Being contracted out and now not getting full state pension.

[rosielee]

The new flat rate state pension scheme suggests that anyone with a full contribution of NI will get the full entitlement of pension. Anyone who has contracted out will not. So how about those who were contracted out without their knowledge or agreement? Should their permission have been obtained? Only now are people finding out they will not get the full entitlement. How can they have been contracted out without their permission?

[Robin]

Everyone who was contracted out (a) paid a lower rate of national
insurance and (b) was in a pension scheme to which they and their
employer contributed. This was usually part and parcel of the job -
something employees were told when they started work. Many may not have
appreciated it but then a lot of people don't pay any attention to their
pension until the day looms large.

As for people finding out only now that they will not get full
entitlement under the new system, that is arguably the result of the way
the new system was described as "flat rate". It ain't and won't be for
many years. And even then it won't be for people with less than 35
years. But crucially for your questions it is only people with a 35
years of contributions *not contracted out* which gives full
entitlement. So the difference exists in both the current and new
systems:

a. under the current system people who were contracted-out won't get
the additional state pension so end up with less state pension in total
than people who were not contracted-out;
b. under the new system people who were contracted-out won't get the
full ("flat rate") state pension so again end up with less state pension
than people who were not contracted-out get.

But in both cases - ie now and under the new system - people who were
contracted out will get pensions from the "contracted out" pension
schemes they and their employers contributed to.

Which group ends up better off is not really a sensible question since
contracted-out pension schemes are such a mixed bag.
--
Robin
reply to address is (meant to be) valid

[the Omrud]

On 24/01/2016 21:04, rosielee wrote:

> The new flat rate state pension scheme suggests that anyone with a full contribution of NI will get the full entitlement of pension. Anyone who has contracted out will not. So how about those who were contracted out without their knowledge or agreement? Should their permission have been obtained? Only now are people finding out they will not get the full entitlement. How can they have been contracted out without their permission?

If I remember correctly, you were contracted out only if you/your
employer were contributing to an approved occupational pension scheme.
So any shortfall from being contracted out should be made up by that
private pension.

--
David

[Bill Taylor]

On Sun, 24 Jan 2016 13:04:37 -0800 (PST), rosielee <234...@gmx.co.uk>
wrote:

>The new flat rate state pension scheme suggests that anyone with a full contribution of NI will get the full entitlement of pension. Anyone who has contracted out will not. So how about those who were contracted out without their knowledge or agreement? Should their permission have been obtained? Only now are people finding out they will not get the full entitlement. How can they have been contracted out without their permission?

I find it difficult to believe that anyone was contracted out without
being informed. I can believe that someone didn't read and understand
the paperwork because it was too boring or too technical.

It is unlikely that the contracted out person will lose out. They will
get the state pension that their contributions entitled them to under
the old system, which may be less (or more) than the new flat rate
pension.

[Robert]

The biggest group affected are probably Public Sector employees.
Joining the pension scheme ( sometimes it was an opt out rather than an
opt in) the leaflets you got specifically stated that you were
"contracted out" however I doubt whether most people understood what
that meant or the possible future ramifications.
Joining the Public Sector Pension Scheme in the past was ,for most, a no
brainer.

[Andy Burns]

There's one type of contracting out where you are part of e.g. an NHS or
local authority occupational pension (maybe some company schemes too)
and I believe you get a different contribution letter on your P60, this
altered your NI deduction. I don't know what happens to the new "flat
rate" pension if you joined this type of scheme.

There was (it stopped a couple of years ago) also contracting out of
SERPS (State earning related pension scheme) later known as S2P (State
Second Pension) this didn't alter your NI deduction, rather it rebated a
small percentage of it into a private scheme. This type started in the
late 1980's.

If you did the SERPS/S2P opt-out you'll have a personal pot somewhere,
mine managed to work its way to £72K, and you are unlikely to get the
full flat rate.

I can't see how either type of opt-out happens without your knowledge or
permission.

[newshound]

Excellent description. I was in a nationalised (subsequently privatised)
industry, but in a very fringe (not final salary) pension scheme which
ended up not contracted out. I've probably ended up better off, but
(without doing the research) I am not sure whether my increased NI
contributions were more or less than my saving from having only 5%
contributions to the company scheme, rather than 6%.

[Graeme]

In message <n83k72$rvr$1...@news.albasani.net>, the Omrud
<usenet...@gmail.com> writes

>
>If I remember correctly, you were contracted out only if you/your
>employer were contributing to an approved occupational pension scheme.

Contracted Out Personal Pensions were introduced late 1980s, at which
point anyone could Contract Out and pay the equivalent to their Personal
Pension without any additional contributions by either employee or
employer.

--
Graeme

[newshound]

My understanding is that Contracting Out was done by *schemes* not by
individuals. Hence the general ignorance. Provided companies had a good
enough scheme to meet the criteria, they normally wanted to contract out
because this reduced *their* NICs.

[Robin]

Oh bother. Yes. I ought to have mentioned personal/stakeholder
pensions as I suppose it's possible some of the many people who signed
up for them might not have realised they were contracting out of SERPS
(though I suspect rather fewer than have forgotten and claim now they
didn't know).

[Sara Merriman]

Can be tricky to find out, too. I've just asked my HR department if I'm
contracted out or not - because I can't remember - and they've said
it's something they don't have access to. Annoying.

--
Armagedon is tiny

[Big Les Wade]

Robin <rb...@hotmail.com> posted

I did open a PPP in the 1980s, and I do remember being contracted out of
SERPS. At the time I had never before known of the existence of SERPS
anyway so it did not seem much of a sacrifice.

