43 years of full NI contributions but being asked to pay more years.
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dex97
Posts: 4 Newbie
Can anyone explain this to me?
My sister is due to receive her state pension in 2020 when she will be 66. She stopped working a few years back.
We’ve had a pension forecast online from the government website.
She will receive £161 per week but needs to pay another 2 years contributions (approx £700).
Otherwise she will receive the lesser amount of £152 per week
It also says she has paid 43 years of full contributions.
I thought that under new rules only 30 years of contributions were required.
So why does she have to make further payments?
My sister is due to receive her state pension in 2020 when she will be 66. She stopped working a few years back.
We’ve had a pension forecast online from the government website.
She will receive £161 per week but needs to pay another 2 years contributions (approx £700).
Otherwise she will receive the lesser amount of £152 per week
It also says she has paid 43 years of full contributions.
I thought that under new rules only 30 years of contributions were required.
So why does she have to make further payments?
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Comments
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You are confusing new rules for those starting out on their pension journey post April 2016 with those already in the system.
And it's 35 years not 30 (for youngsters).0 -
You are confusing full, financial years, of NI with full, not contracted out, years of NI.
Your sister will have a contracted out occupational pension in addition to her State pension. You haven't given enough information for me to be sure, but it is likely that her State pension has been calculated under the old rules, being the higher of her entitlement under either set of rules.0 -
Yes, that’s correct. She was in a contracted out scheme for a few years.
I understand that lower ni was paid during contracted out years but I still don’t quite get the implications of having been contracted out.
In my own case I was contracted out for 12 years and have paid ni contributions for 44 years. If I work until my state retirement age (66) I would have paid ni for 50 years. Would that somehow offset the negative effect of those years that I was contracted out?
My current forecast is £166 per week.
If I stop working (paying ni) now, will I still get the same state pension that I would if I worked (paid ni) for another 6 years?0 -
If you check your state pension entitlement, it will say if you can increase the amount you get, or if your extra years will not provide any extra.If I stop working (paying ni) now, will I still get the same state pension that I would if I worked (paid ni) for another 6 years?
https://www.gov.uk/check-state-pension0 -
The statement should show your estimate to April last year and your forecast at SP age if you contribute for another 6 years. If you current estimate is £166 then that may be the maximum you can get even if you work and pay NI for another 6 years, but your statement should say if that is the case.My current forecast is £166 per week.
If I stop working (paying ni) now, will I still get the same state pension that I would if I worked (paid ni) for another 6 years?0 -
Y Would that somehow offset the negative effect of those years that I was contracted out?
What negative effect? Your employers pension scheme agreed to, as a minimum, make up what you gave up in SP terms in exchange for you and they paying a reduced rate of NI at the time.
In reality you are probably well ahead overall.0 -
Would that somehow offset the negative effect of those years that I was contracted out?
Originally posted by dex97What negative effect? Your employers pension scheme agreed to, as a minimum, make up what you gave up in SP terms in exchange for you and they paying a reduced rate of NI at the time.
In reality you are probably well ahead overall.
Alan is right. I'm in a similar situation - retired at 60, won't get my State pension until 66. Current forecast £140 per week (although I intend to top it up with voluntary Class 3 NI conts).
The way I look at it is that I'm already getting the difference between £164 per week and £140 per week with my contracted out occupational pension.0 -
At 6/4/2016, two calculations were done
Under the old rules, because she had at least 30 years NI she would have been entitled to a full basic state pension.
The calculation would have been £119.30 + (Additional State Pension - deduction for contracting out).
Under the new rules, the calculation would have been full new state pension (because she had at least 35 years NI) - Contracted Out Pension Equivalent
£155.65 - COPE.
Her starter amount was the higher of the two.
She can increase her pension up to the full NSP by paying voluntary contributions
as explained here
https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf0 -
My current forecast is £166 per week.
The full new state pension is currently £164.35 so it may be that although you will have to pay NI (if appropriate) up to SPA, you will not increase the pension.
It seems that you may have a small "protected payment".
https://www.gov.uk/new-state-pension/how-its-calculated
Check your statement.0 -
Ever so slightly off piste, but it's curious how differently people read the same piece of text.
When the first details of the new single tier pension were published in the media I had a moment of panic - I thought that by being contracted out from 1978 to 2015 (when I retired) I wouldn't get any State pension when I reached 66/SPA. However, I then found (from the White Paper) that I would get at least the amount of State pension I would have received under the old rules (phew).
Other people, who read the very same newspaper report, 'read' that they would get the full single tier pension regardless of how many years they had been contracted out.0
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