New pension is Contracted In

Johnhowell

Dear All,

I have recently changed companies and have joined the company Group Pension which is Contracted In.

My last company's final salary pension, held for 13 years, was Contracted OUT.

What effect will this have on the amount of State pension I may receive?

I am 39 years old.

Many regards,
John

CIS

Are you sure that the scheme is not of the type where although you are contracted out, you still pay full rate NI and the difference between this and the normal contracted out rate NI is paid direct to the scheme by the IR at the end of the year?

If it is working like that, the amount of state pension will be calcualted as per normal for contracted out people, ie, minimal amounts of S2P accrued.

Johnhowell

CIS,

My previous pension was definiately Contracted OUT because I opted out and the NI payments were reduced to only 7%(?) instead of full 11%(?).

With my new company I was suprised when I read that the pension was Contracted IN.

I am just unsure how the remaining years to retirement Contracted IN would be reflected in the amount of second state pension received? I read about the magical 44 years of paying full NI contributing - but have 13 years Contracted OUT.

Thanks,
John

CIS

The state pension is split in to two parts;

1)Basic State pension based on 44(for men) qualifying yrs, this does not matter whether you are contracted in or out. Its based on whether you earn or are credited enough to take you over the NI lower earnings level.

2)S2P is based on earnings and depends when you retire and what each yrs earnings are, it cannot be predicted accurately in to the future. Even Pension service estimates are only based on the last years earnings and projected.

Apply for a State Pension Forecast online (http://www.thepensionservice.gov.uk) or telephone on 0191 2135000. This will give you a current and projected breakdown.

Also, have a look at this leaflet, its what pension service staff use for reference(or at least they did whilst I worked there)http://www.thepensionservice.gov.uk/resourcecentre/np46/home.asp

Johnhowell

CIS,

Many thanks, shall look up those pages/forms.

John