State pension questions

cottager

So sorry if I could have found answers in other threads, but either I didn't come across them in those looked at or didn't fully follow. Have only just joined MSE.

Born in 1951, I reach retirement in 2012 at 61 yrs 3 months, and the last state pension forecast I got was Dec 2006, where my contribution record showed that up to 5 Apr 2006 I had 39 qualifying years which would give me a basic state pension of 98% (at that time) of the full rate which they would expect to be 100% on reaching retirement.

My first question and concern is that since then, while I still have a part-time job and am in the PAYE 'system', wages are kept just below the NI threshold, so as well not paying tax I no longer pay any NI contributions either. If this didn't change, does it mean I will automatically end up 'short' and not reach 100% state pension entitlement?

Secondly (this comes from hearing other wives' scary tales!), will I start receiving a state pension in my own right in 2012, or will it be delayed until my husband reaches 65? -- he is 2 yrs older, b. 1949, and self-employed. I suspect what others have said *may* be because they never worked or something like that, but if it did apply to me it would be worrying.

Lastly, is there a means of boosting a state pension by paying additional contributions voluntarily?

Many thanks.

CIS

You receive any pension in your own right at pension age - the only way you would have to wait is if you claimed any increase based on your husbands NI conts.

From 2010 the requirement drops to 30 yrs therefore you have already achieve a full basic pension so paying voluntary NI will not increase your pension.

EdInvestor

cottager wrote: »

Born in 1951, I reach retirement in 2012 at 61 yrs 3 months, and the last state pension forecast I got was Dec 2006, where my contribution record showed that up to 5 Apr 2006 I had 39 qualifying years which would give me a basic state pension of 98% (at that time) of the full rate which they would expect to be 100% on reaching retirement.

Unless you have been contracted out into a company or private pension, you should expect some SERPS/S2P in addition.

As mentioned you only need 30 years now for the full basic if you retire after 2010.

seven-day-weekend

Hello, welcome to the forum.

The only people who will have to wait until their husbands are 65 are those who do not qualify for a pension in their own right (because they have not worked or have worked and paid married women's stamp), and they receive 60% of full pension based on their husband's contributions when he reaches retirement age.

You will have a pension in your own right on your retirement date.

cottager

Very grateful. The detail in this sort of area (pensions and all the different rules, changes and ins-and-outs) doesn't 'stick' for some reason, or hasn't in the past, and something I think I've grasped at the time either leaks away or I realise there was much more I should have asked. But I hope to be educated here

It's *very* helpful to ask one or two questions at a time, absorb the answers, then think a little further and ask more, and I hope you can bear with me as I get it straight. Having answers in plain English as you have already is a big help too.

seven-day-weekend wrote: »

Hello, welcome to the forum.

Thank you, and also for the reassurance -- and love the name
Ours is the classic tale, you'll have seen it all before: we're now 'of a certain age', suddenly it begins to look pretty scary and we wish we'd taken more care and been more diligent in planning ahead. It isn't total disaster (I hope) as thankfully it's not the case we made no plans at all, but I fear inadequate.

CIS wrote: »

From 2010 the requirement drops to 30 yrs therefore you have already achieve a full basic pension so paying voluntary NI will not increase your pension.

EdInvestor wrote: »

As mentioned you only need 30 years now for the full basic if you retire after 2010.

Well that's very good to hear -- thanks. Is there any benefit to what are now an extra 9 years' worth of contributions, or is that effectively 'lost'.

EdInvestor wrote: »

Unless you have been contracted out into a company or private pension, you should expect some SERPS/S2P in addition.

Cue for confusion...

In the forecast from the end of 2006, there were three elements to the projection for 2012:
Basic State Pension £84.25
Additional State Pension £32.05
Graduated Retirement Pension £1.53
Total £117.83/week

First and third OK, but never got my head around SERPS or really understood the implications. Having looked at the Pension Service guidance, I follow what it *is* but not really how being in or out affects my final pension.

I was contracted out from 1989-2000 but, of the two pensions I've had, one only began in 1999 and is still current; and the first, a company rebate-only scheme, only ran till 1994 when it was deferred.

So there was a gap 1994-99 when I was still contracted-out, but I don't know what will have happened about SERPS as it doesn't seem to me there was anywhere to pay the contributions to? Will I have lost out on something there? I'm looking at NP46 Guide to State Pensions as it relates to SERPS, and I'm sure it's my fault it's not abundantly clear to me... but it isn't.

EdInvestor

cottager wrote: »

In the forecast from the end of 2006, there were three elements to the projection for 2012:
Basic State Pension £84.25
Additional State Pension £32.05
Graduated Retirement Pension £1.53
Total £117.83/week

Additional State pension and SERPS/S2P are the same thing.The three pensions are added together to get the total state pension.

I was contracted out from 1989-2000 but, of the two pensions I've had, one only began in 1999 and is still current; and the first, a company rebate-only scheme, only ran till 1994 when it was deferred.

You will get a retirement income from both of these pensions in addition to your state pensions. You should review these pensions as they probably should be moved into a better plan.

So there was a gap 1994-99 when I was still contracted-out, but I don't know what will have happened about SERPS as it doesn't seem to me there was anywhere to pay the contributions to?

Were you working between 94-99?

seven-day-weekend

cottager wrote: »

-- and love the name

When my husband and I took early retirement, someone sent us a card with 'wekcome to the seven-day-weekend' in it and I, like you, loved it!


Well that's very good to hear -- thanks. Is there any benefit to what are now an extra 9 years' worth of contributions, or is that effectively 'lost'.