I never really understood what it was all about, but I definitely did
not expect that contracting out of SERPS would reduce my entitlement to
the standard state pension.

--
Les

[Andy Burns]

Sara Merriman wrote:

> Robin <rb...@hotmail.com> wrote:
>
>> I ought to have mentioned personal/stakeholder pensions as I
>> suppose it's possible some of the many people who signed up for
>> them might not have realised they were contracting out of SERPS
>

> Can be tricky to find out, too.

Can't you tell from the NIC category letter on your P60?

<https://www.gov.uk/national-insurance-rates-letters/category-letters>

I'm sure there are additional ifs and buts.

[Chris R]

This has prompted me to send off a BR19 to get a pension statement from the
DWP. I've been assuming there was no benefit in adding more years once I had
35, but some of my years were contracted out.
https://www.gov.uk/government/publications/application-for-a-state-pension-statement
--
Chris R

[Bill Taylor]

On Mon, 25 Jan 2016 14:50:11 +0000, Big Les Wade <L...@nowhere.com>
wrote:

It doesn't reduce your entitlement to the basic state pension, which
is primarily dependent on your N.I. contributions record.

It does reduce your entitlement to the State Earnings Related Pension,
but that is fair, because you have taken out a private pension and
used the contributions that would have gone to the state to partially
fund your private pension. That private pension is supposed to provide
an income at least equal to the SERPS element of the state pension.

[Sara Merriman]

In article <HJudnUui25X9oTvL...@brightview.co.uk>, Chris R

Thanks both - helpful.

--
Armageddon is tiny

[Roger Hayter]

Try payroll. They're usually very nice people, even if contracted out.

--

Roger Hayter

[Roger Hayter]

The trouble is that they have now amalgamated the two, and the new state
pension is in a couple of years going to be higher but has elements of
both. What is very confusing is whether contracted-out contributions
will count toward all of it.

--

Roger Hayter

[Sara Merriman]

In article <1mhl7tw.18zj1f01897y80N%ro...@hayter.org>, Roger Hayter

Same person in the company I work for. I call him the HR department
because it sounds more important, but it's one bloke. He's also the
payroll department.

--
Armageddon is tiny

[Robin]

Sara Merriman wrote:
>>> Can be tricky to find out, too. I've just asked my HR department if
>>> I'm contracted out or not - because I can't remember - and they've
>>> said it's something they don't have access to. Annoying.
>>
>> Try payroll. They're usually very nice people, even if contracted
>> out.
>
> Same person in the company I work for. I call him the HR department
> because it sounds more important, but it's one bloke. He's also the
> payroll department.

Payroll may well not know. With personal/stakeholder pensions you could
be contracted out but with the same NICs paid by you and your employer.
The contracted out NI rebate was paid direct to your pension. And to
make things more complicated, from 2012 [most] such people were
contracted back in so what is going on now ain't necessarily a guide to
what happened in the past.

[Robin]

Chris R wrote:

> This has prompted me to send off a BR19 to get a pension statement
> from the DWP. I've been assuming there was no benefit in adding more
> years once I had 35, but some of my years were contracted out.
> https://www.gov.uk/government/publications/application-for-a-state-pension-statement

You may[1] care to glance at this DWP factsheet.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

I fail (just) to enjoy the benefit of the new State Pension scheme but
someone who falls the other side pointed me to it as he had been trying
to check his forecast. I'd welcome any views on whether my despair
after reading it was a measure of (a) my declining faculties or (b) the
strength of the ill-will he feels towards me ;(

[1] but OTOH.......

[Big Les Wade]

Roger Hayter <ro...@hayter.org> posted

>Bill Taylor <no...@invalid.com> wrote:
>> It doesn't reduce your entitlement to the basic state pension, which
>> is primarily dependent on your N.I. contributions record.
>>
>> It does reduce your entitlement to the State Earnings Related Pension,
>> but that is fair, because you have taken out a private pension and
>> used the contributions that would have gone to the state to partially
>> fund your private pension. That private pension is supposed to provide
>> an income at least equal to the SERPS element of the state pension.
>
>The trouble is that they have now amalgamated the two, and the new state
>pension is in a couple of years going to be higher but has elements of
>both. What is very confusing is whether contracted-out contributions
>will count toward all of it.

It is just one example of the basic problem with pensions, which is that
when making your decisions you have no idea what benefits you are going
to get out of it, because of the time delay. This has been exacerbated
in recent years by governments' endless tinkering with the system in
order to milk it of ready cash.

--
Les

[Sam Plusnet]

In article <FadNLd29...@binnsroad.myzen.co.uk>, uk...@binnsroad.net
says...

At that time we were all asked to make an individual choice on Opting
Out or remaining in SERPS. Some general advice was offered that, if you
were over some arbitary age (mid 40s? 50?), then remaining in was a
better (safer) bet.

We were warned that the final value of Personal Pension schemes was hard
to predict. How true that has proven.

[AnthonyL]

I was in my own small business and contracted out to have my own
private personal pension. There were incentives at the beginning to
do so and Contracted out element of my NI went directly into the
personal pension in a section called "protected rights" which meant
that, until a few years ago, I had to use that to buy an annuity.

I received regular correspondence telling me I was contracted out and
that I might be better off contracting back in. I think these came
from the private pension provider. I resolved that I would rather
maintain control of the funds instead of letting the government do so
and stayed contracted out.

