State Pension Qualification
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Would I be right in thinking that if an employee has 35 years of “full” qualifying NI years on their record, between 1988 and 2022, then per definition they must be entitled to the full new state pension whether they were contracted out or not?
And in each year they just had to cross a certain minimum threshold during that year to get a full year?
Of is it not that simple?
And in each year they just had to cross a certain minimum threshold during that year to get a full year?
Of is it not that simple?
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When DWP show NI years as 'full' they just mean 'full financial year' and not 'full as in paid full rate NI'.
The standard 35 years only really applies to those who started work after April 2016, with the rest of us being under transitional arrangements with our own individual calculations.
In my case, my NI record showed 'full' years from 1972 until I retired at age 60. However, as I was contracted out from 1978 until 2016 I needed 48 years of NI (44 from work, 4 from paying voluntary Class 3s) in order to qualify for the full nsp. Not complaining - I consider myself to be one of the winners under the new scheme. Had it not changed, my State pension would have been nearer £150 per week with no chance of top ups.
I’m happy with that
I just recently found out that my wife has not been able to check her entitlement as she doesn’t have a working gov gateway account and she can’t create one until she changed her name on her driving license - we need to get a form from the post office for that.
She was in the NHS 1995 pension scheme for about 36 years I think.
I was assuming that given her years of paying NI is the same as mine and we were both contracted out, she must be in the same situation as me, but perhaps there are different levels of contracting out?
I also saw on the MSE article that you can phone up the pension line directly to immediately find out whether buying extra years will help, and that if you were contracted out, it might not make any difference?
Would it be fair to assume though that there is no way she would get less than the basic state pension as there is a safety net to ensure you can’t get less than you would have done under the old system?
Old Rules
NI years (max 30)/30 x £119.30 (Full Basic) + (Additional State Pension - Deduction for Contracting Out).
New Rules
{NI years/35 (max) x £155.65 (Full NSP)} - COPE.
The "starting amount" was the higher of the two.
If equal to full NSP, then you could not improve the SA by further contributions or credits - it would however be index linked under the triple lock.
If under SPA and working and earning the relevant amount, NI would still need to be paid, even where it would not improve the SA.
If more than full NSP, you could not improve the SA by further contributions or credits but the amount equal to full NSP would be indexed under triple lock and the balance by CPI.
If less than full NSP, there was the possibility of improving the SA up to (but not in excess of) a full NSP by further contributions or credits.
https://www.gov.uk/new-state-pension/how-its-calculated
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf
I currently only have 31 years of contributions.
My forecast says £187 a week. Becomes payable in 2025.
Based on your first formula, this means you needed 30 years to get the full state pension already at 6/4/16? Would the 2 "free" years of 6th form for that cohort be included there? If so she would definitely have already had 30 years at that time.
The "deduction for contracting out" in 1st calculation - would that be the same as the COPE amount or different? I guess if you were contracted out for your entire working life up until 2016, it would be the entire additional pension and you were only entitled to basic pension under this calculation?
Regarding the COPE amount - would that amount be different depending what periods you were contracted out? For example I have payslips going back to 1999 and it looks like I was contracted out until my DB pension was deferred in April 2008, but after that I was no longer contracted out. However my wife presumably would have been contracted out for the entire period 1988 to 2016 as she was in the 1995 NHS pension scheme the whole time. I'm guessing that means she would have a much higher COPE number than me?
Also - is it just a coincidence that my COPE amount on my side is almost the exact difference to the penny between the current new state pension and the basic state pension? I think it must be a coincidence because the numbers would have been different anyway in 2016?
Final two questions - can you call the pension line on "Future Pension Centre on 0800 731 0175" to get an immediate update n this even if you don't yet have a government gateway account?
If it turns out that my wife can't top up past years because they are already full but she has a contracting out deduction, can she still top up the future years as she is early retired and still has 10 years to go until her state pension age. I assume this means she can make voluntary contributions during the next 10 years to top up the amount? And there is no deadline for this because she has to do it by year into the future?
No, they will not give you an instant quote but will send you one in the post. There is also a form to request a forecast. https://www.gov.uk/check-state-pension
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
You may find this of interest (produced by RL to coincide with introduction of NSP in 2016).
https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf
The NHS Scheme was contracted out of SERPS/S2P from 1978 -2016.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/220274/eia-ni-credits-changes.pdf
Since April 1975, NI contributions have been credited to people for the tax year in which they reach age 16 and the following two tax years in order to protect their future basic State Pension entitlement and Bereavement Benefits for a spouse or civil partner (“Starting Credits”). The policy intention behind the credits was to ensure that young people staying on in education beyond the minimum school leaving age did not lose future benefit entitlement as a result. There is no requirement for the individual to be in the UK at the relevant age. This was primarily to ensure that young people being educated outside the UK were not penalised.
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim41210
I wanted to know if these starting credits are included just like any normal year in the calculations outlined above (2 different calculations of the starting amount for NSP).
I would have assumed for sure that they must be included because they are listed as "full year" on the state pension forecast screens. However, I saw a comment in another thread here recently that appeared to claim that these starting credits don't count (which would seem to be inherently wrong as there is no point in them still being in your records if they don't mean anything).