Contracted out (National Insurance)

theesel1994

I started working in 1981-82 tax year and had a pension amount deducted from my wages (I think I 3.75% and the Employer also paid 7.5%). 

My national insurance deductions were slightly less as a result.

I became self-employed in November 1998 so was contracted out for 17 years.

There is only a gap of one year in my national insurance contribution record. So I've contributed 43 of 44 years - 10 of those years at the end of this tax year will be post 2016. (There is mention of each qualifying year post 2016 adding £6.58 per week).

The HMRC app tells me my pension will be less because of this contracting out but I go round in circles on their website trying to find out how much this reduction will be.

I'm told "How much is taken off depends on how long you were contracted out and your earnings at the time. While you were contracted out, you were paying into your workplace or personal pension instead."

I was earning peanuts at this time - is there any way of finding out how much this reduction will be or what the maximum this could be. Will my post 2016 NI contributions make up any shortfall and bring it back to the original £230.25 per week?

molerat

What exactly does your forecast show, both the big green box amount and in the texts below ?   Your pension will not be reduced from those amounts shown, contracting out only affected your 2016 starting amount and that is already accounted for in the forecast figures. Anyone with 30 full years pre 2016 - both contracted in or out - and a full post 2016 history to date will receive the full new pension.  

theesel1994

Thanks for your help - their explanations are confusing.
Now I just need to figure out how did get rid of my signature to my posts from 16 years ago.

molerat

That means you are already at the full pension amount.  That is what you will receive and nothing you do will add (or take away) from that amount.

Marcon

theesel1994 said:

I became self-employed in November 1998 so was contracted out for 17 years.

I wonder if you really mean contracted out - did you take out some sort of personal pension, which would have been described as 'appropriate' (that's the jargon, not some sort of confirmation it was the right thing to do!) if you really were contracted out? If so, that'll be a pot of cash available to you.

Changing your signature:

Click on your profile (top right of screen):

Click on Account and Privacy Settings and then click on Signature Settings:

theesel1994

I was paying money into an Occupational Pension Scheme. They inform me each year (after 5th April) how much I could receive if I was to retire at that time. 

dunstonh

theesel1994 said:

I was paying money into an Occupational Pension Scheme. They inform me each year (after 5th April) how much I could receive if I was to retire at that time. 

You are a winner under the new state pension.   Your self-employed years meant you only qualified for the basic state pension in that period.   And your contracted-out years meant you only qualified for the basic state pension in that period.       

I was earning peanuts at this time - is there any way of finding out how much this reduction will be or what the maximum this could be. Will my post 2016 NI contributions make up any shortfall and bring it back to the original £230.25 per week?

You are already at the maximum.   So, nothing for you to do.

molerat

If you really want to know how your 2016 new pension calculation was affected by contracting out click here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account, that figure though is all accounted for in what you see now.

theesel1994

molerat said:

If you really want to know how your 2016 new pension calculation was affected by contracting out click here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account, that figure though is all accounted for in what you see now.

I think I'm nearly there. They don't make life easy for me.