State Pension - How many years NI?

Brighty75

Hi all

Does anyone understand how the number of qualifying years is calculated for full state pension? I know it's now 35, but the years before 2016 can alter that, as can any periods contracted out.

Just check my NI record and pension forecast and am confused

I am 49 years old, have 29 full years (3 years from school post 16, 26 for working the last 26 years), with a 4 year gap of non full years from Uni time. My pension forecast says i only need 1 more year (a few days time) to reach max state pension, so 30 years. Why so low?

More confusingly, my wife is 2 years younger than me, so started 2 years later, but has no gaps, so currently has 2 more full years than me, 31, her forecast states she needs 2 more years to hit max, so 33 total.

We both have the same number of years post 2016, her with 2 more than me pre 2016, so why does she need 2 more years than me to max her pension? neither of us were ever contracted out

Marcon

Brighty75 said:

Hi all

Does anyone understand how the number of qualifying years is calculated for full state pension? I know it's now 35, but the years before 2016 can alter that, as can any periods contracted out.

Just check my NI record and pension forecast and am confused

I am 49 years old, have 29 full years (3 years from school post 16, 26 for working the last 26 years), with a 4 year gap of non full years from Uni time. My pension forecast says i only need 1 more year (a few days time) to reach max state pension, so 30 years. Why so low?

More confusingly, my wife is 2 years younger than me, so started 2 years later, but has no gaps, so currently has 2 more full years than me, 31, her forecast states she needs 2 more years to hit max, so 33 total.

We both have the same number of years post 2016, her with 2 more than me pre 2016, so why does she need 2 more years than me to max her pension? neither of us were ever contracted out

You're both under transitional arrangements - and boy are they creating confusion! If you really want to have a deep dive, see https://commonslibrary.parliament.uk/research-briefings/cbp-7414/ and follow the various links.

molerat

Brighty75 said:
We both have the same number of years post 2016, her with 2 more than me pre 2016, so why does she need 2 more years than me to max her pension? neither of us were ever contracted out

You would likely have earned more additional pension pre 2016 so your starting amount was higher needing fewer post 2016 years to reach the full amount

Does anyone understand how the number of qualifying years is calculated for full state pension? I know it's now 35,

That is the first misconception, 35 years is of no relevance to those with a pre 2016 history, it only applies to those born this century.

If you want to post up some anonymous details from your forecasts then someone will talk you through exactly how you got where you are today

Current weekly £££.pp amount up to April 2024.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later

Those simple few points tell everything.

Triumph13

Or the short answer is both of you had, thanks to the earnings related element of the old pension, accrued more under that basis than the new basis as at 2016. You got to keep that higher figure and are topping it up to the new max with your post 2016 years 

xylophone

• A calculation was done for each of you (at 6/4/16) to establish the personal starting amount for NSP.
  
  The starting amount for each individual was the higher of
  
  Old Rules
  
  NI qualifying years/30 x Full Basic SP (£119.30) + (SERPS/S2P - (if applicable) Deduction for Contracting Out).
  
  New Rules
  
  [NIQY/35 x Full NSP (£155.65)}  - (if applicable) Contracted Out Pension Equivalent.
  
  
  You say that neither you or your wife was ever contracted out therefore no DCO/COPE.
  
  
  
  
  Thus for you,  your SA was the higher of
  
  (21/30 x £119.30) + SERPS/S2P
  
  21/35 x £155.65
  
  
  For your wife, the higher of
  
  (23/30 x £119.30) + SERPS/S2P.
  
  23/35 x £155.65 
  
  You had accrued more SERPS/S2P than your wife.
  
  Each NIQY from 6/4/16 would add 1/35 of full NSP until you reached the full amount. 
  
  You will reach full NSP earlier than she will.
  
  Once you have reached the full amount, you will still pay NI up to SPA (if earning the relevant amount) but your contributions will not increase your SP.
  
  You will just receive the full NSP at whatever rate is then applicable when you reach SPA.
  
  
  Re SERPS/S2P
  
  https://en.wikipedia.org/wiki/State_Earnings-Related_Pension_Scheme
  
  https://en.wikipedia.org/wiki/State_Second_Pension
  

Brighty75

xylophone said:

• A calculation was done for each of you (at 6/4/16) to establish the personal starting amount for NSP.
  
  The starting amount for each individual was the higher of
  
  Old Rules
  
  NI qualifying years/30 x Full Basic SP (£119.30) + (SERPS/S2P - (if applicable) Deduction for Contracting Out).
  
  New Rules
  
  [NIQY/35 x Full NSP (£155.65)}  - (if applicable) Contracted Out Pension Equivalent.
  
  
  You say that neither you or your wife was ever contracted out therefore no DCO/COPE.
  
  
  
  
  Thus for you,  your SA was the higher of
  
  (21/30 x £119.30) + SERPS/S2P
  
  21/35 x £155.65
  
  
  For your wife, the higher of
  
  (23/30 x £115.39) + SERPS/S2P.
  
  23/35 x £155.65 
  
  You had accrued more SERPS/S2P than your wife.
  
  Each NIQY from 6/4/16 would add 1/35 of full NSP until you reached the full amount. 
  
  You will reach full NSP earlier than she will
  

Thankyou.
Bit confused though, is the £ difference between myself and wife on your old rules calc a typo? 21/30 x £119.30 Vs 23/30 x £115.39? Assuming so, I think I get it, as I earned more than my wife pre 2016, I had more serps/s2p in my calc, giving me a higher SA, so even though she has 2 more years than me, she still needs to do 1 more than me?

Brighty

Brighty75

molerat said:

If you want to post up some anonymous details from your forecasts then someone will talk you through exactly how you got where you are today

Current weekly £££.pp amount up to April 2024.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later

Those simple few points tell everything.

Thankyou

Here's my numbers

You can get your State Pension on xx June 2042

Your forecast is £221.20 a week

Estimate based on your National Insurance record up to 5 April 2024 £219.79 a week

Forecast if you contribute another year before 5 April 2042 £221.20 a week
21 full NI years 15-16 and earlier
8 full NI years 16-17 and later

And my wife
You can get your State Pension on xx January 2045

Your forecast is £221.20 a week

Estimate based on your National Insurance record up to 5 April 2024 £211.89 a week

Forecast if you contribute another 2 years before 5 April 2044 £221.20 a week
23 full NI years 15-16 and earlier
8 full NI years 16-17 and later

There's a note on her page saying she was contracted out at some point, even though she didn't think she was, so guess that and the fact she earnt less than me pre 2016 is the difference

GunJack

It also means she's got a works pension of some description lurking around for her to find, unless she left before there was a pension and she had a refund of contributions..

xylophone

There's a note on her page saying she was contracted out

In which case there was a DCO/COPE.

Was she a member of an occupational pension scheme? Does she have any paperwork concerning a deferred pension?

Or, (which seems  much less likely) did she contract out into a personal pension?

https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out#:~:text=Contracting out was a method,SERPS) for particular tax years.

xylophone

 is the £ difference between myself and wife on your old rules calc a typo

Yes! Sorry for the typo - full basic was indeed £119.30. I have now corrected!

Silvertabby

GunJack said:

It also means she's got a works pension of some description lurking around for her to find, unless she left before there was a pension and she had a refund of contributions..

If she did that, then both her and her employer's NI rebates would have been paid to HMRC/COEG as part of the refund payment process, thus putting her back into SERPS/SP2 for that period.

OP - did your wife work in the public sector at some point?  If so, she would have been automatically entered into their (contracted out) pension scheme.