State Pension plus Works Pension

Alex444 wrote: »

I started work, labouring June1968 (16yrs old) joined Civil Service in October 68, joined Fire service Jan 73 till October 2000. Worked for various companies up till August 2013, was registered unemployed for a further year, really retired October 2014 @63 years of age. Total of 47 years worked.

With that record your calculation to 6 April 2016 definitely used old rules and you can't get more by buying any years before 2016-17. You also can't get more by buying the year in which you reached state pension age. If you didn't reach state pension age until 6 April 2017 or later you can get an extra 4.81 a week by buying the 2016-17 year. And your age details suggest that you probably reached state pension age before that.

But the earnings-related bit not being paid to you in the state pension is being paid to you through those work schemes instead.

Alex444 wrote: »

My wife started work 1969 at 15yrs of age as a hairdressing apprentice, married 1973, 3 children 1978, 1981 and 1989, worked as self employed the majority of the rearing ages, started part time work 1990 and has worked up till September 2017, now on benefits (PIP & ESA) Receives State Pension September 2020, just short of 66th birthday, £169.70p at today's rate.

Little or no time in any job likely to be contracted out and maybe lots of years with credits and self-employment, so new rules calculation for her.

New rules is a lot better for people who were mostly self-employed. She probably wouldn't get much more than the basic state pension of 129.20 under the old rules so that change is very good for her, almost 40 a week more than if she'd reached her state pension age before 6 April 2016.

Someone who reached state pension age before 6 April 2016 can increase it by 10.4% for each year they defer it. After that it's 5.8% a year. You can start deferring once even if you've already claimed.

Are you both taking advantage of the free tax relief gain from paying into a pension then taking the money out? I assume that your works pension uses your whole personal allowance so you can make 180 a year doing it. Your wife might have enough personal allowance left to make the 720 a year maximum.

Alex444 wrote: »

My retiring MOD pal was genuinely surprised that I was not getting a full State Pension, he thought he was getting as much as £196.00 was due to him paying the "big stamp" don't know if that is true?

Yes, it'll be because of his big stamp years. Like you, his works pension will be paying some earnings-related bit from when he was paying the smaller stamp (if he ever did, most work schemes worked that way but not all).

Alex444 wrote: »

Thanks jamesd, total minefield of a system!

Wait till the queries start in 20/30 years from now, when they find out how much they loose through auto-enrolement!

Those that can afford it,of course.

Actually, no. Contracting out ended April 2016, so those retiring 20/30 years from now could get the full single tier State pension (assuming they have 35 years of NI contributions) in addition to all of their auto-enrolled/occupational/private pensions.

Even sooner than that - someone with the (old rules) basic State pension of £120 per week as their April 2016 foundation amount, who continues to work/pay NI for approx 9 years post 2016, will also get the equivalent of the full single tier pension.

On the minus side, those who had previously been contracted out (and thus paying reduced NI) saw their NI payments increase to the full whack from April 2016.