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State Pension

02 May 2019, 08:25

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Last edited by rogersh on 02 May 2019, 16:12, edited 2 times in total.

State Pension

02 May 2019, 16:05

stodgy88 wrote:Thanks, on the pension calculator , need 2 years from april 2018 to get full pension,so already paid one .


So if you paid into the RM pension schemes you will be contracted out up to 2016. So you will not actually receive the "full pension"

State pension reforms and S2P 2012
Both the state second pension and contracting out will end (S2P WILL COMBINE WITH BASIC) when the new flat-rate pension comes into force in 2016. So if you are contracted out (on a DB basis), your National Insurance contributions will increase, as will those of your employer.
Any contracted out pension you have built up until 2016 will be protected. But for those in a defined benefit, or final salary scheme, your flat-rate pension will be reduced to balance out any extra pension you receive from contracting out.

Contracted out means out of "additional pension" . as Gov. uk. explains;
Additional State Pension (called State Second Pension or S2P, but before 6 April 2002 it was called SERPS) – this paid different amounts depending on earnings as well as what type of NI contributions or credits the person had and what type of contracted-out private pension scheme they paid into you.
Last edited by rogersh on 02 May 2019, 16:26, edited 2 times in total.

State Pension

02 May 2019, 16:21

rogersh wrote:
stodgy88 wrote:Thanks, on the pension calculator , need 2 years from april 2018 to get full pension,so already paid one .


So if you paid into the RM pension schemes you will be contracted out for 34 years. So you will not actually receive the "full pension"

State pension reforms and S2P 2012
Both the state second pension and contracting out will end (S2P WILL COMBINE WITH BASIC) when the new flat-rate pension comes into force in 2016. So if you are contracted out (on a DB basis), your National Insurance contributions will increase, as will those of your employer.
Any contracted out pension you have built up until 2016 will be protected. But for those in a defined benefit, or final salary scheme, your flat-rate pension will be reduced to balance out any extra pension you receive from contracting out.

Contracted out means out of "additional pension" . as Gov. uk. explains;
Additional State Pension (called State Second Pension or S2P, but before 6 April 2002 it was called SERPS) – this paid different amounts depending on earnings as well as what type of NI contributions or credits the person had and what type of contracted-out private pension scheme they paid into you.

But what we don't know is what state pension benefits he earned before RM!
If he's 'coming up to state pension age in not too distant future'(paraphrased from his first post) and he's done 34 years with RM, he will presumably had some kind of employment beforehand.
He may well have built up some S2P/SERPS during that time, aswell as some 'new state pension' after April 2016.

State Pension

02 May 2019, 17:11

hello I have 5 full years before I started at royal mail in 1985, im still working for them now P.S plus 2.5 years self employed .
Last edited by stodgy88 on 02 May 2019, 17:30, edited 1 time in total.

State Pension

02 May 2019, 17:15

so could the figure change,when they check I was contracted out or would they have checked before issuing a figure ?

State Pension

02 May 2019, 17:23

I forgot to mention I took my post office pension 8 years ago aged 53 and haven't paid into it since .until a couple of months ago when I was auto enrolled back into it .

State Pension

02 May 2019, 18:19

RobertT wrote:
rogersh wrote:
stodgy88 wrote:Thanks, on the pension calculator , need 2 years from april 2018 to get full pension,so already paid one .


So if you paid into the RM pension schemes you will be contracted out for 34 years. So you will not actually receive the "full pension"

State pension reforms and S2P 2012
Both the state second pension and contracting out will end (S2P WILL COMBINE WITH BASIC) when the new flat-rate pension comes into force in 2016. So if you are contracted out (on a DB basis), your National Insurance contributions will increase, as will those of your employer.
Any contracted out pension you have built up until 2016 will be protected. But for those in a defined benefit, or final salary scheme, your flat-rate pension will be reduced to balance out any extra pension you receive from contracting out.

Contracted out means out of "additional pension" . as Gov. uk. explains;
Additional State Pension (called State Second Pension or S2P, but before 6 April 2002 it was called SERPS) – this paid different amounts depending on earnings as well as what type of NI contributions or credits the person had and what type of contracted-out private pension scheme they paid into you.

But what we don't know is what state pension benefits he earned before RM!
If he's 'coming up to state pension age in not too distant future'(paraphrased from his first post) and he's done 34 years with RM, he will presumably had some kind of employment beforehand.
He may well have built up some S2P/SERPS during that time, aswell as some 'new state pension' after April 2016.


