UK State Pension

[Anonymous]

I have just been invited to apply for my UK state pension.

When I log into HMRC I get an estimated value, which is almost, but not quite, the full basic pension. However there is a note to say I was contracted out (which I was) and it gives an estimated COPS equivalent value. It clearly states that the estimated COPS value does not affect the quoted pension estimate. As I understand it means that I am not entitled to any additional state pension. It used to be called SERPS, I think?

I have talked to a government pension service and they tell me that the headline estimated pension is what I will get. But my brother, and neighbour, are convinced that the value is reduced by the COPS estimate.

Does anyone know for definite, and ideally by experience, if the headline estimated basic state pension is what you get, having been contracted out?

Andrew

Edited By Andrew Johnston on 26/09/2022 08:16:26

[Anonymous]

[Stuart Smith 5Participant @stuartsmith5]

Andrew

I have recently applied for my pension. I got an estimate a few months ago and I am pretty sure my actual pension is the same as the estimate. I was in a contracted out company pension. I am away from home but will double check later.

Stuart

[Nicholas FarrParticipant @nicholasfarr14254]

Hi Andrew, when I got mine four years ago, it was just as they stated, and I was contracted out in a company pension for the majority of my working life.

Regards Nick.

[Mike HurleyParticipant @mikehurley60381]

If you will be receiving additional pension amounts from private pensions, you will probably find the tax situation can take a bit of time to 'settle down', but generally the state pension estimate should be on target, and yes it's unlikely (but not impossible) that you would get any 'top up' on the basic amount.

If you do have several additional private pensions, definately worth speaking to a properly accredited financial advisor (beware of sharks and excessive fees though) even with modest amounts can make life much easier in the long run.

All the best

[Nick Clarke 3Participant @nickclarke3]

The new state pension which applies to anyone born after 1951 does not consist of basic and additional parts so the starting value is what you will get already taking into account your contracted out time.

I retired 12 months ago and my new state pension, like yours is fractionally less than the full amount. My tax allowance is applied to this and so I don't pay tax on it while any allowance left over is applied to my teachers pension after which I pay tax.

The advice to consult a qualified Financial Advisor is sound, but for an overview the .gov,uk website explains it quite well.

One final point is that your state pension is not paid monthly, but every 4 weeks on a day of the week depending upon your national insurance number so one month in the year you will get two payments, one at the start and one at the end of the month.

 

Edited By Nick Clarke 3 on 26/09/2022 10:19:00

[John BeresfordParticipant @johnberesford27902]

My wife and I both retired early and we last year looked on the hmrc website to get a state pension estimate which was of course less than the standard amount because of our shortfall in NICs. It should say on the same page what the shortfall in NICs is if you want to get the full state pension amount. Theres another page showing your annual year by year contributions and any shortfalls. You can then opt to voluntarily pay the shortfall in order to bring your contributions up to the required amount in order to guarantee you'll get the full pension.

[Peter G. ShawParticipant @peterg-shaw75338]

Hello,

I worked for 35 years and paid a reduced rate of NI. This was because the works pension guaranteed a minimum pension.

Aftet taking early retirement, I firstly had to pay Class 2 (I think it was) NI for those years when I was working as self-employed and not earning a great deal, and towards the end I also opted to pay one or more lump sum(s) to account for those years I hadn't paid for. During my last year before drawing my state pension, I did obtain a quote of what my state pension would be and this was low (by 1/45th I think). It turned out that the quote did not take into account that I was still paying NI in my last year, and sure enough, my state pension was exactly as expected.

In my wife's case, she has never, or almost never, worked in paying employment and instead gained credits for having children. This did not give a full entitlement and so she had to pay for, if memory serves me correctly, four out of six years. Needless to say, she paid the four cheapest years. She eventually received the full state retirement pension plus a few pennies from whatever it was called (graduated state pension perhaps?) earned in her early years.

So yes, we did receive the full amounts expected albeit with a few catching up payments for missed years. I should point out that we have been receiving state pensions for 14 years (me) and 11 years (boss lady) and hence our state pensions are the older versions and hence somewhat less than the new version.

(Which means that I should be receiving an extra 25p pw as from July next year. Oh frabjous day!)

Hope this helps. And enjoy it Andrew.

Peter G. Shaw

Edited for spelling mistakes.

Edited By Peter G. Shaw on 26/09/2022 10:43:11

[DMBParticipant @dmb]

I think that the system is one chaotic mess with bits and pieces of extra bits added on by different governments over the years, e.g., Graduated Pension, etc. You either pay in to company pension or not if you're lucky enough to work for an employer who supplies a non-contrutory scheme. Maybe index linked or get a choice of that or take big lump sum and run, with reduced remainder. Now the civil service steps in, I think, 'jobs for the boys.' Contracted out, reduced NI but they bugger about clawing it back from the pension when in payout. All the fiddling about creates work for the unionised Civil Servants. Oh! to have a decent level of flat payment on a flat 5% (say) annual increase with only one simple deviation of half (say) if you haven't paid in for half your working life. So much simpler and everyone would know exactly where they stand. Of course that would bring out the whingers in force, claiming some sort of 'unfairness.' 2 sizes will fit nearly all, take it or leave it. Bear in mind that it's about the lousiest retirement pension in Europe. And we get ripped off with higher prices for everything compared with most other countries, because this is 'Treasure Island' for big business.