The recent pension rule changes now mean that I know longer have to
buy an annuity and I am in a SIPP drawdown which was doing alright
until the market panics of the last few weeks - and still probably
doing better than an annuity would have.

--
AnthonyL

[Martin Bonner]

On Monday, 25 January 2016 11:11:23 UTC+1, Robert wrote:
> On 24/01/2016 22:52, Bill Taylor wrote:
> > I find it difficult to believe that anyone was contracted out without
> > being informed. I can believe that someone didn't read and understand
> > the paperwork because it was too boring or too technical.

Absolutely.

> > It is unlikely that the contracted out person will lose out. They will
> > get the state pension that their contributions entitled them to under
> > the old system, which may be less (or more) than the new flat rate
> > pension.
> >
> The biggest group affected are probably Public Sector employees.
> Joining the pension scheme ( sometimes it was an opt out rather than an
> opt in) the leaflets you got specifically stated that you were
> "contracted out" however I doubt whether most people understood what
> that meant or the possible future ramifications.

OTOH, Public Sector employees who were contracted out will have accumulated
*extremely* valuable "Final Salary" entitlement at the same time. They
will be much better off than their higher paid partner who contributed as
much as he could to a personal pension. (No, I'm not bitter - I have
absolutely no problem about being a kept man.)

> Joining the Public Sector Pension Scheme in the past was, for most, a
> no brainer.

I think it still is. Career Average is a lot worse than Final Salary
(although fairer) and accumulating 1/80ths is a lot worse than 1/60ths,
but it's still a very good deal. (Warning: My partner's was in the
University Pension scheme, USS, not the Civil Service, Teachers, or
Local Authority - but I think they are all pretty similar.)

[Nogood Boyo]

"Martin Bonner" <martin...@yahoo.co.uk> wrote in message
news:9529ca49-fb47-4468...@googlegroups.com...

The standard Civil Service scheme was 80ths until (I think) the 90s, when
they introduced options, involving extra payments to get 60ths, more
flexibility with widows pension, etc. I stayed with the classic scheme which
meant that, when redundancies / early retirements came along, I was able to
clear off without any problems but the clever buggers who'd tried to
maximise their pensions (instead of their retirement) had pissed on their
chips and had to stay till they were 60.

--
Nogood Boyo

[Robert]

The only downside I found - NHS scheme - was being a member prevented me
starting up a Personal Pension Scheme as well. I couldnt therefore
maximise my tax free Pension Contributions when I could afford it.
The NHS additional contribution schemes were inflexible and geared up to
making a fixed regular extra contribution until you were 65.
I am in the transition phase of the "new" state pension so will still
get a "full" state pension under the old scheme ~£128pw compared to £40
pw under the new scheme !

[Nogood Boyo]

"Robert" <rob...@invalid.invalid> wrote in message
news:dgsc5e...@mid.individual.net...

>>
> The only downside I found - NHS scheme - was being a member prevented me
> starting up a Personal Pension Scheme as well. I couldnt therefore
> maximise my tax free Pension Contributions when I could afford it.
> The NHS additional contribution schemes were inflexible and geared up to
> making a fixed regular extra contribution until you were 65.
> I am in the transition phase of the "new" state pension so will still
> get a "full" state pension under the old scheme ~£128pw compared to £40
> pw under the new scheme !

Eh..? Where do you get £40 from? The full new State Pension will be £155.65
a week from 6 April 2016...

[Robert]

Reduced by the perceived gain from the NI saved from being contracted out.
I get state pension late in 2016 and benefit from transitional
arrangements giving me the higher of the amounts calculated under the
old and new schemes.
Oh and remember the new scheme requires 5 extra years of contributions
to get the "full" state pension.

[Sara Merriman]

In article <dhcnc9...@mid.individual.net>, Robert

Just musing here... If someone started work at 16, 35 years later
they're in their early 50s and still working. Could they contract out
at that point but still get a full pension when they retire 15 years
later, on the basis that they did 35 years contributions?

[Robin]

Sara Merriman wrote:
> Just musing here... If someone started work at 16, 35 years later
> they're in their early 50s and still working. Could they contract out
> at that point but still get a full pension when they retire 15 years
> later, on the basis that they did 35 years contributions?

There is no contracting out after 6 April.

They could emigrate though to a avoid NICs :)

[Chris R]

> Sara Merriman wrote:
> > Just musing here... If someone started work at 16, 35 years later
> > they're in their early 50s and still working. Could they contract out
> > at that point but still get a full pension when they retire 15 years
> > later, on the basis that they did 35 years contributions?
>
> There is no contracting out after 6 April.
>
> They could emigrate though to a avoid NICs :)

What about the opposite - working extra years (over 35) after the end of
contracting-out to take contracted-out years out of the equation?
--
Chris R

[kat]

But still 5 years less than it was a few years ago. The first time I
got a pension forecast I was going to be a couple of years short of the
required 40, by the time I retired I got the lot, as it was then 30.
Anyone retiring this year would have originally expected to have to have
40 years.

--
kat
>^..^<

[ingram....@gmail.com]

On Wednesday, February 3, 2016 at 8:11:28 AM UTC, Sara Merriman wrote:
> Just musing here... If someone started work at 16, 35 years later
> they're in their early 50s and still working. Could they contract out
> at that point but still get a full pension when they retire 15 years
> later, on the basis that they did 35 years contributions?

