Pre

Nutters05

Good afternoon

I got my dad sorted earlier this year with all the details to pay up additional years as it turned out he's been contracted out in the past and wasn't receiving full state pension. He's just turned 70 in May.

He contacted HMRC, agreed 2007-2009 then 2010 - 2012 as they were part paid years and paid before the 5th April. 

They allocated 2016- 2020 instead and he's been left with 4.1 yrs instead of 5 (one year was allocated correctly) and he's spent the last 6 months now being told pre- 2016 doesn't count.  No reason why or details.  They also want a further £776 to complete the now partial year he's left with. They quite happily took the money in March and ok'd those years! 

I've spent 2 hrs today speaking to HMRC who told me it wasnt them but the DWP who decided pre-2016 doesn't count for him. Phoned DWP who laughed at me and said they do what HMRC say. I'm going round in circles! 

Any help would be appreciated.  Where do i go from here? Or how do I get reasons why?  He's already spent £3,315 and they're only wanting more 

zagfles

It's complicated and there's loads of threads on here explaining it - have a search. But basically in 2016 the state pension transitioned from the old system (basic state pension plus SERPS/S2P) to the new single tier pension, and if at that time he already had 30 years, which was the qualifying criteria for the old basic state pension, then any additional years before 2016 would normally make no difference. 

Marcon

zagfles said:

It's complicated and there's loads of threads on here explaining it - have a search. But basically in 2016 the state pension transitioned from the old system (basic state pension plus SERPS/S2P) to the new single tier pension, and if at that time he already had 30 years, which was the qualifying criteria for the old basic state pension, then any additional years before 2016 would normally make no difference. 

OP is new to this forum - if you could give a link please to one of the 'load of threads' I'm sure it would be appreciated. I've just had a quick look and couldn't immediately find one which explained the position.

DRS1

Someone like @molerat could probably help with the figures (ie whether pre 2016 years help him or not)  He would probably ask you to post some information like this (from a previous post by @molerat)

Current weekly £££.pp amount.

Number of full NI years 15-16 and earlier

Number of full NI years 16-17 and later

Tax year you reached state retirement

Were you in a contracted-out pension scheme, NHS, local government, civil service etc

Years which show not full and prices

Pre top up details would probably be most useful.

molerat

At April 2016 two calculations were carried out to decide on the starting amount going into the new pension.  These were old X(max30) x (119.30/30) + S2P or new X(max35) x (155.65/35) - COPE and you were given the higher of the two calculations.   If you already had the maximum number of years for your particular calculation then adding more would have no value.  The vast majority of those contracted out came under the old rules max 30 calculation.

There have been a few reports of being given the wrong information most likely by new staff brought in to help out.

p00hsticks

Here goes:

When the new State Pension was introduced on 6th April 2016 transitional rules were put in place for those who had already started working but were yet to reach State Pensino age. Two calculations were done for everyone already on the system, one under the new rules and one under the old, and the higher of the two amounts became that person's individual 'starting amount'  

The old rules were
((number of full NI years up to a maximum of 30) / 30 ) x the old 'basic state pension' amount  + any Additional (SERPS or S2P) State Pension 

The new rules were 
((number of full NI years up to a maximum of 35) / 35 ) x the new 'new state pension' amount  - Any Contracted Out Pension Equivalent (COPE). 

• the (old) basic state pension amount is currently £176.45 a week
• the new State Pension amount is currently £230.25 a week
• Additional State Pension was built up by those contracted into the SERPS / Second Pension Government schemes prior to 2016
• The COPE figure reflects the fact that if you were contraced out of SERPS/S2P prior to 2016, you paid a lower rate of NI in return for being enrolled in a separate private or employer pension scheme. 

Which calculation was higher and what the starting amount was depending on an individual record, but in general those who had been contracted out for much of their working lives (and therefore had a high COPE figure) generally did better under the old rules, with a maximum of 30 pre-2016 years counted in the calculation. 

The introduction of the new State Pension simplified the system by doing away with the idea of contracting in and out., SERPS and S2P etc. From that point on, any full post-2016 NI years earned or creditted simply add 1/35th of the new state Pension amount to a persons Starting Amount until either the maximum amount of £230.25 is reached or the person reaches State Pension age - whichever happens sooner. As State Pensioners do not currently pay NI the year in which you reach State Pension age can never be full and so will never be included).