Edited By DMB on 26/09/2022 10:57:24

[Dave HalfordParticipant @davehalford22513]

This is more for the girls really.

You are not forced to claim your state pension, every year it's not claimed is an extra 5.8%, roughly an extra tenner a week when you do.

Leave it 10 years and the lump sum is significant, though taxed.

Please be aware that financial advisers are there to sell you product.

[Henry BrownParticipant @henrybrown95529]

Posted by John Beresford on 26/09/2022 10:30:25:

My wife and I both retired early and we last year looked on the hmrc website to get a state pension estimate which was of course less than the standard amount because of our shortfall in NICs. It should say on the same page what the shortfall in NICs is if you want to get the full state pension amount. Theres another page showing your annual year by year contributions and any shortfalls. You can then opt to voluntarily pay the shortfall in order to bring your contributions up to the required amount in order to guarantee you'll get the full pension.

This is exactly what I did as I retired early.

As I understand it to get the full pension you have to pay an amount that covers the last three years NI that you would have paid if you had worked until your government official age irrespective of how many years NI you have paid.

I assumed that as I had well over 30 years NI I would get the full pension, as a lot of people assume (the government changed the rules and slipped them in quietly), a couple of calls to the pensions office advisors put me right. Of course it's a gamble if you will live long enough to get the extra payments back but I don't intend to fall off the perch yet so I paid the three sums yearly just before the end of each tax year prior to retirement.

[John BeresfordParticipant @johnberesford27902]

Thats right Henry but you also have a time limit of 6 years from your retirement date ie when you stopped paying NI to pay any top up. We've advised a few of our friends to check up on their NI/ state pension status as many were totally unaware there would be a shortfall when they'd reduced their hours or thought of retiring early.

[Mark RandParticipant @markrand96270]

I'm a bit confused by the above. I took VR at 58 at the end of 2016, but I've got 42 full years of full contributions. Even if I paid for the empty years between 2017 and next year, it would make no difference to my pension.

[Adam MaraParticipant @adammara]

My old man always said the pension money would run out one day and insisted I had a private pension and paid any extra into any state enhancements. Was also lucky in having a good accountants to advise me over the years.

I worked from 16 to 65, so got the full state pension plus the added extras, which now pay me an extra £114 a week, well worth having in these very difficult times. Incidentally, i get my pension paid weekly, something they keep a bit quiet about.

[Mike PooleParticipant @mikepoole82104]

Everybody’s pension is going to be governed by their work, pension and national insurance history. I worked for one employer all my working life and was contracted out for many years. After 44 years of work I retired at 60, this left me with a national insurance shortfall of 5 years, from 2016 until this year. My pension could be improved by £5.29 per week for each missing year I paid for at the rate of roughly £800 pounds a year for each missing year. As my state pension will be all taxed by altering my tax code applied to my work pension I calculated it would take about 3 years and 9 months to break even. After repaying the £4000 to myself I would be £1000 a year better off with the state pension. The only catch is that I need to live until I am nearly 70 or I lose my investment. This set of circumstances is my story with my particular pension history. I spoke to the DWP to establish that filling the years I had missing would benefit me and they assured me it would, they gave me the number to ring and the key words to negotiate the voice recognition options on the HMRC number, they provide you with an 18 digit number and how to pay details and amazingly it seems like it has worked. It seems that paying a pre 2016 shortfall may not improve your pension so beware. I think giving advice on pensions is covered by a regulatory body and it would be wise to talk to a qualified practitioner. The DWP should know their job as they are responsible for the state pension but that might be rather an optimistic hope, nevertheless that must be the place to start. On the government pension page I had three figures quoted, the first was my pension earned so far, the second if I payed NI contributions this year and the third was the figure if I payed the missing years. Remember we are just blokes down the pub and take what is said with a pinch of salt although many valid points will be raised I would take it as useful background rather than hard facts.

Mike

[Martin KyteParticipant @martinkyte99762]

Regarding NI contributions for Full Basic State Pension.

Qualifying for the full amount

You usually need a total of 30 qualifying years of National Insurance contributions or credits to get the full basic State Pension.

If you have fewer than 30 qualifying years, your basic State Pension will be less than £141.85 per week. You might be able to increase the amount you get by paying voluntary national insurance contributions.

Check your National Insurance record to find out how many qualifying years you have.

You are eligible for the old Basic Sate Pension if born before April 6 1951 which I take it Andrew is as he is now about to claim.