But I believe (hope!) you can retire with >35 years contributions and not pay any further NIC and still get the full state pension at retirement age (about 65.5 for me).

nib

[Robin]

kat wrote:
>
> But still 5 years less than it was a few years ago. The first time I
> got a pension forecast I was going to be a couple of years short of
> the required 40, by the time I retired I got the lot, as it was then
> 30. Anyone retiring this year would have originally expected to have
> to have 40 years.

And of them some wasted money (eg paying Class 2 NICS rather than taking
advantage of small earnings exemption) in order to reach 40 years :(

[Roger Hayter]

You can do that, up to state pension age, and you can even buy added
years or make voluntary NI contributions, with some restrictions.

--

Roger Hayter

[Roger Hayter]

Brian Reay <no...@m.com> wrote:

snip
>
> The number of years for a full pension was reduced to 30 years sometime
> back (10 years ago may be) but it was recently increased to 35. I can't
> recall what it was before the reduction to 30 years, I suspect 35.

I haven't googled it, but ISTR it was longer, such that very few women
ever achieved it. This was thought to be unfair.


--

Roger Hayter

[Robin]

Chris R wrote:
>
> What about the opposite - working extra years (over 35) after the end
> of contracting-out to take contracted-out years out of the equation?

I *think* that in the transitional period if you have been contracted
out you will still not qualify for the full rate of the new pension even
if you have 35 or more years not contracted out; but I've not looked
into the new scheme in detail as (a) I just miss it[1] and (b) fear that
doing so would lead to what's left of my brain dribbling down my chin.

That said, you may find of course your entitlement to S2P means your
starting amount for the new pension is greater than the (misleadingly
named) flat rate. I'd advise waiting for your forecast and then lining
up the wet towels and restorative of your choice .

[1] bitter? Moi? With that on top of the switch from RPI to to CPI you'd
better believe it

[Janet]

In article <n8sjsa$74g$1...@dont-email.me>, rb...@hotmail.com says...

>
> Sara Merriman wrote:
> > Just musing here... If someone started work at 16, 35 years later
> > they're in their early 50s and still working. Could they contract out
> > at that point but still get a full pension when they retire 15 years
> > later, on the basis that they did 35 years contributions?
>
> There is no contracting out after 6 April.
>
> They could emigrate though to a avoid NICs :)

No need to go that far :-) Having once made the required number of NI
contribution years for full SP, just retire early, compulsory NIC
payments stop when you're no longer employed. (Course you'll have
several years gap between ending paid employment and beginning SP,
during which you'll need some other means of support).

Then still claim full SP on reaching the designated SP age.


Janet.

[Janet]

In article <n8sjnk$6jc$1...@dont-email.me>, no...@m.com says...

> The number of years for a full pension was reduced to 30 years sometime
> back (10 years ago may be) but it was recently increased to 35. I can't
> recall what it was before the reduction to 30 years, I suspect 35.
>

at one time it was 39 years for men.


Janet

[Janet]

In article <1mi1jdl.1eoyc10aez3kcN%ro...@hayter.org>, ro...@hayter.org
says...

Even after reaching SP age, if you don't qualify for a full SP you can
make a one-off payment to top it up ( by up to an extra £25 a week).

https://www.gov.uk/state-pension-topup

Janet

[Robert]

On 03/02/2016 07:21, Brian Reay wrote:

> The min. under the new scheme, if you have 35 years of contributions, is
> over £100 pw., not £40 per week.
>
> If you were contracted out for part, or all, of your contribution period, a
> reduction is applied from the £155 starting point. However it can't be
> reduced below the minimum, which is over £100 (I can't remember the
> number).
>
> You can request an estimate of your pension and contribution history. They
> tell you your pension at your retirement age and your contribution years.
> You need 35 for the full £155. Not difficult, assuming you did things like
> worked while at Uni etc., even if you retire early. In fact you can easily
> exceed it.
>
>
>
Estimate received 1 year ago quote:
"37 qualifying years Existing State Pension rules £114.19 pw (full
amount then) New State Rules £32.00 pw"
Remember I do get a Public Sector Pension .

[Vir Campestris]

On 02/02/2016 22:02, Robert wrote:

> Reduced by the perceived gain from the NI saved from being contracted out.

IIRC the point about contracting out was you didn't get SERPS. I was
happy to contract out as I trusted the government even less than the
pension fund providers.

The only odd thing about this is that some are calling a pension that
most of use won't get "universal". I'm not at all surprised that I'll
lose out by it.

Andy

[kat]

It was definitely 40 for me when I got my first pension forecast. And I
am female.

--
kat
>^..^<

[kat]

On 03/02/2016 11:15, Robin wrote:
> kat wrote:
>>
>> But still 5 years less than it was a few years ago. The first time I
>> got a pension forecast I was going to be a couple of years short of
>> the required 40, by the time I retired I got the lot, as it was then
>> 30. Anyone retiring this year would have originally expected to have
>> to have 40 years.
>
> And of them some wasted money (eg paying Class 2 NICS rather than taking
> advantage of small earnings exemption) in order to reach 40 years :(
>
>

Happily, I didn't, but I know those who did.

--
kat
>^..^<

[Robin]

kat wrote:
>
> It was definitely 40 for me when I got my first pension forecast. And
> I am female.

It's only 10 years or so since it was going to be 44 years for both men
and women by 2020. (And I still think 35 years looks absurdly few.)

