Can you help us understand/challenge a sudden HUGE reduction in state pension?

Misslayed

Mr. M had a letter from DWP today referring to his 'change in circumstances'. After nearly an hour he got through to a very helpful lady at DWPwho said this was due to HMRC recalculating his pension entitlement, as they had recalculated his NI contributions. Another very long wait on hold to HMRC, he spoke to a less than helpful chap (English second language), who claimed he 'did not have access' to any information we needed. This was at 3 minutes to 5, on a Friday 🙄. We must write a letter. 

Mr. M is 69, he's been getting £884.60 every four weeks since he claimed his SP 3 years ago. Gov Gateway shows he has 44 full years, and was paying into the fire brigade from age 18, then police pension schemes, so contracted out obvs.. Injured on duty, he was medicalled out of the police service, so received police pension, DLA and industrial injury benefits. He worked again briefly 2012/13 (to pay for our wedding! 🥰). The helpful lady at DWP told him his SP would be reduced by just over 25%/month (12 months divided by 12). She said "Wow, that's a lot! That's unusual ". Now we must wait till Monday to pursue this. Hoping someone can shine a light on this for us. 

Misslayed

Mr. M has received a letter from DWP thanking him for informing them of his change in circumstances. There have been no changes and he hasn't informed them! Currently on hold trying to speak to a human, but wondered if it might have been triggered by the change in eligibility for the WFP, which he received last year. He isn't entitled to pension credit, his police pension and industrial injury benefit haven't changed. Can anyone shed any light?

EDIT: finally got through! Had counted on an hour, so 52 minutes felt like a win! Very helpful lady found that this was the first of two letters, the second one explaining that HMRC have recalculated his NI contributions, which leaves him with a reduced SP. The good news is he won't have to pay anything back! The bad news is he's now going to have to ring HMRC to question this, DWP lady quoted the second letter, which contained the wrong date when he transferred from the fire brigade to the police - 5 years out, which would account for the newly discovered 'shortfall' in his NI record. Ho hum, another hour on hold (but this time with added steam coming from his head! 😤) 

JoeCrystal

Check with the DWP. Only they can answer the question why they would send a letter. I would check with them anyway just in case there may be something odd going on.

Silvertabby

Yes, contact them to check.

But if this is the first of a batch of letters (sent in lieu of the letter saying your WFA of £XXX will be paid between XX/XX/XXXX and XX/XX/XXXX) confirming change of circumstances/no longer eligible to receive WFA then that really would be throwing petrol on the flames!

Dazed_and_C0nfused

I doubt anyone here will be able to add much other than that sounds highly unusual.

But so does this.  

Mr. M is 69, he's been getting £884.60 every four weeks since he claimed his SP 3 years ago. 

Do you really mean that or do you mean he has been getting very close to the standard new State Pension each year and in this tax year that has reached £221.15/week?

TheBanker

I don't know the answer but I hope you sort it out, it must be stressful.

Is it possible they've been overpaying since he started claiming three years ago, and the 25% reduction is so high because it is trying to recover three years of overpayments?

LHW99

Is this a follow-up from this thread Misslayed?

https://forums.moneysavingexpert.com/discussion/6552556/dwp-mysterious-letter-regarding-a-reported-change-in-circumstances-news-to-us#latest

If so, perhaps ask the mods to merge them as, if you have two running, you may miss answers / people will duplicate what is being said.

theoretica

884 every 4 weeks seems close to the new state pension. The old basic state pension would have been 676 (if I have the correct years figures). and as his NI entitlement was all (almost all?) before 2016 and he was opted out this may be what he should have expected.

It might be worth considering/checking if he can voluntarily top up any years of NI (and which ones to choose!) to get more back on his pension - there are extended deadlines to top up for many years until the start of April 2025.

Misslayed

TheBanker said:

I don't know the answer but I hope you sort it out, it must be stressful.

Is it possible they've been overpaying since he started claiming three years ago, and the 25% reduction is so high because it is trying to recover three years of overpayments?

Lady at DWP read out the second letter we are due to receive, it did say he wouldn't be asked to repay as it was their error. 

Misslayed

Dazed_and_C0nfused said:

I doubt anyone here will be able to add much other than that sounds highly unusual.

But so does this.  

Mr. M is 69, he's been getting £884.60 every four weeks since he claimed his SP 3 years ago. 

Do you really mean that or do you mean he has been getting very close to the standard new State Pension each year and in this tax year that has reached £221.15/week?

Yes, that's just his current payment after the last increase. 

xylophone

I am assuming that your husband had 44 QY by 6/4/16.

It appears that he had ceased paid employment before this date.

On 6/4/16, your husband's NSP "starting amount" should have been calculated as the higher of

Old Rules (Amount 1)

NI Qualifying Years (max 30)/ 30 x Full Basic SP + ( Additional State Pension - Deduction for Contracting Out).

Thus £119.30 + (SERPS/S2P - Deduction for Contracting Out).


New Rules   (Amount 2)

(NIQY(max 35)/35 x Full New State Pension) - Contracted Out Pension Equivalent.

Thus £155.65 - COPE.

Your husband would have been "contracted out" from 1978, first in the Fire Brigade Scheme and then to the end of his career in

the Police Scheme.

He would have accrued no SERPS but it is possible (depending on his salary) that he might have accrued some S2P despite being

contracted out.

Nevertheless his COD/COPE would have been high and it is virtually certain that Amount 1 would have been his starting

amount for NSP and that it was under a full new state pension.

It would not have improved beyond that amount (except for statutory revaluation) because he was not paying contributions

after 2013.

Given his circumstances, it is quite possible that at SPA, his entitlement was very little more than a Full Basic State Pension

whereas he seems to have been receiving a Full New State Pension.

This would mean that he would be entitled to very little over £169.50 a week rather than the £221.20 which he is currently

receiving.

This may be the answer.