STATE PENSION - NATIONAL INSURANCE CONTRACTED OUT AMOUNT/CONTRIBUTIONS

Agsta

I have recently retired an was expecting a full State pension. I was not aware the "contracting out" would affect my pension amount, which as led to my State pension being about £10 per week lower than the normal full pension amount. I know that 35 years of full "National Insurance" are required for a full pension. I have 50 years of "contracted out" National Insurance contributions. Should this be enough for a full pension, and, if not, how many years would be needed?  Thanks.

Marcon

Agsta said:

I have recently retired an was expecting a full State pension. I was not aware the "contracting out" would affect my pension amount, which as led to my State pension being about £10 per week lower than the normal full pension amount. I know that 35 years of full "National Insurance" are required for a full pension. I have 50 years of "contracted out" National Insurance contributions. Should this be enough for a full pension, and, if not, how many years would be needed?  Thanks.

You're under transitional arrangements, so 35 years doesn't apply to you.

See https://forums.moneysavingexpert.com/categories/state-pension-topping-up and you can check if topping up might be possible.

molerat

I know that 35 years of full "National Insurance" are required for a full pension.

Where did you hear that ?  35 years only applies to those born this century and starting their NI record from 2016.  Everyone else with a pre 2016 history needs as many as it takes all depending on their personal circumstances.

£10 short is around another 2 years required.  You need to look at your NI record to see if there are any not full years after 2016.  If there are there will be a cost against them and they can be filled.  How much exactly, £££.pp, is your current amount ?

dunstonh

I have recently retired an was expecting a full State pension. 

What gave you that expectation?

 I know that 35 years of full "National Insurance" are required for a full pension.

35 years under the new state pension is required.   However, you are not doing 35 years under the new state pension.  You are subject to transitional arrangements and you may need up to 40 or so.

I have 50 years of "contracted out" National Insurance contributions.

That is a long period of contacted out.  What made you think you would qualify for the maximum under the new state pension when you would have only been qualifying for the basic (with no SERPS, S2P etc) under the old state pension?

. Should this be enough for a full pension, and, if not, how many years would be needed? 

I suspect your problem is what you are defining as a full pension.
The new state pension bundles the old basic state pension, graduated benefit, SERPS, and S2P into a single state pension. Based on your statements, you had 50 years of qualifying for just the basic state pension.  Only the years when you were contracted in or under the new state pension will qualify you for the full rate.   

How were you contracted out as there were two methods?   a) a final salary/defined benefit pension scheme  or b) contracted out via a personal pension where you build a lump sum there.

xylophone

• You have said that you have 50 contracted out years but I do not see how this would be possible.
  
  A "full (qualifying) year" is not necessarily a "contracted out" year.
  
  
  
  "Contracting Out"   began  for DB Schemes 6/4/78 and ended for DB Schemes 5/4/16.
  
  Further information about contracting out here
  
  https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out
  
  
  
  You reached SPA in the current tax year and had 50 full (qualifying) years at 5/4/23?
  
  
  At 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 (max 30)/30 x Full Basic State Pension + (Additional State Pension - Deduction for Contracting Out).
  
  
  New Rules
  
  {NI Qualifying Years (max 35)/35 x Full New State Pension} - Contracted Out Pension Equivalent.
  
  
  It appears that your starting amount was under a full NSP - qualifying years from 6/4/16 to the last full tax year before you
  
  reached  SPA would improve your starting amount up to (but not in excess of) a full NSP.
  
  It would appear that your COPE was so high that it could not quite be "cancelled out" by post 5.4.16. contributions.
  
  
  
  

Agsta

molerat said:

I know that 35 years of full "National Insurance" are required for a full pension.

Where did you hear that ?  35 years only applies to those born this century and starting their NI record from 2016.  Everyone else with a pre 2016 history needs as many as it takes all depending on their personal circumstances.

£10 short is around another 2 years required.  You need to look at your NI record to see if there are any not full years after 2016.  If there are there will be a cost against them and they can be filled.  How much exactly, £££.pp, is your current amount ?

Thanks for your response.
35 years comes from when my wife and I spoke to the pensions people and topped-up my wife's contributions. I was then told I did not to make any additional top-up contributions for a full SP.
All my years after 2016 are full years.
I currently receive £ 764.76 SP every four weeks.

