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  • FIRST POST
    • NorthernGeezer
    • By NorthernGeezer 4th Mar 18, 8:42 AM
    • 111Posts
    • 20Thanks
    NorthernGeezer
    When R U Officially Classed as Retired?
    • #1
    • 4th Mar 18, 8:42 AM
    When R U Officially Classed as Retired? 4th Mar 18 at 8:42 AM
    I'm assuming its at your government defined retirement date, in my case November 2021.
    So, if that's the case, up to then you are officially employed or unemployed?
    At present i'm employed but intend to be unemployed on May 1st this year.
    My gross 'earnings' for the tax year 2018/19 are likely to be 5000 so i'm assuming i can pay this whole amount in to my pension to gain the tax relief?
    Does it matter when i pay this amount in to the pension pot?
    I intend to withdraw my full tax free allowance from my pension in this tax year, presumably this cannot be classed as earnings under recycling rules.
Page 2
    • Audaxer
    • By Audaxer 4th Mar 18, 6:06 PM
    • 1,051 Posts
    • 607 Thanks
    Audaxer
    I thought you only had to pay NI contributions for 35 years to receive a full state pension?
    Originally posted by ArchBair
    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.
    • bostonerimus
    • By bostonerimus 4th Mar 18, 7:42 PM
    • 1,833 Posts
    • 1,173 Thanks
    bostonerimus
    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.
    Originally posted by Audaxer
    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.
    Misanthrope in search of similar for mutual loathing
    • Silvertabby
    • By Silvertabby 4th Mar 18, 9:20 PM
    • 2,749 Posts
    • 3,936 Thanks
    Silvertabby
    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.
    • hyubh
    • By hyubh 4th Mar 18, 9:47 PM
    • 2,126 Posts
    • 1,634 Thanks
    hyubh
    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.
    Originally posted by bostonerimus
    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.
    • Audaxer
    • By Audaxer 4th Mar 18, 10:12 PM
    • 1,051 Posts
    • 607 Thanks
    Audaxer
    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.
    Originally posted by Silvertabby
    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.
    • greenglide
    • By greenglide 4th Mar 18, 11:12 PM
    • 3,096 Posts
    • 2,015 Thanks
    greenglide
    I don't think people were 'misled' j
    Confused would describe it.

    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?
    • bostonerimus
    • By bostonerimus 4th Mar 18, 11:48 PM
    • 1,833 Posts
    • 1,173 Thanks
    bostonerimus
    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.
    Originally posted by hyubh
    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.
    Misanthrope in search of similar for mutual loathing
    • hyubh
    • By hyubh 5th Mar 18, 12:05 AM
    • 2,126 Posts
    • 1,634 Thanks
    hyubh
    The problem is that many people are not aware of the consequences of "contracting out".
    Originally posted by bostonerimus
    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!
    • bostonerimus
    • By bostonerimus 5th Mar 18, 12:28 AM
    • 1,833 Posts
    • 1,173 Thanks
    bostonerimus
    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.
    Originally posted by hyubh
    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.
    Misanthrope in search of similar for mutual loathing
    • hyubh
    • By hyubh 5th Mar 18, 8:33 AM
    • 2,126 Posts
    • 1,634 Thanks
    hyubh
    Many people don't do planning
    Originally posted by bostonerimus
    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.
    • OldMusicGuy
    • By OldMusicGuy 5th Mar 18, 10:25 AM
    • 368 Posts
    • 744 Thanks
    OldMusicGuy
    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.
    Originally posted by Audaxer
    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.
    • Triumph13
    • By Triumph13 5th Mar 18, 12:42 PM
    • 1,180 Posts
    • 1,463 Thanks
    Triumph13
    I am "economically inactive" as far as the employment stats are concerned.
    Originally posted by OldMusicGuy
    I quite like the sound of that:
    "What do you do for a living?"
    "I'm economically inactive."
    Definitely has possibilities.
    • Audaxer
    • By Audaxer 5th Mar 18, 1:30 PM
    • 1,051 Posts
    • 607 Thanks
    Audaxer
    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.
    Originally posted by OldMusicGuy
    That is a surprise to me as I thought the most anyone could get was 159.55 per week (8,296 per annum) unless they deferred taking it at State Pension age.
    • NorthernGeezer
    • By NorthernGeezer 5th Mar 18, 1:37 PM
    • 111 Posts
    • 20 Thanks
    NorthernGeezer
    My pension statement quotes 179/week even though I contracted out for a few years.
    Presumably its all about your qualifying years.
    • OldMusicGuy
    • By OldMusicGuy 5th Mar 18, 1:41 PM
    • 368 Posts
    • 744 Thanks
    OldMusicGuy
    That is a surprise to me as I thought the most anyone could get was 159.55 per week (8,296 per annum) unless they deferred taking it at State Pension age.
    Originally posted by Audaxer
    No, that's after 2016. So if you had contributed to SERPS/S2P prior to 2016 and that meant your pension would be more than the new flat rate, that's what you got. It's a gradual transition, so people like me that contributed most of their NI before 2016 and did not contract out will get the entitlement they built up prior to 2016. Although remember I was both contracted out and contracted in over the last 40 years so there is an element of offset.

    That does mean that people like my wife that did contract out have the opportunity to get up to the flat rate if they can contribute additional years (I think they have to be post 2016). My wife reaches SP age in 5 years time (at 66) so can make voluntary contributions to make her pension up to the new flat rate.
    Last edited by OldMusicGuy; 05-03-2018 at 1:43 PM.
    • bostonerimus
    • By bostonerimus 5th Mar 18, 1:47 PM
    • 1,833 Posts
    • 1,173 Thanks
    bostonerimus
    No, a significant proportion of previously contracted-out people have too, also the self-employed paying class 2 NICs, and (typically female) carers.
    Originally posted by hyubh
    Under the old scheme people living in the UK and only entitled to the basic state pension could get pension credit to significantly increase their weekly cheque. However, expats could not get pension credit and so the new flat rate pension is a 22% increase for them......that will also be true for people who could not get top ups to the basic SP under the old scheme. A big improvement in the new system is opening up the range of activities that count for NI credits.
    Last edited by bostonerimus; 05-03-2018 at 2:47 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 5th Mar 18, 1:51 PM
    • 1,833 Posts
    • 1,173 Thanks
    bostonerimus
    My pension statement quotes 179/week even though I contracted out for a few years.
    Presumably its all about your qualifying years.
    Originally posted by NorthernGeezer
    I imagine you are one of the folks in transition and there's still an element of "second SP" in that number. My SP date is 2028 and right now I'm entirely in the flat rate pool.
    Misanthrope in search of similar for mutual loathing
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