[Robert]

On 04/02/2016 07:38, Brian Reay wrote:

> Brian Reay <no...@m.com> wrote:
>> Robert <rob...@invalid.invalid> wrote:
>>> On 03/02/2016 07:21, Brian Reay wrote:
>>>> Robert <rob...@invalid.invalid> wrote:
>>>>> On 31/01/2016 21:09, Nogood Boyo wrote:
>>>>>> "Robert" <rob...@invalid.invalid> wrote in message
>>>>>> news:dgsc5e...@mid.individual.net...
>>>>>>>>
>>>>>>> The only downside I found - NHS scheme - was being a member prevented me
>>>>>>> starting up a Personal Pension Scheme as well. I couldnt therefore
>>>>>>> maximise my tax free Pension Contributions when I could afford it.
>>>>>>> The NHS additional contribution schemes were inflexible and geared up to
>>>>>>> making a fixed regular extra contribution until you were 65.
>>>>>>> I am in the transition phase of the "new" state pension so will still

>>>>>>> get a "full" state pension under the old scheme ~ļ½£128pw compared to ļ½£40

>>>>>>> pw under the new scheme !
>>>>>>

>>>>>> Eh..? Where do you get ļ½£40 from? The full new State Pension will be ļ½£155.65

>>>>>> a week from 6 April 2016...
>>>>> Reduced by the perceived gain from the NI saved from being contracted out.
>>>>> I get state pension late in 2016 and benefit from transitional
>>>>> arrangements giving me the higher of the amounts calculated under the
>>>>> old and new schemes.
>>>>> Oh and remember the new scheme requires 5 extra years of contributions
>>>>> to get the "full" state pension.
>>>>>
>>>>>
>>>>>
>>>>
>>>> The min. under the new scheme, if you have 35 years of contributions, is

>>>> over Ā£100 pw., not Ā£40 per week.

>>>>
>>>> If you were contracted out for part, or all, of your contribution period, a

>>>> reduction is applied from the Ā£155 starting point. However it can't be
>>>> reduced below the minimum, which is over Ā£100 (I can't remember the

>>>> number).
>>>>
>>>> You can request an estimate of your pension and contribution history. They
>>>> tell you your pension at your retirement age and your contribution years.

>>>> You need 35 for the full Ā£155. Not difficult, assuming you did things like

>>>> worked while at Uni etc., even if you retire early. In fact you can easily
>>>> exceed it.
>>>>
>>>>
>>>>
>>> Estimate received 1 year ago quote:
>>> "37 qualifying years Existing State Pension rules £114.19 pw (full
>>> amount then) New State Rules £32.00 pw"
>>> Remember I do get a Public Sector Pension .
>>>
>>>
>>>
>>>
>>

>> Well, all I can say is that there were a number of examples similar to
>> yours discussed in the media where people were expecting to get circa £150
>> under the new scheme but had quotes of something like the current pension,
>> £110 or so (all per week). The thread was they were disappointed
>> (understandably!) rather than some bit of Gov. spin. The Gov. were accused
>> of being less than clear. Of course the claim was, the PSP compensated for
>> the difference.
>>
>> I would suggest you query it, errors are not unknown with such things.
>>
>> Hopefully it will turn out in your favour.
>>
>>
>>
>>
>
> Being a little perplexed by the difference between our understanding of
> what people in your position should receive, I did some Googling this
> morning (I'm an early riser).
>
> Numerous media reports refer to PSP people receiving below than the higher
> new pension (circa £150 pw) but all speak of the reduced amount being
> £110-£130 or so pw.
>
> Of course, this isn't conclusive, the media do make errors and things
> change etc. but it would be enough for me, in your position, to double
> check.
>
> I suppose, if an error exists, you are in for good news.
>
> Good luck.
>
>
>
I agree that when the new pension scheme was announced I too was
expecting ~£150. I should by now have learnt to wait for the small-print !
The calculations are correct - they were provided .

[Nogood Boyo]

"Brian Reay" <no...@m.com> wrote in message
news:n8uv4r$s1j$1...@dont-email.me...

>
> Being a little perplexed by the difference between our understanding of
> what people in your position should receive, I did some Googling this
> morning (I'm an early riser).
>
> Numerous media reports refer to PSP people receiving below than the
> higher
> new pension (circa £150 pw) but all speak of the reduced amount being
> £110-£130 or so pw.
>
> Of course, this isn't conclusive, the media do make errors and things
> change etc. but it would be enough for me, in your position, to double
> check.
>
> I suppose, if an error exists, you are in for good news.
>
> Good luck.
>

I've also been surprised by some of the statements here and I also did some
Googling yesterday. I note that you mention "media reports" - perhaps like
me you couldn't find the answer on GOV.UK... The pages on State Pension went
round in circles and I gave up in the end, not knowing whether I'm better
off or worse off as a result of getting to 65 in June 2015 rather than June
2016 (with a classic civil service pension).

--
Nogood Boyo

[Robin]

Nogood Boyo wrote:
> I've also been surprised by some of the statements here and I also
> did some Googling yesterday. I note that you mention "media reports"
> - perhaps like me you couldn't find the answer on GOV.UK... The pages
> on State Pension went round in circles and I gave up in the end, not
> knowing whether I'm better off or worse off as a result of getting to
> 65 in June 2015 rather than June 2016 (with a classic civil service
> pension).

You'd struggle to be worse off if you reached 65 in June 2016. The
transitional arrangements mean your National Insurance record in April
would be used to calculate your entitlement under both (a) the old rules
and (b) the new rules. Whichever is higher would become your "Starting
Amount".
Sadly, deferring taking the pension until 2016 would not have won
entitlement to the new rules.

[Nogood Boyo]

"Robin" <rb...@hotmail.com> wrote in message
news:n90l1r$f69$1...@dont-email.me...