Yes Robert he would build up, as I do, some more pension from April 2016. As the pension statement booklet explains;

"Will qualifying years added to my NI contribution record for tax years from 6th April 2016 onwards improve my state pension ?

If your starting amount on 6th April 2016 is less than the full rate of new state pension, you can increase it by adding further qualifying years.
For each extra qualifying year you will get 1/35th of the full amount of the new state pension - about £4.45 a week.

However, your starting amount plus anything you add after 6 April 2016 cannot be more than the full rate of the new state pension."

2016 £155.65 (1/35th) = £4.45
Annual inflation rises
2017 £159 55 = £4.56
2018 £164.35 = £4.70
2019 £168.60 = £4.81

State Pension

02 May 2019, 19:07

stodgy88 wrote:hello I have 5 full years before I started at royal mail in 1985, im still working for them now P.S plus 2.5 years self employed .

stodgy88 wrote:so could the figure change,when they check I was contracted out or would they have checked before issuing a figure ?

It's hard to say for sure, but with 41-42 years of work behind you and 34 years of state pension entitlement, it sounds to me as if your contracted out years are already factored in.

State Pension

02 May 2019, 20:08

Thanks for your time.

State Pension

05 May 2019, 15:49

For anyone thinking of topping up their state pension because of missing qualifying years or being contracted out, you might find this guide informative.

State Pension

14 May 2019, 22:35

Hi
This link below may be useful to anyone with insufficient NI contributions
https://www.gov.uk/government/news/look ... te-pension

State Pension

15 May 2019, 01:31

Just checked mine. Current forecast is £149.54, up until 05/04/2019. I've got until 05/04/2034 to contribute 4 years which gives me £168.60. I'm 52 in August, started at RM in 1988. Might give some a guide as to their figures. Very easy to set your account up and use the site, so worth doing, even if you only use it for this purpose.

State Pension

15 May 2019, 07:13

So just to clarify you won’t need to pay an extra in as long as you work another 4 years?

Thanks

State Pension

15 May 2019, 10:21

Hawkey99 wrote:So just to clarify you won’t need to pay an extra in as long as you work another 4 years?

Thanks


According to Gov.uk, it says paying more will enable you to access certain benefits. Whatever that means. However, and I could be wrong here, I wonder if it would be worth it. Our pensions may make us exempt from receiving benefits, I really don't know. One thing I can tell you is that as of 2016, we are now on the new, flat rate pension. That means that extra N.I payments through overtime / bonus payments etc, do not count as extra to your State pension, as in previous years. Eventually, all future workers will receive this. We have a hybrid scheme where we benefit from both, to a greater or lesser extent, depending on when we started work, contributions, etc.

State Pension

17 May 2019, 15:35

The state pension used to be made up of two parts:

1. Basic State Pension – which you accrued by earning at least the level of the LEL, currently £118 per week / £6,135 per year. The LEL in this instance is the one set by by the government & NOT RM!
2. Additional State Pension(also known as SERPS & state second pension) – which is earned by the amount of NIC's you actually pay. So higher earners will earn more ASP because they pay more NIC's.

However, anybody who has been in the RMPP or it's predecessors POSSS & POPS, will have been contracted out of the ASP and will have paid a lower rate of NIC's – 10.6% instead of 12%.
The idea is that being contracted out will earn you more pension from your employer, than you would have done had you paid into the ASP.

In 2016 the new flat rate state pension was introduced, but the full terms of that only really apply to those that start their working lives after 6th April 2016. Everyone else, which is probably pretty much everyone on this forum, will have dual state pension benefits – so some pre 2016 and some post 2016 state pension!

You will have been given a 'starting amount' of pension that you had built up until 5th April 2016 and that would have been worked out as the higher of what you would've got under the old scheme compared to the new scheme.
If your starting amount is lower than the full rate of the state pension (currently £168.60), then continuing to work and earning at least £6,136 in a tax year will mean you'll be adding another qualifying year onto your entitlement. And that is worked out as 1/35th of the full amount, so that would currently be £4.81.

So as a simple example:

Bob has built up £149.36 worth of state pension as at 5th April 2019, so he's £19.24 short of the maximum. He's currently 54 years old with a state pension age of 67, and has 13 years to make up the difference. Which he should do by working another 4 years.

It's only when you have missing qualifying years and stand to have a lower state pension than the maximum at state pension age, that paying extra is worth doing.

I'm no expert on state benefits, but paying NIC's means you're entitled to benefits such as:

Contribution based Job Seekers Allowance
Contribution based Employment & Support Allowance
Maternity Allowance
Bereavement Support Payment.

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