When R U Officially Classed as Retired?
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I had originally thought that as well, but I found out that because I have a Defined Benefit private pension, I was 'contracted out' for some of the time (as seems to been the case with many people on DB schemes), meaning my current State Pension forecast is about £30 per week short of the maximum.
Yep, contracting out is a nasty surprise for some. It's a cautionary example of how people need to be aware of the status of all their retirement income streams to have a coherent retirement plan. I've been paying voluntary Class 2 NI for most of my working life and just as I was approaching 30 years and thinking my contributions could stop they increased the number of years to qualify for full pension to 35...I've got one year left and hope they don't move the goalposts on me again.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
Hardly a 'nasty surprise' - the contracted out deduction was made clear from day one of the new single tier pension announcement.
When I started to read one of the first newspaper articles I had a moment of panic when I thought that I wouldn't get any State pension, as I had been contracted out from 1978 until I was due to retire in 2016 - but when I read all of the article I realised that I would get at least the pension I would have been entitled to under the old rules (phew!) .
Sorry, but the only people who were 'misled' where the ones who only read the '£150 per week State pension' headlines and didn't bother reading the rest.0 -
bostonerimus wrote: »Yep, contracting out is a nasty surprise for some. It's a cautionary example of how people need to be aware of the status of all their retirement income streams to have a coherent retirement plan.
Quite the opposite - people with a significant period of contracting out who reach SPA a few years or more after 2016 are (in general) the big winners from the single tier state pension, particularly if they have a GMP (goes for both public and most private sector DB scheme members). The big losers are employees who were contracted-in anyway, but hadn't already accrued above the new single tier amount when the new system came in.0 -
Reading various threads on here where the issue was brought up, and talking to friends, it was clearly a surprise for a lot of people who thought that they would get the full state pension because they already had been paying NI for well over 35 years. I don't think people were 'misled', just that they weren't aware they were contracted out for some of the time, as they had still been having NI payments deducted from their salaries.Silvertabby wrote: »Hardly a 'nasty surprise' - the contracted out deduction was made clear from day one of the new single tier pension announcement.
When I started to read one of the first newspaper articles I had a moment of panic when I thought that I wouldn't get any State pension, as I had been contracted out from 1978 until I was due to retire in 2016 - but when I read all of the article I realised that I would get at least the pension I would have been entitled to under the old rules (phew!) .
Sorry, but the only people who were 'misled' where the ones who only read the '£150 per week State pension' headlines and didn't bother reading the rest.0 -
Confused would describe it.I don't think people were 'misled' j
Most people only heard the "flat rate" and "£155" or so. Since "most" people didn't understand the old system there was no hope of explaining the full impact of the changes.
As usual the press were too busy putting their political spin on it and the government, as usual, totally failed to get the true impact of the changes across. Of course the government wouldn't want people to know the full impact would they?0 -
Quite the opposite - people with a significant period of contracting out who reach SPA a few years or more after 2016 are (in general) the big winners from the single tier state pension, particularly if they have a GMP (goes for both public and most private sector DB scheme members). The big losers are employees who were contracted-in anyway, but hadn't already accrued above the new single tier amount when the new system came in.
The problem is that many people are not aware of the consequences of "contracting out". Whatever pension they are getting other than SP they are expecting to get the full state pension with "35 years" of contributions and then when they don't they are surprised......and that's not a good surprise when planning for retirement. The new flat rate SP is a cut for almost everyone because the basic pension was usually toped up with pension credits and of course the elimination of the second earnings related pension has hit many workers. I've come out of it well though as living overseas I would have only got the basic SP and the new flat rate pension is a 22% increase.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »The problem is that many people are not aware of the consequences of "contracting out".
What, like pay a lower rate of NI and participate in an occupational scheme with superior benefits...? Bring out the suitably tiny violins
Whatever pension they are getting other than SP they are expecting to get the full state pension with "35 years" of contributions and then when they don't they are surprised......and that's not a good surprise when planning for retirement.
On that basis, from the time they started contracting out to only a few years ago, they would have been 'expecting' and 'planning' to get less than what they actually will be getting as their state pension. These people are the winners.The new flat rate SP is a cut for almost everyone
It is a cut for practically anyone working full time who would have been contracted in anyway.and of course the elimination of the second earnings related pension has hit many workers.
By definition not those that were contracted out though!0 -
What, like pay a lower rate of NI and participate in an occupational scheme with superior benefits...? Bring out the suitably tiny violins
On that basis, from the time they started contracting out to only a few years ago, they would have been 'expecting' and 'planning' to get less than what they actually will be getting as their state pension. These people are the winners.
Many people don't do planning and will have fixated on the 155 number and when they get less they are surprised. I imagine there is a large variation in the pension benefits of those that contracted out. Some will have done well and others will have lost out. It would be interesting to hear examples. The new flat rate SP is a for almost everyone which compounds the status of the UK as having one of the worst state pensions in the developed world. It's only expats paying Class 2 that have done really well out of it.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »Many people don't do planning
Well it was yourself that brought up 'planning' (posts 22 and 27)...and will have fixated on the 155 number and when they get less they are surprised.
Then they can come on here and learn how they haven't actually been ripped off.
I imagine there is a large variation in the pension benefits of those that contracted out.
Of course, more so than SERPS, let alone S2P, which were limited CARE schemes.Some will have done well and others will have lost out.
In the main, nope, even if their old DB scheme fails and enters the PPF. (And people who elected to contracted out into personal pension arrangements... well good or bad, that was down to them.)The new flat rate SP is a for almost everyone which compounds the status of the UK as having one of the worst state pensions in the developed world.
Unfunded pension liabilities are a massive part of government spending as it is.It's only expats paying Class 2 that have done really well out of it.
No, a significant proportion of previously contracted-out people have too, also the self-employed paying class 2 NICs, and (typically female) carers.0 -
Don't worry, been checking it for years. I'm forecast to get over 10.5K per annum as of today because I contracted back in after a period of contracting out. Any additional NI contributions will not increase what I will get.It would be worthwhile checking your State Pension forecast if you have not already done so, as I had wrongly assumed that with over 40 years of NI contributions I would get the maximum State Pension.0
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