> Nogood Boyo wrote:
>> I've also been surprised by some of the statements here and I also
>> did some Googling yesterday. I note that you mention "media reports"
>> - perhaps like me you couldn't find the answer on GOV.UK... The pages
>> on State Pension went round in circles and I gave up in the end, not
>> knowing whether I'm better off or worse off as a result of getting to
>> 65 in June 2015 rather than June 2016 (with a classic civil service
>> pension).
>
> You'd struggle to be worse off if you reached 65 in June 2016. The
> transitional arrangements mean your National Insurance record in April
> would be used to calculate your entitlement under both (a) the old rules
> and (b) the new rules. Whichever is higher would become your "Starting
> Amount".

OK, but I still don't know if I'd have been better off. You'd think
something so important would be crystal clear on GOV.UK but it isn't.

> Sadly, deferring taking the pension until 2016 would not have won
> entitlement to the new rules.
>

Good... I'd have been pretty sick if I'd got that option wrong...

[Robin]

Nogood Boyo wrote:
>> You'd struggle to be worse off if you reached 65 in June 2016. The
>> transitional arrangements mean your National Insurance record in
>> April would be used to calculate your entitlement under both (a) the
>> old rules and (b) the new rules. Whichever is higher would become
>> your "Starting Amount".
>
> OK, but I still don't know if I'd have been better off. You'd think
> something so important would be crystal clear on GOV.UK but it isn't.
>

Men who reach 65 before April 2016 cannot get a pension under the new
rules. So DWP could be accused of wasting public money acting if they
gave you the information you want. (Technically the expenditure might be
beyond the ambit of the DWP Vote: even I'm not sad enough to plough
through the Etimates to check but it'd be hard to argue telling you what
might have been if the legislation were different has anything to do
with administering the legislation there is.)

And yes, Minister, the fact that it avoids the risk of an unhappy voter
is entirely coincidental.

[the Omrud]

On 04/02/2016 23:12, Nogood Boyo wrote:
> "Robin" <rb...@hotmail.com> wrote in message
> news:n90l1r$f69$1...@dont-email.me...
>> Nogood Boyo wrote:
>>> I've also been surprised by some of the statements here and I also
>>> did some Googling yesterday. I note that you mention "media reports"
>>> - perhaps like me you couldn't find the answer on GOV.UK... The pages
>>> on State Pension went round in circles and I gave up in the end, not
>>> knowing whether I'm better off or worse off as a result of getting to
>>> 65 in June 2015 rather than June 2016 (with a classic civil service
>>> pension).
>>
>> You'd struggle to be worse off if you reached 65 in June 2016. The
>> transitional arrangements mean your National Insurance record in April
>> would be used to calculate your entitlement under both (a) the old rules
>> and (b) the new rules. Whichever is higher would become your "Starting
>> Amount".
>
> OK, but I still don't know if I'd have been better off. You'd think
> something so important would be crystal clear on GOV.UK but it isn't.

I'm not quite sure what you gain by knowing. At your State Pension Age,
you will be entitled to a certain pension. How do you benefit from
knowing what it might have been if you'd been two years older or younger?

--
David

[Nogood Boyo]

"the Omrud" <usenet...@gmail.com> wrote in message
news:n91opm$2r9$1...@news.albasani.net...

Understanding... Knowing whether the Govt has been fair to me, friends,
family, former colleagues who are all there or thereabouts...

[Robert]

No difference if like me you contributed to a PSP for most of your
working life !
The only benefit you have in getting SP in 2015 is that you get 10%
extra for every year you defer taking the pension. With the new scheme I
think this is reduced to 5%.

[Brian Reay]

On 04/02/2016 16:50, Nogood Boyo wrote:

The 'confusion' is that someone (Robin?) said he was only expecting to
receive 40 pounds per week, not the current pension (circa 110 pw), due
to having a public sector pension and (as I understand it) a full
contribution record.

I referred to the media coverage, rather than the Gov. site, as the
topic had been discussed some time back when people with public sector
pensions started to query how they would fair.

Robin's situation seems to be at variance to the examples I found.

However, he seems to be 'happy' with the calculations so I will leave it
there.

[Nogood Boyo]

"Brian Reay" <no...@m.com> wrote in message

news:n938gf$7ha$1...@dont-email.me...

Robert, I think, rather than Robin.

[Robin]

Brian Reay wrote:
<snip>

> The 'confusion' is that someone (Robin?) said he was only expecting to
> receive 40 pounds per week, not the current pension (circa 110 pw),
> due to having a public sector pension and (as I understand it) a full
> contribution record.

It was not I.

> I referred to the media coverage, rather than the Gov. site, as the
> topic had been discussed some time back when people with public sector
> pensions started to query how they would fair.
>
> Robin's situation seems to be at variance to the examples I found.
>
> However, he seems to be 'happy' with the calculations so I will leave
> it there.

Egads sir! You accuse me of being " 'happy' with the calculations" after
all I've said? Messrs Sue, Grabbit and Runne will be taking the
necessary.

[Brian Reay]

Robin <rb...@hotmail.com> wrote:
> Brian Reay wrote:
> <snip>
>> The 'confusion' is that someone (Robin?) said he was only expecting to
>> receive 40 pounds per week, not the current pension (circa 110 pw),
>> due to having a public sector pension and (as I understand it) a full
>> contribution record.
>
> It was not I.

Sorry, a simple error.

