State Pension Estimate & Forecast... (the missing 1p!)

1957DfurdPensionist

seacaitch said:

I don't know that starting amount for me, sorry. Can I see it somewhere in my SP forecast? Not to my knowledge...

No I don't believe it was in any forecast I ever downloaded, but it seems it first was notified in my case in a letter headed 'Your State Pension Statement' dated 31.3.2015.  It arrived with a Printed leaflet titled "Your State Pension Statement explained' and the lealet print reference is DWP42 v2.0(August 2014).  I see now that an example in the leaflet confirms @DRS1's 30/35ths of max nSP for your case.

I can see that the new rules starting amount given to the likes of me (66 in 2023) was actually at that time Q1 2015 based on the max nSP being set at £148.40.  That's despite there being a known Triple Lock increase of +2.5% imminent from April 2015 and another at April 2016 in order to bring max nSP up to £155.65 by the 2016 nSP launch.  But if I told you those two increases were +2.5%, and +2.9% respectively, you'll have noticed I have introduced yet another unexplained (so far!) mystery.

Later Triple Lock increases haven't usually started being paid for some days into the new financial years, and not exactly from 6.April.  That might be something to do with all of us having different pay dates Monday thru Friday according to last two digits of our NINo. But I digress.

So, mysteriously(?) £148.40 +2.5% = £152.11 so only the good Lord knows where the official 2015/16 notional max nSP of £151.25 came from - but at least £151.25 +2.9% = £155.63625. You are looking for a missing penny, but I might be looking for more than that if I return to my spreadsheet with their stated 31.3.2015 numbers in my case!

1957DfurdPensionist

Just to explore the mystery above, I had to prompt Google very specifically about the £148.40 before it would even recognise it as ever being an HM Gov published figure for nSP.  Finally it gave me this AI response:

AI-oversight

The UK New State Pension figure of £148.40 per week in DWP leaflet DWP42 v2.0 (August 2014) was the notional maximum, corresponding to the Pension Credit standard minimum guarantee for the 2014/15 tax year. This amount was used as a reference point to highlight that the full New State Pension would be set above this means-tested support level, which was £148.35 for a single pensioner at that time. 

Key Points 

• The £148.40 figure was a reference point:

  It wasn't the maximum New State Pension itself, but the amount of the Pension Credit standard minimum guarantee for a single pensioner in 2014/15.
• The New State Pension would be higher:

  The government stated that the full amount of the New State Pension would be set above this £148.35 figure.
• National Insurance was still key:

  As with today, an individual's actual pension amount depended on their National Insurance contributions record.
• Purpose was to illustrate the benefit:

  The figure was published to show that the New State Pension would provide a higher income than the basic means-tested support available at the time.

It seems something of a shame that DWP didn't say in the Statement or the leaflet that it was an advance fudge based on just beating the 2014 Pension Credit standard minimum guarantee, but that by April 2016 it would be something (87p per week) less than that number £148.40 x 1.025 x 1.029 (the intervening Triple Locks).  Maladministration or what?

seacaitch

Triumph13 said:

The problem though is that redoing the calculation at retirement would mean DWP had to maintain all the records and processes to calculate the interaction of old SP, new SP, S2P and COMP amounts for 35 years.  It was just so much more practical to do a one-off exercise at 2016 to calculate a single transition amount for every person, then move forward from there. 

Understood. 

This has all been useful discussion for me, adding to my knowledge, so thanks for the input everyone. And I'll be pleased if by the time I reach SP age my only "shortfall" is 1p rather than a substantial sum (or all of it) due to some drastic future rejigging of eligibility.

1957DfurdPensionist

@seacaitch - Well I think we might all have learned from this thread, and in my case the £148.40 question leading to a reduction in my eligibility of the order of 87p in the space of just one year and a few days back in 2015-2016 is something I think we should all take note of.  Most people don't keep DWP standard leaflets if their relevance seems years away. The point is that 87p contrived shortfall just before nSP launch date and well after we had been notified of our starting amounts would lead to a present day shortfall of well over £1 per week (£1.29 in fact), never mind 1p ... so keep all paper (cos dinosaurs don't do digital in any robust sense), and stay alert/check everything. We are each a long time retired we hope, and compound percentages make the money last longer one way or the other, depending upon which end of the deal you sit!