37 full years NI contributions contracted out, forecast £148, max attainable £180 ? 8 March at 10:27AM in Pensions, annuities & retirement planning 12 replies 798 views

sawdrl

I have just become aware of the potential to increase your state pension if there are gaps in your contribution years. I retired early with 37 years contributions, most of which were contracted out. My pension forecast is £148 but it states that if I make good shortfalls I can achieve a max of £180.
£32 extra is well worth having if I can plug the gaps, however with 37 full years contributions I can't see how that is possible ?
It is impossible to get through to the Pensions Forecast Service to clarify this, despite trying daily for over two weeks !!!!!
Does anyone out there find themselves in the same position and have they managed to get answers from HMRC ?

p00hsticks

It's possible because you are under transitional rules and so the '35 years gets you a full state pension' mantra doesn't apply to you - that's only for young people who fall entirely under the new system introduced in 2016.  

Transitional rules mean that you may need more or less years to get the new £185.15 (we've seen a minimum of 29 and maximum of 50 reported on this board), or  either be able to get more than it or never be able to reach it.

If you have a state pension forecast and post up the details people will be able to help you.

• Maximum amount of forecast
• Current amount up to April 2022
• Years you have available going forward until you reach State Pension Age
• Number of full years prior to April 2016
• Number of full years after April 2016
• Years which are not filled
• Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)

xylophone

• Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)

OP states above

I retired early with 37 years contributions, most of which were contracted out. 

p00hsticks

xylophone said:

• Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)

OP states above

I retired early with 37 years contributions, most of which were contracted out. 

Yes, I did spot that  - but we need to know the actual amount if we are to help, and we are getting so many such enquiries I'm simply cutting and pasting the list of things we need to know 

xylophone

however with 37 full years contributions I can't see how that is possible ?

You come under transitional rules. 

See chart on P6 of this booklet produced to coincide with introduction of NSP

https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf 

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 it seems likely that you had at least 30 qualifying years up to 6/4/16. 

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

It would seem that you don't have enough years post 2016 and pre the year in which you reach SPA to cover a full NSP?

 

Audaxer

sawdrl said:

I have just become aware of the potential to increase your state pension if there are gaps in your contribution years. I retired early with 37 years contributions, most of which were contracted out. My pension forecast is £148 but it states that if I make good shortfalls I can achieve a max of £180.
£32 extra is well worth having if I can plug the gaps, however with 37 full years contributions I can't see how that is possible ?

It's definitely possible as I have 47 years full contributions and still need to make a few more years voluntary payments to get to the maximum. 

If you give the details as @p00hsticks has said above, someone will be able to confirm what years will definitely increase your SP and by how much.

dunstonh

My pension forecast is £148 but it states that if I make good shortfalls I can achieve a max of £180.
£32 extra is well worth having if I can plug the gaps, however with 37 full years contributions I can't see how that is possible ?

The majority of your qualification was built up under the basic state pension and contracted out.  The basic state pension is £141.85.  So, it seems that you in the expected ballpark.  Forget the 35 year rule as that does not apply to you. You have entitlement under historic methodology that is transitioned to the single state pension.      The 35 year rule wont apply to anyone hitting state pension age in the next 27 or so years.

sawdrl

p00hsticks said:

xylophone said:

• Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)

OP states above

I retired early with 37 years contributions, most of which were contracted out. 

Yes, I did spot that  - but we need to know the actual amount if we are to help, and we are getting so many such enquiries I'm simply cutting and pasting the list of things we need to know 

Thanks for the very helpful responses everyone.

In answer to the questions raised :-

all of my qualifying years are pre 6/4/2016

6 years were basic contributions followed by 31 years which were contracted out.

Linton

sawdrl said:

p00hsticks said:

xylophone said:

• Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)

OP states above

I retired early with 37 years contributions, most of which were contracted out. 

Yes, I did spot that  - but we need to know the actual amount if we are to help, and we are getting so many such enquiries I'm simply cutting and pasting the list of things we need to know 

Thanks for the very helpful responses everyone.

In answer to the questions raised :-

all of my qualifying years are pre 6/4/2016

6 years were basic contributions followed by 31 years which were contracted out.

 There is no benefit from buying years from before 2016 since you had already exceeded the necessary years for both the old and new SP.  But years after 2016 up to the year before you reach SP age will help thanks to the transition rules.

molerat

If you post up answers to the rest of the questions asked someone will sort out exactly what your options are, it is all about the fine detail.

Current £.pp amount accrued up to April 2022
Financial year you reach state retirement
Any COPE amount shown
Years which show not full and prices

sawdrl

Finally got through to the Future Pensions team ! A very helpful officer gave me a full review of my options. It is possible to buy back the years since 2016 at roughly £800 per year which will give me an extra £1656 per year. So for a £4800 investment now I would be significantly better off after 2.9 years. Fortunately I am in a position where I can afford to buy back these years so it does seem like a no brainer ! The only gamble is whether or not I survive beyond 2.9 years after my SP age ?????