Reduced State Pension

jaymac55

Hi,

I’m a pensioner and a newbie on this site and I’m trying to find out why my state pension has been reduced by about £40 per week.

I’ve been in touch with DWP who’ve confirmed that I have 43 years of qualifying contributions.

However, what they’ve also said is that due to rule changes back in 2016, I’ve been adversely affected because (a) I haven’t paid any NI contributions since 2014 even though I have more than 40 years of contributions prior to then and (b) I started receiving a private works pension 6 years prior to receiving my state pension.

This seems a bit strange and still doesn’t explain why my state pension has been reduced by about £40/week.

Can anyone help or point me in the right direction?

Many thanks in advance

Stubod

..what does you actual pension forecast say?....why do you think it has been "reduced". Are you just reading the "new" headline rate and jumoing to conclusions? 35 qualifying years only apply to those people "after" 2016 when the rules changed. ..lots (an lots) of threads on this., almost daily at the mo...), read the sticky at the top of this forum for clarification...

https://forums.moneysavingexpert.com/discussion/6406767/mse-guide-how-much-state-pension-will-i-get#latest

molerat

Your state pension has not been reduced, you are receiving what you were entitled to at April 2016, the higher of your entitlement under the old or new schemes, your new scheme amount would have been reduced by contracted out service. 

You have obviously fallen for the 35 years myth printed in the press. You do not come under the new scheme but a transitional arrangement. You could need more or less than 35 years, on here 50 has been mentioned.

All may not be lost and there is a possibility to increase that pension.

Provide us with a few bits of information and someone will point you in the right direction

Current £.pp amount received
Number of pre 2016 years full
Number of post 2016 years full
Financial year you reached state retirement
Years which show not full and prices

dunstonh

I’ve been in touch with DWP who’ve confirmed that I have 43 years of qualifying contributions.

That doesn't mean anything in the calculations really.

However, what they’ve also said is that due to rule changes back in 2016, I’ve been adversely affected because (a) I haven’t paid any NI contributions since 2014 even though I have more than 40 years of contributions prior to then and (b) I started receiving a private works pension 6 years prior to receiving my state pension.

a) means you haven't built up any qualification on the single state pension. All yours is on the basic state pension and addons.
b) that shouldn't make a difference.     Unless they were trying to point out that the works pension was contracted out.

Nobody has been adversely affected by the change to the single state pension.

This seems a bit strange and still doesn’t explain why my state pension has been reduced by about £40/week.

What do you mean by reduced by £40 per week?
Are you perhaps mixing up the single state pension maximum with your own entitlement? (of which zero was built up under the single state pension)?

xylophone

It seems that you reached SPA after 5/4/16.

You  have no NI "qualifying years" since 2014 - at that time you had 43 qualifying years.

It would appear that for much or all of your working life  you were a member of a contracted out pension scheme.

https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out#:~:text=Contracting out was a method,SERPS) for particular tax years

2016 saw the introduction of New State Pension.

On 6/4/16, two calculations were done to establish your  "starting amount" for NSP.

It was the higher of  your old/new rules entitlements.

Old Rules

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

New Rules

{NI years/35 (max) x £155.65 (Full NSP)} - Contracted Out Pension Equivalent.


In your case, it is almost certain that the old rules would have given the higher entitlement.

Your entitlement was less than a full NSP and you had a number of years to go before you reached SPA.

 Qualifying years post 6/4/16 and up to the year before the one in which you reached SPA would  improve your starting amount up to (but not in excess of) a full NSP.

 You were not  contributing/receiving  credits post  2014 but you may  have the opportunity to increase your state pension by making voluntary contributions ("buying" the appropriate number of years  for tax year 6/4/16 onwards).

https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf produced by Royal London as an aid to  understanding NSP might be of interest - also the Govt's attempt at the same

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

What exactly does your forecast show?

jaymac55

Thanks everyone for your replies.

Here’s a date timeline which hopefully answers the questions posed: -

July 1972 to November 2013 – in full employment (NI paid)

November 2013 onwards – unemployed (claimed benefit for 12 months)

August 2015 – works pension kicked in

August 2021 – state pension kicked in (£142.72 per week, a shortfall of £42.43 on the full amount)

Dazed_and_C0nfused

jaymac55 said:

Thanks everyone for your replies.

Here’s a date timeline which hopefully answers the questions posed: -

July 1972 to November 2013 – in full employment (NI paid)

November 2013 onwards – unemployed (claimed benefit for 12 months)

August 2015 – works pension kicked in

August 2021 – state pension kicked in (£142.72 per week, a shortfall of £42.43 on the full amount)

A clear winner under the new system then 😊.

You paid less NI for many years and now bump your expected pension up by a bonus £42.43!

Each post 2016 year will add £5.29/week but you might want to stop at 8 years (if that many is possible) as the 9th would only add the final 11p/week.

Steve_666_

As has been stated: "August 2021 – state pension kicked in (£142.72 per week, a shortfall of £42.43 on the full amount)" you have never earned an entitlement to the new state pension (NSP) of £185.15

yours will be based on
NI years/30 (max) x £119.30 (Full Basic) + ( Additional State Pension  - Deduction for Contracting Out).
note the Full basic this year is £141.85

sammyjammy

xylophone said:

It seems that you reached SPA after 5/4/16.

You  have no NI "qualifying years" since 2014 - at that time you had 43 qualifying years.

It would appear that for much or all of your working life  you were a member of a contracted out pension scheme.

https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out#:~:text=Contracting out was a method,SERPS) for particular tax years

2016 saw the introduction of New State Pension.

On 6/4/16, two calculations were done to establish your  "starting amount" for NSP.

It was the higher of  your old/new rules entitlements.

Old Rules

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

New Rules

{NI years/35 (max) x £155.65 (Full NSP)} - Contracted Out Pension Equivalent.


In your case, it is almost certain that the old rules would have given the higher entitlement.

Your entitlement was less than a full NSP and you had a number of years to go before you reached SPA.

 Qualifying years post 6/4/16 and up to the year before the one in which you reached SPA would  improve your starting amount up to (but not in excess of) a full NSP.

 You were not  contributing/receiving  credits post  2014 but you may  have the opportunity to increase your state pension by making voluntary contributions ("buying" the appropriate number of years  for tax year 6/4/16 onwards).

https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf produced by Royal London as an aid to  understanding NSP might be of interest - also the Govt's attempt at the same

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

What exactly does your forecast show?

Did you read this post above yours? You are not entitled either due to lack of State second pension (due to DB pension) or lack of qualifying years

p00hsticks

jaymac55 said:

August 2021 – state pension kicked in (£142.72 per week, a shortfall of £42.43 on the full amount)

The point others are making though, is that that £142.72 is what you would always have got under the old system - it's not been 'reduced' at all by the new scheme coming in. 

In fact, you are potentially one of the winners under the transitional rules for the new scheme, because not only are you getting what you always would have got, you have the opportunity to make voluntary contributions for the five years after April 2017 at a cost of around £824 a year, which will each boost you state pension by £5.29 a week. 

but you need to act fast as 2016-17 will no longer be available to buy after the July deadline (now moved back from April) and the price of some of the other ones will go up.  

jaymac55

Thanks everyone for your contributions, I've obviously been looking at things the wrong way
I'll "retire" and move on gracefully.