The future pension service hanging up

molerat

To add to the above, years 2015-16 and earlier will not add to your pension.  Your "best buy" order is 2020-21 at £795.20, 2021-22 at £800.80, then any 2 other years including 2022-23 at £824.20.  Years 2020-21 and earlier will be increasing in price after July.

molerat

p00hsticks said:

heakitt said:

 My last formal (in writing) pension statement was in 2017 and told me I had 38 full years’ contributions and was entitled to a full pension (less the COPE element) and that I could not increase my pension further by making voluntary payments. Based on what I was told in 2017 I have therefore not made any voluntary payments to top up my NI as I was under the impression I had paid enough.

That doesn't sound right- any chance you could post up a (suitably redacted) copy of the forecast so that we can try to work out what has happened ?

I suspect they actually meant that the pension could not be increased by purchasing earlier pre 2016 years.

heakitt

OK thanks everyone. It looks like I misunderstood my 2017 letter. It's bad enough having spent the first 15 odd years of my working life planning my pension around retirement date of 60, so underinvesting in hindsight. I still don't understand why 38 years is not enough contributions though.

I'll have to assess the pros and cons of topping up now.

MallyGirl

there are people who have needed quite a lot more than that if they have been in a contracted out scheme for many years.
If you had retired at 60 under the old scheme it would have been on less than you have potential to achieve now.

heakitt

MallyGirl said:

there are people who have needed quite a lot more than that if they have been in a contracted out scheme for many years.
If you had retired at 60 under the old scheme it would have been on less than you have potential to achieve now.

Light is beginning to dawn. I was only contracted out for 7 years I think. Thanks everyone 

molerat

heakitt said:

OK thanks everyone. It looks like I misunderstood my 2017 letter. It's bad enough having spent the first 15 odd years of my working life planning my pension around retirement date of 60, so underinvesting in hindsight. I still don't understand why 38 years is not enough contributions though.

I'll have to assess the pros and cons of topping up now.

The only con of topping up is not living the 3 or so years it takes to recoup the capital outlay.

xylophone

 I still don't understand why 38 years is not enough contributions though.

The new state pension (£155.65 a week) was introduced 6/4/16.  At the same date the  Basic State Pension had increased to £119.30 a week.

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

At 6/4/16, your "starting amount" was the higher  of your entitlements calculated under old and new rules.

Old Rules 

(NI qualifying years/30 (max) x Full Basic SP) +  (Additional State Pension - Deduction for Contracting Out).

In your case

£119.30 + (ASP - "COD").

New Rules 

(NI qualifying years/35 (max) x Full NSP) - Contracted Out Pension Equivalent.

In your case

£155.65 - £53.05

Your starting amount was the higher of the two and in your case was given by the Old Rules calculation and was less than a full new state pension.

You had a number of years between 6/4/16 and the tax year prior to that in which you would reach SPA.

Since then your starting amount has been inflation protected under the triple/double link.

Only contributions/credits from 6/4/16 up to the tax year prior to that in which you would reach SPA could improve your starting amount up to (but not exceeding) a full NSP.

You need to purchase four years - see Molerat's post above

Your "best buy" order is 2020-21 at £795.20, 2021-22 at £800.80, then any 2 other years including 2022-23 at £824.20.  Years 2020-21 and earlier will be increasing in price after July.

heakitt

Thank you everyone for this advice. It sounds like because I was contracted out for 7 years then I have 38-7 years full contributions which leaves me 4 years to make up. I did think my contracting out was compensated for by SERPS but they have disappeared in the new scheme.

I am very grateful to MSE in general as my contracted out pension was subject to a 90s buy out recommended by my IFA. By the time I had realised it was not doing very well the company had gone bust, it was only MSE's information that made me chase compensation and at the time was awarded the maximum amount, event though this was less than what they reckoned I had lost. So MSE has been very important to me.

In terms of pros and cons I will have to pay tax on my state pension which will erode some of the additional income but it looks definitely worth paying for some of the missed years.

Thanks again all.

molerat

heakitt said:

Thank you everyone for this advice. It sounds like because I was contracted out for 7 years then I have 38-7 years full contributions which leaves me 4 years to make up. I did think my contracting out was compensated for by SERPS but they have disappeared in the new scheme.

I am very grateful to MSE in general as my contracted out pension was subject to a 90s buy out recommended by my IFA. By the time I had realised it was not doing very well the company had gone bust, it was only MSE's information that made me chase compensation and at the time was awarded the maximum amount, event though this was less than what they reckoned I had lost. So MSE has been very important to me.

In terms of pros and cons I will have to pay tax on my state pension which will erode some of the additional income but it looks definitely worth paying for some of the missed years.

Thanks again all.

It is not as simple as that

jem16

heakitt said:

Thank you everyone for this advice. It sounds like because I was contracted out for 7 years then I have 38-7 years full contributions which leaves me 4 years to make up. 

I’m really glad it doesn’t work like that as I’ve always been contracted out. Under your system I would have had 35 years to make up.