Contracted out civil service pension

MetManMark

Hi there

Another pension related question...

I started work as a civil servant in 2003 - this was on the Classic scheme which then morphed into Alpha. My question is regarding the State Pension. I have checked my NI payments and can see that I have 20 years (from working) plus another 3 whilst at school.

So I will hit 35 years of contributions when I am 59. My question is regarding "Contracting Out". If I understand correctly, my civil service pension was contracted out before 2016 which has the impact of reducing my state pension. 

1) Is there a way in which I can calculate how much my state pension will be reduced by?
2) If I work past the 35 years and continue to pay NI, will the reduction of state pension be lessened as a result?

Thanks in advance.
M

QrizB

If you get your State Pension forecast from the gov.uk website, it contains all the info you need.

https://www.gov.uk/check-state-pension

If you need help interpreting it, post all the details here (omit your exact DOB) and we can help.

molerat

The state pension will not be reduced.  You will be entitled to at least what you had earned under the old rules at April 2016 and get whatever your forecast states you will get as long as you follow any caveats contained in that forecast.  35 years is of no relevance whatsoever if you were born before 2000. 

As above post up the details from your forecast and someone will talk you through it.

Current weekly £££.pp amount accrued up to April 2022 (or 2023 as some have been updated)
Number of pre April 2016 NI years full
Number of post April 2016 NI years full
Tax year you reach state retirement
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme" if there is one.
Years which show not full and prices

hugheskevi

I started work as a civil servant in 2003 - this was on the Classic scheme which then morphed into Alpha. 

Are you sure about that? From October 2002 new joiners would usually have gone into the Premium pension scheme.

MetManMark

Yes - you are correct, @hugheskevi. I will dig out the details and see if I can decipher them!
M

MetManMark

OK - here are my details...

I get my pension in 2043!

My forecast is £203.85 a week, £886.38 a month, £10,636.60 a year

Estimate based on your National Insurance record up to 5 April 2023

£127.17 a week

Forecast if you contribute another 14 years before 5 April 2042

£203.85 a week

Contracted Out Pension Equivalent (COPE)

Your COPE estimate is £29.21 a week

I am not sure what I make of this... 

I don't fully understand why they want me to contribute for another 14 years given that I already have contributed 23. I thought that the max was 35?

It also suggests that the max I can get is £203.85 a week which is the full state pension isn't it? I thought that this was going to be reduced as part of my pension was "contracted out". I know I have a long way to go still but I'd like to understand this a little better... I had previously thought that I'd need to work till 62 to get my 35 years but then was happy to see that I had an extra 3 from being at school thereby reducing it to 59 year. Now they suggest that I need another 14 years which would make me 61. I guess I shouldn't stress too much at the moment as they will probably change the rules by the time I get there

Thanks in advance for any clarification . Comments thus far are super-helpful...

M

Dazed_and_C0nfused

I don't fully understand why they want me to contribute for another 14 years given that I already have contributed 23. I thought that the max was 35?

Where are you getting that information from?

That only applies to people starting to accrue NI years from 2016.

You have plenty of years to increase your starting amount, calculated in 2016, to the standard new State Pension of £203.85/week.

Another 13 years will take you to £202.83,.  The 14th year will only add the final £1.02 taking you to £203.85.

MetManMark

Thank you for your reply @Dazed_and_C0nfused. I started contributing before 2016 so I don't know why I thought that I needed 35 years contributions. Could you please point me to the info that explains how many years contributions that I actually require in order to get the max state pension? 

In the mean time I just put as much as I can afford into a SIPP .

Dazed_and_C0nfused

MetManMark said:

Thank you for your reply @Dazed_and_C0nfused. I started contributing before 2016 so I don't know why I thought that I needed 35 years contributions. Could you please point me to the info that explains how many years contributions that I actually require in order to get the max state pension? 

In the mean time I just put as much as I can afford into a SIPP .

Everyone building up years pre 2016 will have their own number of years based on their personal NI record.

The second link goes into much more detail

https://www.gov.uk/new-state-pension/how-its-calculated

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

molerat

Somewhere between 29 and 49 are the reported numbers on here, you need as many as your personal circumstances dictate..

At April 2016 a line was drawn and you were given the higher of your old or new system amount, the number of years became irrelevant, it was the amount that counted.  You could then top that up with post 2016 years up to the new max.  Your actual number of years needed will be the current 23 + the 14 future years so 37.

With a current amount of £127.17 and  16 pre and 7 post 2016 years your April 2016 starting amount was £65.98 made up of £63.63 basic and £2.35 S2P.  The new calculation was £41.94, £71.15 less £29.21 COPE, lower than the old calculation.  You then needed another 21 years, (£155.65 - £63.63) / £4.45, to reach the maximum.

dunstonh

MetManMark said:

Thank you for your reply @Dazed_and_C0nfused. I started contributing before 2016 so I don't know why I thought that I needed 35 years contributions. Could you please point me to the info that explains how many years contributions that I actually require in order to get the max state pension? 

In the mean time I just put as much as I can afford into a SIPP .

The number of years you need will vary when it comes to including pre 2016 entitlement.  A crude generalisation is that Contracted-out people need longer than contracted in.   

So, the actual number of years it will end up being for you is personal.   You can work out from your online state pension forecast.