>
>> I referred to the media coverage, rather than the Gov. site, as the
>> topic had been discussed some time back when people with public sector
>> pensions started to query how they would fair.
>>
>> Robin's situation seems to be at variance to the examples I found.
>>
>> However, he seems to be 'happy' with the calculations so I will leave
>> it there.
>
> Egads sir! You accuse me of being " 'happy' with the calculations" after
> all I've said? Messrs Sue, Grabbit and Runne will be taking the
> necessary.
>

ROTFL.

;-)

[Vir Campestris]

On 04/02/2016 16:50, Nogood Boyo wrote:

> I've also been surprised by some of the statements here and I also did some
> Googling yesterday. I note that you mention "media reports" - perhaps like
> me you couldn't find the answer on GOV.UK... The pages on State Pension went
> round in circles and I gave up in the end, not knowing whether I'm better
> off or worse off as a result of getting to 65 in June 2015 rather than June
> 2016 (with a classic civil service pension).

Those of us not on a government backed, inflation-proof final salary
pension will think you are better off. Better off than us, anyway... I'm
currently putting 30% of salary into my pension scheme to try to repair
some of the damage Gordon Brown did, and rumours are that Cameron is
going to take away my tax relief on contributions in the next budget.

Anyone on an MPs pension will of course fail to understand what all the
fuss is about.

Andy

[Nogood Boyo]

"Vir Campestris" <vir.cam...@invalid.invalid> wrote in message
news:ebadnZTwCO_YJirL...@brightview.co.uk...

The pension is part of a long term package and is just the best part of an
overall shitty deal.

[David]

Late to the (very useful) thread, but I ran a quick illustration, born in
1950 and wanting £25 a week extra.

I would have to pay £22,250 aged 65, or £21,775 aged 66.

At a simple pay back (by my calculations) I would get the principle back
in a bit over 17 years.

So a 65 year old would have to still be drawing State Pension at 82 to
make this worth while.

This ignores the index linked increases of the highest of:

average earnings

Consumer Price Index (CPI)

2.5%

Which will compound the extra payment and also my lack of maths ability.

So this is an interesting punt - let us assume the compounding brings the
payback down to 15 years.....a quick and dirty spreadsheet shows that it
should pay back during year 14 for both the 65 and 66 year old
illustrations.

So you get your money back no later than when you are 80 (that is 2 years
earlier).

So the bet is fairly complex.

If CPI runs above 2.5% (as it apparently did in 2010-2013) then you get
your pay back quicker.

If the increase in average earnings run at more than 2.5% then you get
your payback quicker. [Not found a table of this annual increase yet.]

So betting on price and/or wage inflation makes this an interesting
possible insurance policy.

However it would have to perform better than putting the £22,250 in an
investment (ISA?) and drawing the equivalent money out over the same
period.

Bottom line is that you are lending the government (and all future
governments until you are 80) your money and trusting them to give a
return on it and not change the rules.

To be in with a chance to win you would have to be still living in the UK
at around the age of 80 and the current rate of indexation would still
have to apply. Which implies a great deal of trust in successive
governments not to try and reduce or remove the indexation.

[One interesting factor is that it seems as though if you move to another
country you still get your pension (possibly through a mutual agreement)
but indexation may be suspended. This give it a whole extra dimension.]

Anyway, this is a legal not a financial NG but I wonder what formula they
used to calculate the payment required?

Cheers

Dave R


--
Windows 8.1 on PCSpecialist box

[Norman Wells]

"David" <wib...@btintenet.com> wrote in message
news:diem1rF...@mid.individual.net...

It would have been done actuarially - it's what actuaries do - based on life
expectancy tables so as to average out whatever people decide to do, pretty much as
you've worked out in reverse. If you pay the extra in, you're simply gambling that
you will live longer then the average.

[Janet]

In article <dierat...@mid.individual.net>, h...@unseen.ac.am says...

>
> "David" <wib...@btintenet.com> wrote in message
> news:diem1rF...@mid.individual.net...
> > On Wed, 03 Feb 2016 15:06:08 +0000, Janet wrote:
> >> In article <1mi1jdl.1eoyc10aez3kcN%ro...@hayter.org>, ro...@hayter.org
> >> says...
> >>> Chris R <inv...@invalid.munge.co.uk> wrote:
> >>>
> >>> > > Sara Merriman wrote:
> >>> > > > Just musing here... If someone started work at 16, 35 years later
> >>> > > > they're in their early 50s and still working. Could they contract
> >>> > > > out at that point but still get a full pension when they retire
> >>> > > > 15 years later, on the basis that they did 35 years
> >>> > > > contributions?
> >>> > >
> >>> > > There is no contracting out after 6 April.
> >>> > >
> >>> > > They could emigrate though to a avoid NICs :)
> >>> >
> >>> > What about the opposite - working extra years (over 35) after the end
> >>> > of contracting-out to take contracted-out years out of the equation?
> >>>
> >>> You can do that, up to state pension age, and you can even buy added
> >>> years or make voluntary NI contributions, with some restrictions.
> >>
> >> Even after reaching SP age, if you don't qualify for a full SP you can

> >> make a one-off payment to top it up ( by up to an extra £25 a week).

> >>
> >> https://www.gov.uk/state-pension-topup
> >>
> >> Janet
> >
> > Late to the (very useful) thread, but I ran a quick illustration, born in

> > 1950 and wanting £25 a week extra.
> >
> > I would have to pay £22,250 aged 65, or £21,775 aged 66.

