State Pension Delays

[welsh dragon]

You're gonna need it with the way energy prices are going!!

We can use it to buy more blankets.

 

[Chislenko]

My bilingual "Get Your State Pension" invitation letter arrived today.


Will do the online application tomorrow (having a day uptown on the beer today!)

Lets hope I make it to February so I can get something back 😄 and also pay more tax on my private pensions 😭.

Also looking forward to not being the only person on the bus who has to pay 🚌.

 

[The Central Scrutinizer]

Not necessarily! My sister worked for 48 years but does not have enough contributions for a full state pension because she was contracted out of the state pension for a number of years.

She was looking at whether it was worth just paying the extra contributions, but has now got a part-time job working in a village shop so she will get the required missing NI contributions paid that way.

She worked out if she had paid her missing contributions, she would have to live to at least 73 to get that money back. Since most of our family seem to live to our 80s or 90s, it would have been worth doing.

My wife has decided to pay the extra contributions because she gets her state pension in 2023 and although working all her life fell short of getting the full pension because she worked for the NHS and they had opted out.
BTW i don't if anyone knows this but you don't have to take your state pension monthly.You can take it weekly or fortnightly if you want to.

 

[Chislenko]

My wife has decided to pay the extra contributions because she gets her state pension in 2023 and although working all her life fell short of getting the full pension because she worked for the NHS and they had opted out.
BTW i don't if anyone knows this but you don't have to take your state pension monthly.You can take it weekly or fortnightly if you want to.

Didn't know about the payment options. I suppose most people take monthly as that is how we have been paid at work for many years.

The opting out part I find strange. I opted out for many years but when I went on the government site and fed in my NI number it told me I was getting the full £179 a week.

However it does estimate my COPE payment as £280 per month extra if I had not opted out.

The opt out pension I took out pays me £580 a month so it looks like opting out was a winner for me.

 

[fossyant]

I should get some of my private pensions from 55 - only 3 and a bit years away, OMFG. Surprisingly one scheme has gone up in value by over £10k in the year (no contributions going in there now). Probably all go in three years though.

 

[PaulSB]

I should get some of my private pensions from 55 - only 3 and a bit years away, OMFG. Surprisingly one scheme has gone up in value by over £10k in the year (no contributions going in there now). Probably all go in three years though.

I don't think that growth should be a surprise. I've seen £8000 growth in my pension pot since July and £7000 on a separate investment fund. In 2020 both of these recovered their value to above that pre-crash at the start of Covid.

If you have private pensions only three years from maturity it could be worth locking in the value now.

 

[PaulSB]

My wife has decided to pay the extra contributions because she gets her state pension in 2023 and although working all her life fell short of getting the full pension because she worked for the NHS and they had opted out.
BTW i don't if anyone knows this but you don't have to take your state pension monthly.You can take it weekly or fortnightly if you want to.

I don't know about the weekly or fortnightly options but SP is not paid monthly it's paid four-weekly. The other point is as far as I'm aware the need to purchase extra years is not as a result of contracting out. My wife worked for the NHS and was contracted out but also retired at 60. The reason she has to purchase additional is because she will not have worked or made contributions for 6 years prior to reaching state pension age. It's not a question of having worked for "x" years but of having contributed up to state pension age.

 

[ColinJ]

The other point is as far as I'm aware the need to purchase extra years is not as a result of contracting out. My wife worked for the NHS and was contracted out but also retired at 60. The reason she has to purchase additional is because she will not have worked or made contributions for 6 years prior to reaching state pension age. It's not a question of having worked for "x" years but of having contributed up to state pension age.

That is not correct!

As I mentioned above, my sister worked 1, 2, or 3 jobs continuously from the age of 15 to 63, with only 2 brief absences for maternity leave. She paid everything that she was supposed to pay but has ended up several years short of qualifying contributions because of contracting out. I have far fewer years of contributions than her but I DO have enough qualifying ones to get the full pension.

Valuing your National Insurance contributions and credits made before 6 April 2016
Your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’. This is part of your new State Pension.

Your starting amount will be the higher of either:

• the amount you would get under the old State Pension rules (which includes basic State Pension and Additional State Pension)
• the amount you would get if the new State Pension had been in place at the start of your working life

Your starting amount will include a deduction if you were contracted out of the Additional State Pension. You may have been contracted out because you were in a certain type of workplace, personal or stakeholder pension.

If your starting amount is less than the full new State Pension
You can get more State Pension by adding more qualifying years to your National Insurance record after 5 April 2016. You can do this until you reach the full new State Pension amount or reach State Pension age - whichever is first.

Each qualifying year on your National Insurance record after 5 April 2016 will add about £5.13 a week to your new State Pension. The exact amount you get is calculated by dividing £179.60 by 35 and then multiplying by the number of qualifying years after 5 April 2016.

 

[SpokeyDokey]

That is not correct!

As I mentioned above, my sister worked 1, 2, or 3 jobs continuously from the age of 15 to 63, with only 2 brief absences for maternity leave. She paid everything that she was supposed to pay but has ended up several years short of qualifying contributions because of contracting out. I have far fewer years of contributions than her but I DO have enough qualifying ones to get the full pension.

