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State Pension Qualification
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The different transition date periods in the example tables in the document don't correspond to anything in the tables I have from my pension provider - I do have one document that says there was £456p/a of "post 6th April 1988" GMP in my pension as of 2021 when the GMP was merged into the pension. 1988 doesn't correspond with the years mentioned in the different tables in that document.
That said, the first example in the document is not that dissimilar to my wife's situation and it certainly gives me the impression that her starting amount in 2016 would have been be not much higher than the basic state pension amount. Once we get access to her gov gateway account we can see for sure.
I think the difference is that I was only contracted out for for 17 years whereas she was contracted out for 30 years. As such, I am expecting that she will have a lower starting amount than what I had.
In other words, if you had at least 30 years of NI full years on your record at the time of April 2016, it’s impossible for your starting amount to be less than £119.30 (no matter how long you were contracted out)?
Is that correct?
Your wife was over 18 before 2011 - she received the credits and was therefore entitled to have them counted in her individual calculation - did you check my other link to the HMRC manual?
1988 is significant because of the rules relating to increases in payment on certain occupational pensions once age 60 (female) 65 (male) is reached.
Let us suppose that Jim Jones retired from his lifetime job with ABC Ltd at scheme pension age of 60. He was a member of his occupational DB pension scheme between 1978 and 2017 when he retired.
His scheme was always contracted out of the state pension.
This means that between 1978 and 1997 (when the GMP system was ended and replaced by the Reference Scheme Test) part of the scheme pension he accrued was his Guaranteed Minimum Pension.
Let's say that on retirement his pension (which consisted of pre 88 GMP/post 88 GMP and excess over GMP) was £10,000 per annum.
Let's say that his Scheme used uncapped RPI as the index for annual increases.
Every year thereafter up to age 65 his pension would be treated as though it were all "excess" and his pension would increase as above.
Once he reached age 65, his pension would be split out into its component parts - in future, the scheme would pay no increase on his revalued pre 88 GMP, (for example £1500 pa) only up to 3% CPI on his revalued post 88 GMP (for example £1000 pa) and uncapped RPI on the excess over GMP.
This is not true.
Under certain circumstances, the COD could indeed be higher than the ASP.
This tended to happen where a person left a scheme before scheme pension age and had a deferred pension with GMP and the GMP revalued at "Fixed Rate".
See https://forums.moneysavingexpert.com/discussion/comment/60448917/#Comment_60448917
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
3. It important to note that basic State Pension eligibility is not affected by adjustments for time spent contracted-out. Contracting-out adjustments are only made to additional State Pension entitlement in the current scheme.
https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/state-second-pension-explained/
I had read tha point 3 and my interpretation was that I am correct that once you had your 30 years prior to April 2016 you have your full basic state pension amount guaranteed (using the old terminology).
In the other forum post, if I understand it, you are saying that any increases in payment to amounts above the basic state pension relating to contracted out periods from 88 to 97 could be frozen for a period of time if this calculation is negative?
In any case, the NHS pension did / does not revalue GMP at a fixed rate I don’t think?
this does not mean that a negative number in the cod calculation would eat into your basic state pension amount - it’s only about the increases in the additional state pension part? But in that case this wouldn’t have any bearing on the result of the “old calculation” and is to all intents and purposes irrelevant once you are retiring under the NSP or what am I missing?
Or are you saying that this frozen adjustment could still happen to the protected part of the additional pension even under the NSP in these edge cases? Either way I’m pretty sure this wouldn’t apply to neither me nor my wife.
Yes.
NHS would use "full rate" for a pension in deferment.
This could have been the case for some people receiving SP under the old scheme.
In any case my wife's NHS pension was never in deferment - it went directly from "in service" to "in payment".
In any case, my overall feeling from reading all this is that when the changes happened in 2016, you could define everyone as a winner as mentioned earlier in this thread because everyone had the theoretical opportunity to increase their pension higher than before.
However, if you look at it another way, it seems to me that when we are considering people who were contracted out for long periods, that people who had a lot more than 30 years of service and were just about to retire lost out a bit compared to people who happened to have exactly 30 years of service at the time these changes were made.
The latter would have got the full old Basic amount guaranteed and plenty of years to increase the pension probably to the max by one way or another.
On the other hand, the former group would have ended up with a starting amount that was not hugely more than the Basic amount in relation to all the extra years they already contributed, and might be already just about to retire and face having to pay top up fees if they want to increase the pension. We can see this when we see that some contracted out people ended up having to do 48 full years NI to get the full NSP whereas others might only need 37 or so.
Theoretically this should offset against all the extra money they get from their DB pension, but this link to me seems to be theoretical rather than real, given that the main part of most DB pensions is related to a portion of your salary rather than anything to do with your NI service record. e.g. my NSP is the full amount despite I was contracted out for 17 years, but my DB pension prediction doesn't appear to have gone correspondingly down.