted in) high earners.  

Qyburn

Silvertabby said:

Actually, Qyburn is one of the losers under the new pension scheme.  If SP2 accrual hadn't stopped in 2016, they may have gone on to rack up well over £200 per week State pension.

I was contracted out at one stage, then contracted back in and I simply can't remember the details. I am a socialist in general, so don't really approve of the State Pension being higher for high earners. So although I'm not going to complain that I've received some benefit I can also see why the rules were changed. To be honest I am surprised the pension hasn't been made means tested by now.

NedS

Qyburn said:

Silvertabby said:

Actually, Qyburn is one of the losers under the new pension scheme.  If SP2 accrual hadn't stopped in 2016, they may have gone on to rack up well over £200 per week State pension.

I was contracted out at one stage, then contracted back in and I simply can't remember the details. I am a socialist in general, so don't really approve of the State Pension being higher for high earners. So although I'm not going to complain that I've received some benefit I can also see why the rules were changed. To be honest I am surprised the pension hasn't been made means tested by now.

It is to an extent - if you are on a high income in retirement, you will pay more tax the more income you have. Have enough income from other sources and you will effectively be paying 40% tax on your state pension (I know the state pension is untaxed and it is the other income which is taxed, but the receipt of the state pension is what causes that other income to be taxed at 40%).

Audaxer

Silvertabby said:

Audaxer said:

Qyburn said:

I guess there's no harm showing the actual figure.  What it says is ..

"Your forecast
    is not a guarantee and is based on the current law
    is based on your National Insurance record up to 5 April 2022
    does not include any increase due to inflation
 £199.18 is the most you can get
You cannot improve your forecast any more. "

NI history says I have 42 years full contributions up to and including 2021/22 and six part years.

You are in a very good position in that your forecast is already over the maximum new State Pension which is currently £185.15. I have 46 years full contributions and still have 3 years voluntary contributions to make to get to the maximum.

Actually, Qyburn is one of the losers under the new pension scheme.  If SP2 accrual hadn't stopped in 2016, they may have gone on to rack up well over £200 per week State pension.

People just don't seem to realise that the long term aim of the new State pension is to save money - ie, capped at £185 per week instead of the £300 plus it could have been for (contracted in) high earners.  

Fair enough, he could have ended up with more, but he is still in a better position than a lot of posters on here without having to make voluntary contributions. 

I see he was also contracted out at one stage, so I am a bit surprised that he is over the maximum, but good luck to him. 

Anyway, I'm still happy enough that at least I'm in a position that I can get to the maximum amount with voluntary contributions. 

Silvertabby

Audaxer said:

Silvertabby said:

Audaxer said:

Qyburn said:

I guess there's no harm showing the actual figure.  What it says is ..

"Your forecast
    is not a guarantee and is based on the current law
    is based on your National Insurance record up to 5 April 2022
    does not include any increase due to inflation
 £199.18 is the most you can get
You cannot improve your forecast any more. "

NI history says I have 42 years full contributions up to and including 2021/22 and six part years.

You are in a very good position in that your forecast is already over the maximum new State Pension which is currently £185.15. I have 46 years full contributions and still have 3 years voluntary contributions to make to get to the maximum.

Actually, Qyburn is one of the losers under the new pension scheme.  If SP2 accrual hadn't stopped in 2016, they may have gone on to rack up well over £200 per week State pension.

People just don't seem to realise that the long term aim of the new State pension is to save money - ie, capped at £185 per week instead of the £300 plus it could have been for (contracted in) high earners.  

Fair enough, he could have ended up with more, but he is still in a better position than a lot of posters on here without having to make voluntary contributions. 

I see he was also contracted out at one stage, so I am a bit surprised that he is over the maximum, but good luck to him. 

Anyway, I'm still happy enough that at least I'm in a position that I can get to the maximum amount with voluntary contributions. 

Ditto.  I had enough time between retiring at 60 and SPA (66) to pay 4 years of voluntary Class 3 NI, taking me up to the full single tier rate despite being contracted out (and thus  paying reduced NI) from 1978 until 2016.  

We are two of the winners under the new scheme.

Qyburn

Aside from my own circumstances I've just had a little look at the State Pension in general.  Is it really true that someone born early 1951 will getting today a pension that's £40 a week less then someone born maybe only a few months later?  If so then I struggle to see how that's fair.

molerat

Qyburn said:

I guess there's no harm showing the actual figure.  What it says is ..

"Your forecast
    is not a guarantee and is based on the current law
    is based on your National Insurance record up to 5 April 2022
    does not include any increase due to inflation
 £199.18 is the most you can get
You cannot improve your forecast any more. "

NI history says I have 42 years full contributions up to and including 2021/22 and six part years.

Dazed_and_C0nfused said:

And not paying any more NI won't reduce it.

And nothing you have paid since 2016 has added 1p, apart from inflationary increases, to that pension. You were already above the maximum when the new pension was introduced.  At that time you had around £168.15 when the full new pension was £155.65.

molerat

Qyburn said:

Aside from my own circumstances I've just had a little look at the State Pension in general.  Is it really true that someone born early 1951 will getting today a pension that's £40 a week less then someone born maybe only a few months later?  If so then I struggle to see how that's fair.

If they were only on the "basic" pension then yes but the vast majority would have some S2P / additional / graduated pension on top.  If that was the only income then pension credit could make it up to just below the new pension amount - £182.60 - which could open up eligibility to other benefits so not as bleak as you portray.

Silvertabby

Qyburn said:

Aside from my own circumstances I've just had a little look at the State Pension in general.  Is it really true that someone born early 1951 will getting today a pension that's £40 a week less then someone born maybe only a few months later?  If so then I struggle to see how that's fair.

It's not as black and white as that.  Those born just a few months later didn't all automatically get the full new State pension.  During the (lengthy) transitional period, all of us who retired/retire after 2016 have our own individual calculations, designed to ensure that everyone got at least the amount they would have received under the old rules based on their accruals as at April 2016.

The £40 less that you quote is the old basic State pension - but very few actually have to live on only that as they will have additional pension income in the form of SERPS/SP2 or a contracted out occupational pension.  Or, in the worst possible scenario, they may be able to claim Pension Credit to take them up to £183 per week.

Note that the means tested pension credit limit is set at just a couple of pounds under the new single tier rate, meaning that in the years ahead, when all retirees do get the full £185 per week, they won't be entitled to pension credit or any of the other means tested top ups that pension credit opens the door to.  Remember I did say that the long term aim of the new single tier pension is to save money, not to shovel more at the post 2016 retirees.