One of the frustrating things is that it is seemingly impossible to get any info' re the calculation involved to derive the contracted out deduction figure.

My S2P/SSP payments lifted my SP to (current projection due in 12 months time) to £13500 with £3000 lopped off re contracting out reducing it to £10500 pa. All figures approximate.

I tried a few years ago to find out how the deduction was calculated to no avail - it's not a calculation made available to the recipient I was eventually told.

 

[Erasmus]

Didn't know about the payment options. I suppose most people take monthly as that is how we have been paid at work for many years.

The opting out part I find strange. I opted out for many years but when I went on the government site and fed in my NI number it told me I was getting the full £179 a week.

However it does estimate my COPE payment as £280 per month extra if I had not opted out.

The opt out pension I took out pays me £580 a month so it looks like opting out was a winner for me.

Like you, I got a COPE estimate for the opted out years. However, as long as you've otherwise got enough qualifying years (fortunately I did), then you still get the full pension, it's only the shortfall in qualifying years/contributions that will actually reduce it. The COPE estimate does not necessarily correlate to any difference in your state pension, it's merely (I think) their calculation of what a privately invested pension will provide on those missing payments.

Seems like you got a good result on opt out pension though

 

[Chislenko]

Seems like you got a good result on opt out pension though

Not forgetting the 25% lump sum on top of that monthly figure which you ain't getting via a state pension😊

 

[PaulSB]

That is not correct!

As I mentioned above, my sister worked 1, 2, or 3 jobs continuously from the age of 15 to 63, with only 2 brief absences for maternity leave. She paid everything that she was supposed to pay but has ended up several years short of qualifying contributions because of contracting out. I have far fewer years of contributions than her but I DO have enough qualifying ones to get the full pension.

I'll firstly qualify the following by saying I'm talking about the "old" NHS pension scheme.

With respect Colin I feel you haven't correctly understood your own quote nor appreciated this discussion is age dependent. Contracting out is irrelevant in relation to having sufficient qualifying years because this term is appropriate to and only relevant to contracting out of SERPS or Additional State Pension. No one contracts out of the basic state pension but many people did both "contract out" and "contract in" to SERPS or Additional State Pension. "Additional" is the important word.

There was a point around 40 years ago when it became apparent paying SERPS was not necessarily a good deal and individuals could be better off contributing their SERPS element to a private pension. At this point individuals were able to "contract out" of SERPS into a private scheme to which the government also contributed. At the same time if at any point "contracting out" became a poorer option for the employee the pension provider was obliged to offer the employee the opportunity to "contract in" to the state pension.

For example any NHS employee contributing to the NHS pension scheme and paying SERPS, was automatically contracted out because the NHS scheme has always been better than Additional State Pension. If this ceased to be the case at any point the NHS pension provider would have been obliged to offer individuals the opportunity to "contract in." If one reads an NHS state pension, which I have, it shows the basic NHS pension plus the additional pension earned through "contracting out."

In my personal case I "contracted out" for several years but reached a point when my pension provider was obliged to tell me I would be better off if I "contracted in." Consequently I was able to build up a significant contribution to my personal private pension and after "contracting in" gained an Additional State Pension to add to the basic state pension well in excess of £2000pa.

No amount of "contracting in" or "contracting out" influences the basic state pension as this is dependent on when one was paying contributions. If one stops paying contributions five years prior to state pension then one is five years short and these have to be purchased to gain a full SP. I know this to be true for the very simple reason my wife is currently five years short as she retired five years prior to SP age. We have a quote from the DWP showing if she pays five years she will get the full SP.

The fundamental problem is people do not clearly understand the difference between the SP and other pensions. The SP is a state benefit we all become entitled to at state pension age and which is paid for by those still working and paying NI, any other pension is a money pot which the individual can use in many different ways. One is expected to pay NI up to state pension age and therefore to continue to contribute to the support of others, if one chooses to stop working and making NI contributions prior to state pension age then that individual will be short of contributions through having stopped paying them.

 

[PaulSB]

Didn't know about the payment options. I suppose most people take monthly as that is how we have been paid at work for many years.

The opting out part I find strange. I opted out for many years but when I went on the government site and fed in my NI number it told me I was getting the full £179 a week.

However it does estimate my COPE payment as £280 per month extra if I had not opted out.

The opt out pension I took out pays me £580 a month so it looks like opting out was a winner for me.

Exactly. This is precisely the point behind "contracting out" and "contracting in."

 

[PaulSB]

Just out of curiosity if you never worked and paid no NI would you get any sort of state pension?

There are circumstances under which I believe one would. Whether or not one qualifies for a state pension in these circumstances would be dependent on the reasons why an individual never worked and paid no NI.

 

[SpokeyDokey]

This is all getting very confusing.

As I understand the system providing that you have 35 qualifying years you will get the full New State Pension. This ignores any contracting out/in circumstances.

If you have 35 qualifying years and stop working before your State Pension age you do not have to continue making NIC's until your State Pension age to retain your full entitlement.

In theory this could mean that providing you have 35 qualifying years then stopped working at age 51 your full New State Pension will be paid whenever you reach your State Pension age.

If this is incorrect could someone please link to the appropriate Gov' documentation.