The upshot of this is that those who had many years contracted out prior to 2016 had an additional opportunity to boost the basic state pension amount they had been anticipating for much of their working lives up to the higher new State Pension amount, providing they had enough post-2016 years before they reached SPA. But to do so they would most likely need more than the 'standard' 35 years that will apply to people whose entire working lives fall under the new system. 

Conversely, those who were contracted in and had already accumulated a lot of SERPS / S2P would find they needed fewer than 35 years - if their starting amount as at 2016 was already over the new maximum then this became a 'protected payment'. 

Anecdotally, the lowest number of years we've seen reported on these boards to get the full amount is 29, the highest 50. 

Hope this helps.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/81726558#Comment_81726558

might be of interest.

af1963

We don't know exact figures but let's suppose for now that the pre-2016 years actually won't make a difference (since it's quite likely that someone who was 60ish in 2016 could already have the 30 years needed for a full 'old' pension at that date, even with a few incomplete years.)  We can check and re-calculate if this turns out not to be the case...

It's possible that he was wrongly led to believe that completing the 'partial' pre-2016 years would increase his pension, and given an amount to pay based on that. 

If he was given that wrong information, and made a payment, then it's a good thing that they are not actually allocating that payment to the earlier, useless years. 

Instead of topping up five or six (it's not clear from the message and dates - looks like either four or six tax years but the poster says five) partial years at cheaper rates, which wouldn't actually improve his pension, the £3,315 may be getting allocated to post-2016 years which do actually make a difference, but it's only enough to buy four and a bit years.

If that's what's happened, then the initial quote may have been wrong but the payment has actually been used to buy the extra pension that his father was entitled to buy.

Whether it's actually worth completing any additional years, including the one that is now partially paid, would depend on how much more pension it will add now.

That's my guess.  Getting the actual pre-topup details would clarify.

Triumph13

The explanation above is almost certainly the right one.  The only remaining question is whether to pay the extra or to ask for a refund of the partial year amount paid based on their faulty advice.  If his current pension, after buying the four years, is £223.67 or less, then the year would be worth the full £6.58 a week.  If it is £230.25 or more then it's worth nothing.  If it's in between then it's worth the difference between current pension and £230.25 and he'd have to decide whether it was enough to be worth it.

german_keeper

Triumph13 said:

The explanation above is almost certainly the right one.  The only remaining question is whether to pay the extra or to ask for a refund of the partial year amount paid based on their faulty advice.  If his current pension, after buying the four years, is £223.67 or less, then the year would be worth the full £6.58 a week.  If it is £230.25 or more then it's worth nothing.  If it's in between then it's worth the difference between current pension and £230.25 and he'd have to decide whether it was enough to be worth it.

Generally I agree with you and the post you refer to.

But based on the limited information available I suspect there may not be any faulty advice. The suggestion in the OP is that his/her Dad called HMRC and asked to pay backdated NI contributions to fill previous years. The call centre operator appears to have then followed the Call Type Process and did exactly what was requested. It is not for HMRC to question why the request is made. If this request was prompted by DWP advice, and there is no indication that it did, then clearly that DWP advice was potentially faulty.

Again lots of supposition but when the payment was received the person dealing with it has possibly realised that it is likely to be about State Pension and allocated the payments in the most beneficial way. If this is the case I would have hoped they would have made contact with OP's dad to clarify; maybe they tried and failed or maybe their process doesn't allow it. Or maybe they wrote to them explaining what they had done.

The problem is that the caller has little or no knowledge of the subject matter and unfortunately it is highly possible that the call centre operators had little or no technical training or knowledge. Without listening in to the calls and examining the case file it is impossible to establish exactly what has happened and whether any incorrect advice has been given. 

  

Nutters05

Thanks for this all. I have only got a chance to log into his government gateway account and it looks like he had 34 full years plus a lot of part years pre 2016. It makes sense reading the above that he must have been on the old state pension. I believe he was getting £176 a week before he paid the extra. 

It also sounds like the people we've been speaking to haven't had a clue. He's been talking to a few different people and not one person has mentioned the old state pension or why they don't want to allocate to pre-2016 years even though they said it was ok and would make a difference.

My dad didn't work much in the years before he retired but refused to claim benefits too which actually might have helped!