> >
> > At a simple pay back (by my calculations) I would get the principle back
> > in a bit over 17 years.
> >
> > So a 65 year old would have to still be drawing State Pension at 82 to
> > make this worth while.
> >
> > This ignores the index linked increases of the highest of:
> >
> > average earnings
> >
> > Consumer Price Index (CPI)
> >
> > 2.5%
> >
> > Which will compound the extra payment and also my lack of maths ability.
> >
> > So this is an interesting punt - let us assume the compounding brings the
> > payback down to 15 years.....a quick and dirty spreadsheet shows that it
> > should pay back during year 14 for both the 65 and 66 year old
> > illustrations.
> >
> > So you get your money back no later than when you are 80 (that is 2 years
> > earlier).
> >
> > So the bet is fairly complex.
> >
> > If CPI runs above 2.5% (as it apparently did in 2010-2013) then you get
> > your pay back quicker.
> >
> > If the increase in average earnings run at more than 2.5% then you get
> > your payback quicker. [Not found a table of this annual increase yet.]
> >
> > So betting on price and/or wage inflation makes this an interesting
> > possible insurance policy.
> >

> > However it would have to perform better than putting the £22,250 in an

> > investment (ISA?) and drawing the equivalent money out over the same
> > period.
> >
> > Bottom line is that you are lending the government (and all future
> > governments until you are 80) your money and trusting them to give a
> > return on it and not change the rules.
> >
> > To be in with a chance to win you would have to be still living in the UK
> > at around the age of 80 and the current rate of indexation would still
> > have to apply. Which implies a great deal of trust in successive
> > governments not to try and reduce or remove the indexation.
> >
> > [One interesting factor is that it seems as though if you move to another
> > country you still get your pension (possibly through a mutual agreement)
> > but indexation may be suspended. This give it a whole extra dimension.]
> >
> > Anyway, this is a legal not a financial NG but I wonder what formula they
> > used to calculate the payment required?
>
> It would have been done actuarially - it's what actuaries do - based on life
> expectancy tables so as to average out whatever people decide to do, pretty much as
> you've worked out in reverse. If you pay the extra in, you're simply gambling that
> you will live longer then the average.

This particular "additional pension" deal is 50% inheritable by a
spouse, which could make the maximum purchase an attractive deal for
the older partner in a couple with a big age gap.

Janet.

[David]

On Sun, 24 Jan 2016 13:04:37 -0800, rosielee wrote:

> The new flat rate state pension scheme suggests that anyone with a full
> contribution of NI will get the full entitlement of pension. Anyone who
> has contracted out will not. So how about those who were contracted out
> without their knowledge or agreement? Should their permission have been
> obtained? Only now are people finding out they will not get the full
> entitlement. How can they have been contracted out without their
> permission?

Just to note that a number of posters have stated that contracting out
took place in the '80s.

Looking at my pension statement, I was contracted out from 6/4/1978.

[David]

Do you have a link to independent actuarial tables? That is, tables which
combine life expectancy and return on investment to estimate what pension
should be offered on average.

Google so far keeps throwing up pension providers who will give you a
quote.

I did a spoof quote to see what you might be offered for a pension pot of
£1million and the answer seems to be from £47,000 to £50,000 a year.

This does make you wonder if the new "pension pot" rules are suddenly
going to bite senior managers in the Civil Service, and others who are
part of final salary pension schemes. Anyone lucky enough to retire in the
future on a £50,000 pension might hit the tax penalties.

The quote was for flat rate (not indexed) and no provision for a partner.

I assume that as final salary pensions tend to be index linked and have
rights to half pension for a surviving partner that the equivalent to a £1m
pension pot might be around £45,000 per year.

>From the figure I picked up, say £22,250 pot gives you £25 per week or
£1170 per year, then £1m should yield (1,000,000/22,250 * 1170) £52,584
per year index linked. This makes it look a marginally better investment
than a commercial annuity but not a gift by any means.

So it looks as though the government actuaries may be excluding profit
from their calculations.

[Norman Wells]

"David" <wib...@btintenet.com> wrote in message

news:dijjvf...@mid.individual.net...

> On Mon, 15 Feb 2016 20:38:27 +0000, Norman Wells wrote:
>> "David" <wib...@btintenet.com> wrote in message
>> news:diem1rF...@mid.individual.net...

>>> Anyway, this is a legal not a financial NG but I wonder what formula
>>> they used to calculate the payment required?
>>
>> It would have been done actuarially - it's what actuaries do - based on
>> life expectancy tables so as to average out whatever people decide to
>> do, pretty much as you've worked out in reverse. If you pay the extra
>> in, you're simply gambling that you will live longer then the average.
>
> Do you have a link to independent actuarial tables? That is, tables which
> combine life expectancy and return on investment to estimate what pension
> should be offered on average.

If I did, we wouldn't need actuaries to confuse us.

[Andy Burns]

[repost from NIN due to original being swallowed by Giganews]

David wrote:

> Just to note that a number of posters have stated that contracting out
> took place in the '80s.
>
> Looking at my pension statement, I was contracted out from 6/4/1978.

It was contracting out of SERPS that began in the eighties ...

[Robin]

Andy Burns wrote:
>>
>> Looking at my pension statement, I was contracted out from 6/4/1978.
>
> It was contracting out of SERPS that began in the eighties ...

Some say the whole state pension system was devised to show the British
civil service good do better than those continentals with their little
Schleswig-Holstein problem ;( But I think SERPS started in 1978 and
contracting out with it. It was contracting out for defined
contribution schemes that started in the 1988.