Can anybody explain in layman's terns why I am not getting a full state pension?

MmmStilton · 14 February at 12:16PM

I received my state pension in September 2018

I had to retire in Nov 2006 due to ill health, and was told by the benefits person I spoke to that as I had 37 years of NI contributions already I did not need to seek sickness benefits to gain any more NI contributions. My works pension was over the limit to receive any financial help, so I did not register for benefits.

I know it's a bit late, but I've never understood why I am not receiving the full state pension of £230.25 pw, but £199.22 pw, about 85% of the full pension.

I have a total of 45 years of NI contributions, but for some reason my record shows 2013 to 2017 as not full years, but 2017 to 2018 as full year.

I have just written to HMRC, but I'm not expecting an understandable response.

Silvertabby · 14 February at 12:18PM

Are you male or female?

Just noticed from one of your previous posts that you are male, which explains the NI credit for financial year 2017/2018. Briefly, a woman born on the same day as you would have reached her SPA at about age 64, whereas your SPA was 65. Thus your Pension Credit age was 64, at which point you could have claimed pension credit (had you been eligible) plus non-means tested extras such as a bus pass and winter fuel allowance. The NI credit would have been automatic, which is why you didn't need to apply for it.

As for the rest of your pension, it hasn't been reduced. In fact, it's more than you would have received under the old rules had you not been given the NI credit.

Pre 2016, the State pension was in two parts. The basic State pension, plus earnings related SERPS/SP2 for those who weren't contracted out into another pension. In your case, you do have some contracted out service - during which time both you and your employer paid reduced rate NI. In return for this, your employer was committed to pay you the equivalent of SERPS/SP2 as part of your contracted out occupational pension.

Come April 2016, and everyone had two calculations done - one based on the old pension rules, and another on the new - with the higher amount being locked in as your foundation amount. Going on from there, further years of NI added to this foundation amount.

So, you are one of the winners under the new scheme, just not as big a winner as someone younger who had more time between 2016 and SPA to be able to add more to their pensions.

P.S. The information you were given in 2006, about 37 years being enough for a full (old basic) State pension was correct at the time. Back then, it would have been 30 years, and the details of the new 2016 State pension not even dreamed of. And, even then, 35 years only applies to those who started work after 2016. The rest of us are under transitional arrangements, each with our own very different calculations and needing anything between 28 and 50 years of NI to accrue the full single tier pension.

Dazed_and_C0nfused · 14 February at 12:22PM

https://forums.moneysavingexpert.com/discussion/6655318/can-anybody-explain-in-layman-039-s-terns-why-i-am-not-getting-a-full-state-pension

It's because you fall under transitional rules, not the new State Pension rules.

Your contracting out period meant you needed several post 2016 years to reach the standard £230.25/week and because you reached State Pension age in 2018 you simply didn't have enough years available to get there.

If you are able to buy 2016/17 then it should be a brilliant option financially. An extra £6.89 or £6.90 each week (April 2026 rate) for the rest of your life, for less than £1k 😳. Even allowing for the extra tax you will presumably have to pay it's a cracking deal.

And personally I don't know how a benefits person giving you information in 2008 could know what the rules would be in 2016? That was more your responsibility to keep up to date with things.

Okell · 14 February at 12:23PM

https://forums.moneysavingexpert.com/discussion/6655318/can-anybody-explain-in-layman-039-s-terns-why-i-am-not-getting-a-full-state-pension

"… My works pension was over the limit to receive any financial help, so I did not register for benefits…"

Something similar happened to me.

AIUI if you were contracted out of what was then called SERPS (the state earnings related pension) because you had a separate pension from your employment, you are only entitled to a reduced state pension.

But I could be wrong…

Dazed_and_C0nfused · 14 February at 12:26PM

https://forums.moneysavingexpert.com/discussion/comment/81884328#Comment_81884328

I'd say you were wrong. But people have different takes on what is considered a "reduced" State Pension.

MmmStilton · 14 February at 12:26PM

https://forums.moneysavingexpert.com/discussion/comment/81884322#Comment_81884322

Male

And I think I've just found the answer myself as my works pension was contracted out.

I still do not understand the missing years though.

MmmStilton · 14 February at 12:29PM

https://forums.moneysavingexpert.com/discussion/comment/81884326#Comment_81884326

I think It's too late to buy 2016/2017

And

"Your contracting out period meant you needed several post 2016 years to reach the standard £230.25/week and because you reached State Pension age in 2018 you simply didn't have enough years available to get there."

seems to be very ill thought out and unfair.

And I do not understand why 2013/2017 were not full but 2017/2018 was.