.

You have to pay National Insurance if you are working and earning enough, even if you have your thirty years - they do count for other things than your pension though - for example Incapacity Benefit if you are sick.

cottager

EdInvestor wrote: »

Additional State pension and SERPS/S2P are the
You should review these pensions as they probably should be moved into a better plan.

I realise that and will be. Another thread with a few details first perhaps, in order to prime me with suitable and intelligent questions to ask?

Were you working between 94-99?

Apart from one period of 6 months, Nov 95-May 96, the only time I've never worked. I'd left my previous job voluntarily so wasn't entitled to unemployment benefit. By the time I was I believe it exactly coincided with starting my next job. I think I'm right saying I never actually received any benefit... if I did it would have been for something like a week, two at the most, but don't recall receiving anything.

Many thanks.

cottager

seven-day-weekend wrote: »

When my husband and I took early retirement, someone sent us a card with 'welcome to the seven-day-weekend' in it and I, like you, loved it!

Brilliant -- I'll remember that one (and aspire to it!).

You have to pay National Insurance if you are working and earning enough, even if you have your thirty years - they do count for other things than your pension though - for example Incapacity Benefit if you are sick.

Ah, yes I see. Thanks for that.

EdInvestor

cottager wrote: »

I realise that and will be. Another thread with a few details first perhaps, in order to prime me with suitable and intelligent questions to ask?

Write to the providers and request the following info, then post it here

Current value
Transfer value
Annual charges
Fund(s) invested in
Alternative fund options
If with-profits, any guarantees attached?

Apart from one period of 6 months, Nov 95-May 96, the only time I've never worked.

If you weren't working you weren't paying NI, and thus no NI rebate would have been paid into your contracted-out pension.So nothing lost there.

cottager

EdInvestor wrote: »

Write to the providers and request the following info, then post it here

Thanks, I will do that.

If you weren't working you weren't paying NI, and thus no NI rebate would have been paid into your contracted-out pension. So nothing lost there.

I have been in continuous employment, including during the period 1994-99, apart from the 6 months I was unemployed.

The estate agency I worked for became part of Nationwide B/Soc in 1987, and we were offered the rebate-only pension scheme from 1988 which I took up. I believe Nationwide matched the DSS contributions going into it after contracting-out, plus a bit. I personally paid nothing.

In 1994 my company became part of another financial institution, thus Nationwide's contributions to it would have ceased then, I assume. In due course we were offered the option to continue it with the new owners, but unfortunately a lack of action on my part led to the plan being deferred by Nationwide, by default. As I realise now, this was a serious mistake on my part, but it was a period of various personal upheavals which went on for some while at that time, though of course I should have kept on top of things like this. But there we are: one learns lessons.

Having gone into 'suspended animation' I thought nothing could be done to resurrect it. I knew it could be T/F to another scheme up to age 59 (2010), but if left as and where it was no other options till it matured in 2014. Effectively I then forgot about it.

I also thought deferring meant no further DSS contributions would or could go into it after 1994, hence my question about what would have happened about SERPS 1994-99, and whether there was any loss.

I left the estate agency anyway late in 1995, had the unemployed patch of 6 months with no benefit, before starting another job in May 96. My new employers had no pension scheme, so I began the second plan in 1999 with Standard Life (which I'm still paying into), and in 2000 contracted back in.

Sorry, this follows from not fully understanding deferment -- would the DSS contributions nevertheless still have been paid into it (till starting the S/Life plan), even though Nationwide's matching was not? This would be good news I imagine, as at least something would have been going into it.

The deferred scheme is administered by Nationwide Pension Fund. It was originally a Standard Life policy and annual statements came from them for a while, but later on from Nationwide Pension Fund who presumably took it in-house. I phoned Nationwide yesterday to find of couse it's still sitting there, and they're sending out a Deferred Members' Statement.

The last received was in 2000 when apparently they ceased circulating them until maturity approaches, except on request. It had these figures, everything in italics being quoted from there but not necessarily in full:

Scale Pension revalued to 31 Oct 2000, £1677.69
This amount will increase by RPI up to a maximum of 5% for each complete year that the pension is in deferment.
Guaranteed Minimum Pension, £272.89
Fixed Pension Purchased via a transfer received, £0.00

At normal retirement age your pension will be £3060.39 pa based on RPI up to the date of this statement and assuming 3% RPI up to your normal retirement date. Alternatively you can elect to receive a tax free cash lump sum of £6885.88 and a reduced pension entitlement of £2455.20 pa.

Please note that these figures assume that future increases in the Retail Price Index will average 3% pa. Therefore if RPI is lower (or higher) than 3%, this will affect the figures quoted accordingly.

Benefits: Spouse/dependant to receive pension of £1170.34 pa if I should die while pension is still in deferment. If I die after pension is in payment, spouse/dependant will receive pension equal to 66.67% of my gross pension at date of death.

Transfer value at 31 Oct 2000 was £28,307.44 (with usual provisos about stock market factors etc).

Further info: Once in payment, pension will be increased annually on 1 Apr by 3%.

Nothing else seems particularly relevant to quote here. I have no idea what to expect to see when the new statement arrives, to have affected these figures over the past 7+ years. If it was possible for a deferred plan to be reactivated, which I'm hoping you could clarify, it seems to me that even this late in the day it would be worthwhile adding to? -- but maybe this wouldn't be possible in view of the type of plan it was.

I couldn't manage regular monthly payments beyond what I'm putting into the second and later Standard Life pension, but a lump sum is possible.

Sorry for the lengthy post...