The .GOV site doesn't say anything about the last few years just that you need 30 in total. The New State Pension may be different I didn't look.

regards Martin

 

Edited By Martin Kyte on 26/09/2022 13:45:29

[Mike PooleParticipant @mikepoole82104]

The new state pension requires 35 qualifying years to collect £185.15 per week, I had 45 years of full contributions but the kicker is that I was contracted out for many years. After topping up my years I now have 50 years of full contributions but the contracted out years mean I still fall short of the £185.15. There is a hell of a lot to working out your pension entitlement even if you have been on PAYE all your life, self employment is another can of worms.

Mike

[BazyleParticipant @bazyle]

Only need to work for 30 years !!! now I'm feeling hard done by after 45 working years.

[Mike PooleParticipant @mikepoole82104]

According to the song “only fools and horses work”

Mike

[Stuart Smith 5Participant @stuartsmith5]

Andrew

I have sent you a PM.

Re my earlier post, my pension will be as my pension forecast based on my NI contributions to when I stopped working . This was on the pension forecast but is less than the headline figure.

Stuart

[Colin HeseltineParticipant @colinheseltine48622]

Andrew,

I started taking my state pension in 2016, 1 had put it off for one year.

I get:

Basic State Pension

Plus Pre 97 additional State Pension

Plus Post 97 additional State Pension

Plus Graduated Retirement Benefit.

The Pre 97 additional State Pension is reduced by the Contracted Out Deduction (COD) which in my case was £64.28.

I worked for British Coal and so had their Pension as well

Colin

[Henry BrownParticipant @henrybrown95529]

Posted by Martin Kyte on 26/09/2022 13:44:57:

Regarding NI contributions for Full Basic State Pension.

Qualifying for the full amount

You usually need a total of 30 qualifying years of National Insurance contributions or credits to get the full basic State Pension.

If you have fewer than 30 qualifying years, your basic State Pension will be less than £141.85 per week. You might be able to increase the amount you get by paying voluntary national insurance contributions.

Check your National Insurance record to find out how many qualifying years you have.

You are eligible for the old Basic Sate Pension if born before April 6 1951 which I take it Andrew is as he is now about to claim.

The .GOV site doesn't say anything about the last few years just that you need 30 in total. The New State Pension may be different I didn't look.

regards Martin

Edited By Martin Kyte on 26/09/2022 13:45:29

Martin,

Exactly what I thought, with 35+ years NI I thought I'd be ok and had when I retired but I still had a shortfall. I retired at 59,9 years ago. and self financed until I was eligible for state pensoin. I still haven't taken all my private pension but that's another story.

I believe the rule was introduced after I retired and before I was due to take my pension.

The site may not say anything about the 3 year rule but if you check it out with their advisors they will confirm it.

Regards, Henry.

[Anonymous]

Thank you to all those who have replied. It has been helpful, and interesting. I think we can safely say that the UK pension system is grossly over-complicated and few people, let alone the government, understand it!. In the past I was an employee elected pension trustee and I still don't really understand pensions.

What I understand from the replies is that the estimated state pension value given is what you will get, give or take small changes due to circumstances. That is what I would have hoped.

I turn 66 early next year and will be taking the state pension as soon as I can. I am slightly niggled that although I have 48 years ot NI contributions, assuming I pay up for the tax year ending last April, I will still not get the full state pension. I will be about £6 a week short. I've only missed two years since leaving school, while I was doing my Ph.D. It is interesting that my NI record says I have three full years prior to 1975, which is when I left school. Those years must have been due to summer jobs, one year at the Texas Instruments plant in Bedford and two years at RAE Bedford. As far as I can see I am unable to make any additional NI payments to get the last six quid or so per week. All my years, apart from the two missed, are full.

I started getting my university pension earlier this year. It just about covers the council tax, but is a defined benefit scheme and is index linked. I've moved around a lot in my career, so pensions have been all over the place, and I have been self-employed for a lot of the last 20 years. But I am fortunate to have a couple of substantial defined contribution personal pension funds, plus investments, so I shouldn't be living on the streets, at least for a while.

Andrew

[Ron LadenParticipant @ronladen17547]

I,ve never really tried to understand how they calculate your state pension. I believe the full pension is currently £185.15 per week paid every 4 weeks but I get quite a bit more than that I get £266.50 per week, how..? I dont know or at least I cant remember it was explained a few years back but I was probably not listening. I also have a private pension I paid into for a number of years but I pay tax on that as my state pension uses up my tax allowance.

[Speedy Builder5Participant @speedybuilder5]

Born in 1946, I retired early to build a house. To get my full number of years, I paid my contributions for the last few years to get the full 36 years of contributions. Then the rule changed to only requiring 32 years (After I had paid for 35 tears). No re-fund of contributions and no letter to say stop paying contributions.

By comparison, my wife was short of years although to be fair she was credited with certain years when she had ill health. We could not transfer my excess payments (Like income tax credits) and the payments to make hers a full pension did not seem cost effective.

Two of my private pensions have collapsed. There were warning letters before the collapse saying that they were fully insured. When the collapse came, their values were frozen and that no further increases would be paid.

RANT over !

Bob

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