Dazed_and_C0nfused

Agsta said:

molerat said:

I know that 35 years of full "National Insurance" are required for a full pension.

Where did you hear that ?  35 years only applies to those born this century and starting their NI record from 2016.  Everyone else with a pre 2016 history needs as many as it takes all depending on their personal circumstances.

£10 short is around another 2 years required.  You need to look at your NI record to see if there are any not full years after 2016.  If there are there will be a cost against them and they can be filled.  How much exactly, £££.pp, is your current amount ?

Thanks for your response.
35 years comes from when my wife and I spoke to the pensions people and topped-up my wife's contributions. I was then told I did not to make any additional top-up contributions for a full SP.
All my years after 2016 are full years.
I currently receive £ 764.76 SP every four weeks.

The 35 years is of no relevance to you.  You are however a winner under the new system.

You paid reduced NI for many years and were then able to increases your original expected "basic" State Pension to close to the standard "new" State pension.

It's just that you didn't quite have enough post 2016 years to reach the the standard amount.

molerat

Agsta said:

molerat said:

I know that 35 years of full "National Insurance" are required for a full pension.

Where did you hear that ?  35 years only applies to those born this century and starting their NI record from 2016.  Everyone else with a pre 2016 history needs as many as it takes all depending on their personal circumstances.

£10 short is around another 2 years required.  You need to look at your NI record to see if there are any not full years after 2016.  If there are there will be a cost against them and they can be filled.  How much exactly, £££.pp, is your current amount ?

Thanks for your response.
35 years comes from when my wife and I spoke to the pensions people and topped-up my wife's contributions. I was then told I did not to make any additional top-up contributions for a full SP.
All my years after 2016 are full years.
I currently receive £ 764.76 SP every four weeks.

It looks to me like you completely misheard or misinterpreted what you were told, there is no way DWP would have said that 35 were needed.

Your wife needing 35 is purely coincidental.  Those under the transitional rules and needing 35 are mainly women who often were in low paid work or receiving credits where the new rules calculation exceeded the old.

You were likely, correctly, told there was no opportunity to top up beyond the personal maximum amount you had already achieved.

Almost-free

I've been trying to find out how this affects me. My state pension forecast states full and that I can't improve it, but there's another paragraph mentioning me being contracted out. I joined  the scheme in 1978 so I'm one of the diminishing few that are pre 1980. 
I left the NHS in 2005 so my pension was left there for 15 yrs until I turned 60, but from 2005 to 2020 when I took my NHS pension I was paying full NI. I've tried asking state pension but they told me to talk to NHS pensions. I've tried to get an answer from them but they were supposed to ring me back last week  and haven't yet. 

I've heard so much contradictory info on this and I realise it's very individual. 

MallyGirl

Almost-free said:

I've been trying to find out how this affects me. My state pension forecast states full and that I can't improve it, but there's another paragraph mentioning me being contracted out. I joined  the scheme in 1978 so I'm one of the diminishing few that are pre 1980. 
I left the NHS in 2005 so my pension was left there for 15 yrs until I turned 60, but from 2005 to 2020 when I took my NHS pension I was paying full NI. I've tried asking state pension but they told me to talk to NHS pensions. I've tried to get an answer from them but they were supposed to.rimg me back last week eek and haven't yet. 

I've heard so much contradictory info on this and I realise it's very individual. 

That is all you need to know. The COPE figure was used in initial calculations due to you being under transitional arrangements. It does not get deducted or anything like that.

molerat

You will get exactly what your forecast states you will get and as long as it states only one amount with no caveats in the text below the green box then you are home and dry.  Contracting out only affected your 2016 new scheme starting amount. Those post 2005 contracted in earnings built up additional pension and would likely have offset any negative effect and any post 2016 contributions would have added to that up to the new pension max.  As long as your forecast mentions you were contracted out there is no need for concern.  There is nothing useful you would learn from speaking to HMRC or DWP but if you really want to know you could ask for a full breakdown of how your contracting out affects your state pension - not a push of a button document but a very long manually made up document that would take several months to prepare.