Contracted out element

Roverssupporter

Apparently I was contracted out in 1964. I paid into a company pension for 2 years then left the company, I returned to the company 6 months later but didn't rejoin the pension scheme. 
I left in 1994, only now at the age of 91 do I realize that I don't get a company pension yet still have £6.38 deducted from my state pension ie the contracted out element . A friend discovered for me that the company I worked for actually paid me a lump sum of £251 when I was 65.
My point is I have had over £6000 deducted since I took my state pension and deductions will continue, is that correct or fair?

Linton

You could not have been "contracted out" (of SERPS) in 1964 since SERPS was not introduced until the late 1970's. So you need to look elsewhere for an explanation.  £6.38 is pretty small for a contracted out deduction so it would seem you were only contracted out for a short time. 

Marcon

Roverssupporter said:

Apparently I was contracted out in 1964. I paid into a company pension for 2 years then left the company, I returned to the company 6 months later but didn't rejoin the pension scheme. 
I left in 1994, only now at the age of 91 do I realize that I don't get a company pension yet still have £6.38 deducted from my state pension ie the contracted out element . A friend discovered for me that the company I worked for actually paid me a lump sum of £251 when I was 65.

Contracting out didn't start until 1978.

There was no mandatory 'preservation' (the right to a pension at some later date if you left before reaching a scheme's Normal Retirement Date) for anyone leaving a scheme before April 1975. The lump sum you received at age 65 sounds as if it might have been a very late repayment of your personal contributions (minus tax).

Roverssupporter said:

My point is I have had over £6000 deducted since I took my state pension and deductions will continue, is that correct or fair?

Without knowing why you are having that amount deducted, it's impossible to comment. Until 1978 you would have been building up an entitlement to Graduated Retirement Benefit, but that isn't deducted from your state pension. Unless you actually had some period of being contracted out of SERPS, it's hard to see where that deduction comes from. 

Maybe query with DWP? I don't think anyone here is going to be able to throw any light on what might actually an error, either in terms of DWP's record keeping or your recollection of your pension history.

Marcon

See https://forums.moneysavingexpert.com/discussion/6267734/is-there-a-really-detailed-online-method-to-check-nics/p1 and follow the suggestion in my post of 15 May 2021 to make a Subject Access Request. I'm afraid you'll need to plough through the whole of that lengthy thread to understand why it could give you the answer.

One possibility is that you briefly took out something known as an 'appropriate' personal pension (maybe in 1988 or shortly afterwards, when they were first introduced), having been lured by the prospect of a free miniature alarm clock, Parker pen or whatever freebie was being proffered at the time. You would have paid full rate NI, as would your employer, and part of this was then paid over ('rebated') to the pension provider. If this only happened for a short time, there would have been very little cash in your personal pension and it's likely that the charges prevalent at the time would simply have eaten up the whole pot, so I'm afraid there may be nothing to find.

dunstonh

My point is I have had over £6000 deducted since I took my state pension and deductions will continue, is that correct or fair?

As is often the case with these things, it will be down to you misunderstanding or relying on duff facts.   Such as you not being able to contract out in 1964.

You need to look at other pensions you have.   Did you have an occupational pension after that?   Or did you have a personal pension?  

Where are you getting this £6.38 deduction from?  (i.e. what paperwork is showing it)

p00hsticks

Where are you getting the £6.98 figure form ?
You should be receiving a letter from DWP in spring each year detailing how your state Pension is made up. What does that say ?
How much State Pension are you actually getting ? 

Silvertabby

 So, you reached SPA well  before 2016 (ie, old pension rules).

Your State pension will be the old basic State pension plus earnings related SERPS/SP2.  Is it simply that your total State pension is £6.98 a week less than the new single tier pension, which has lead you to mistakenly believe that your pension is being abated? 

Beddie

Congratulations on reaching the age of 91 - you have therefore done very well out of the state pension and received far in excess of the average person. I'd say that's a double win in life, despite this mystery shortfall.

xylophone

• Presumably your SP commenced around twenty five years ago.
  
  You might have started work  pre 1950.
  
  Between 1961 and 1975, the Graduated Pension Scheme was in operation as an add on to Basic State Pension.
  
  If  employers chose, they could provide  an  alternative  known as Equivalent Pension Benefits (EPBs). 
  
  Example
  
  https://nguk.pensions.nationalgrid.com/deferred-member/scheme-benefits/epb
  
  It is therefore possible that your sixties employer "contracted out" of GRAD as in above example.
  
  With regard to the lump sum paid at 65 (State Pension Age and the age at which any Grad would be payable and any EPBs from an
  
  occupational Scheme), is it possible that your EPBs were commuted and paid as a lump sum?
  
  See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm061200
  
  
  

  In addition to the authorised payments under the 'lump sum rule', certain other lump sum payments specified in regulations are also authorised payments when they are made by registered pension schemes.

  This includes the payment of certain lump sums representing commuted equivalent pension benefits known as an equivalent pension benefits lump sum. Equivalent pension benefits are contracted-out rights earned between 1961 and 1975. 
  
  
  
  See also
  
  https://www.linkedin.com/pulse/blast-from-past-equivalent-pension-benefits-dave-king
  
  
  
  

  
  However, if a COD is shown on your State Pension letter, it relates to contracting out of SERPS 1978-1997.
  
  What was your pension provision between these dates?
  
  

  
  

Qyburn

Did contracting out actually reduce the Basic State Pension? It sounds illogical the contracting out of the Additional state pension would do so.

dunstonh

Qyburn said:

Did contracting out actually reduce the Basic State Pension? It sounds illogical the contracting out of the Additional state pension would do so.

It had no impact on the basic state pension.