State pension prediction says I've paid enough contributions - Not convinced

Spendless

Wonder if someone can help.

Back in March 1990 I took out a private pension and at the same time contracted out of Serps.
 
In April 1991 I started with a company that offered a workplace pension and in late 1992 became eligible to join. It was Non contributory. I joined in and asked what I should be with my private pension and was told I could make FSAVs which I did for a while.

I left the company at the end of 1997 due to redundancy and then either worked or claimed JSA (cont based) until March 2000 when I had my first chid, followed by another 3 years later. I always claimed child benefit for my children.
During these time I work 

Nov 2000 - Oct 02
June 09 - Dec 11
Aug 12 - Dec 15

(These are mostly part-time, zero hours/ad hoc jobs  


As my youngest child turns 12 (late March 2015) I am working in the  ad hoc zero hour contract. The following July 2016 I start working full time until late Dec 2018 when the company closes.

Due to my daughter's MH at the time, I don't seek work or claim benefits. Since then I have worked 
Nov 19-March 20 (lost job due to pandemic)
Nov 21-March 22
June - 22 - Aug 23
Aug 23-Dec 23

Some of the jobs have been p-time hours, some f-time 

I never contracted back into serps.

As we're in the middle of sorting out what private/company pensions I have, downloaded a state pension forecast. It tells me I have paid 38 years of the 35 needed. How? 2 of the years I was still in f-time  education. I have a Sept birthday so was 16 at the beginning of the year, then did a year at sixth for followed by a YTS then work full time until Dec 1998 with do gaps until as detailed above.

I am showing 3  recent years where I've not paid full NI they are the tax years 19/20, 20/21 and 21/22. (I might be wrong but I don't think these are current years you can pay to top up) 

How have I got 35 years when I contracted out of Serps in 1990 and never opted back in even accepting that Serps rules changed in April 2016?

I'm just concerned that the forecast in incorrect and possibly when I am able to should I be topping up the missing years? 

molerat

You don't need to contract back in, contracting out only applies to years where you were actively contributing to a contracted out pension.  What does your forecast show for your COPE amount ? - in a click link in "You've been in a contracted-out pension scheme".  Currently any gap years from 2006-07 can be topped up.  Your NI record will show exactly how each year became filled.

Spendless

Thank you, I will have a look.

From that info, I believe I would be contracted out from March 1990 until November 92 as I was paying into the private pension and then I became eligible to join my workplaces non contributory pension which I do until 31st Dec 1997 when I'm made redundant.

After that I do not contribute to any pension at all until 2015. 

MallyGirl

you don't have to be contributing to a pension - you just need to be paying NI or accruing NI credits

molerat

MallyGirl said:

you don't have to be contributing to a pension - you just need to be paying NI or accruing NI credits

That statement will be in reference to actively contributing to a contracted out pension.

eskbanker

Spendless said:

As we're in the middle of sorting out what private/company pensions I have, downloaded a state pension forecast. It tells me I have paid 38 years of the 35 needed. How? 2 of the years I was still in f-time  education. I have a Sept birthday so was 16 at the beginning of the year, then did a year at sixth for followed by a YTS then work full time until Dec 1998 with do gaps until as detailed above.

Needing 35 years only applies to those born this century, everyone else is on transitional arrangements that mean the number of years required to qualify for a full pension is variable.  If your forecast says that you're eligible for the full £203.85/week based on your contributions up to April 2023 then you're fine.

In terms of your years in full time education, these used to count for NI credits:

25. From 1975 16, 17 and 18 year olds were given credits if they stayed in full time education, approved training or apprenticeship to protect their state pension position. These credits were ended on 6 April 2010 because the reduction in the number of qualifying years required for a full basic State Pension at that time meant that they were no longer needed. 

https://assets.publishing.service.gov.uk/media/5a7ba56440f0b645ba3c5a94/national-insurance-single-tier-note.pdf

af1963

"contracted out" doesn't mean the year doesn't qualify as a full contribution year.  It means you were not building up SERPS/SSP for those years, and that probably means that there was a "contracted out deduction" made from your "starting" amount when the new style pension was set up in 2016. Any years worked ( or credited) since then will have increased that amount.

You probably also got credits for the time between 16 to 18 you were still at school, maybe also for the YTS time.

35 years is also irrelevant, except for people who started work after 2016. You may need more or fewer than this.

As well as telling you the number of years you've contributed, your forecast will also say how much state pension you are in line to get based on your contributions to date. If that's less than a full pension, you can increase it by adding more years, either by working ( 23-24 may already have enough based on your list of job dates) or paying to buy incomplete or missing years.

Spendless

My forecast says £203.85 per week (even with me not paying enough years for the tax years 19/20, 20/21 & 21/22)  . It was me who thought it was incorrect, due to the contracting out of Serps. I wasn't aware that only counted for the years I was paying into a contracted out pension. I will have a look again in more detail using the info from the replies on here.

molerat

The important bits are contained in the statements below the big green box at the top.  As long as that states you have already achieved £203.85 at April 2023 and you have a statement to the effect that you were in a contracted out pension and linking to a COPE amount then all should be good.

xylophone

What exactly is shown on your forecast under

Estimate to 5th April 2023?



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

It was the higher of

Old Rules

NI qualifying years/30 (max) x £119.30 (Full Basic) + (SERPS/S2P -  (if applicable) Deduction for Contracting Out)

New Rules

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


https://www.litrg.org.uk/tax-guides/students/going-abroad/national-insurance

A ‘qualifying year’ sounds as though you might need to have 52 weeks of working for it to count. In fact, for Class 1 NICs (those payable by employees), any tax year where you receive a minimum amount of earnings or credits (which you receive for example, if you cannot work because you are bringing up children who are aged under 12) can be a qualifying year. The 2023/24 tax year could be ‘banked’ as a qualifying year provided you have earned the equivalent of 52 x £123 (this amount is the weekly Lower Earnings Limit) – total £6,396. Please note that any pay periods in which you have earned under the Lower Earnings Limit will not count towards the total.

You could also make up a qualifying year for 2023/24 by, say, earning £123 for 40 weeks and then receiving NIC credits for the other 12 weeks.

As you may see from the calculations above, the starting amount varied according to individual circumstances.

People were in one of three positions

  (a) Starting amount equal to full NSP

  (b) Starting amount greater than full NSP

  (c) Starting amount less than full NSP.


In the case of (a) or (b), while if  under SPA, working and earning the relevant amount, the person would continue to pay NI,  he could not

improve on his starting  amount.  This would revalue up to and beyond State Pension Age according to  (in the case of Full NSP only) the

"triple lock" and (in respect of any amount over full NSP - the "protected 'payment") by CPI.


In the case of (c), contributions /credits  from 6/4/16 onwards  would count towards making a qualifying year but once full NSP was

reached, even though this would not improve his state pension, the person  would still have to pay NI if under SPA, working and earning

 the relevant amount. 

It could also be possible (in the case of (c), to improve the starting amount by making voluntary contributions for certain past years.