Originally Posted by Editha

OK. Deep breathe. Begin again.

My husband reaches state retirement age in 2017, after 6th April 2016 when the 'single tier' pension rules come into force. A previous pension forecast had told him that he had 30 years contributions which would have been sufficient for a full pension under the old rules, but you will need 35 years contributions to get a full single tier pension; so, we were anxious to make up the shortfall.

We've just got another pension forecast for him and realise that it is much more complicated than we realised because SERPS is being abolished under the new rules. That is the State Earnings Related Pension Supplement. But additionally anyone who was in a 'contracted out' pension scheme (mostly public employees) will have their pension reduced because they didn't pay SERPS contributions.

Under the old rules my husband will get a pension of £121.23 a week. That is the basic state pension of £113.10 plus £8.13 SERPS.

But, under the new, single-tier, rules he will only get £75.26 a week, which is only slightly more than half of the full single-tier rate of £148.40. This is not just because he has a shortfall of five years in contributions. Most of the reduction is because he was in a 'contracted out' pension scheme for most of his working life.

So, even if he made up the five missing years in Class 3 contributions, he would gain nothing because he would still get less under the new rules than he would get under the old. The rule is that you will get the higher of the two amounts.

The DWP advisors we have spoken to have said that in 2016 it will be possible to make up contributions, but the rules have not been published yet and we will have to wait and see whether he could benefit.

Originally Posted by dunroving

But as with all these things, I don't think we will know the full story until people actually start to receive a pension under the new scheme. I already received one pension forecast about 4 years ago, that is now out of date/incorrect. I just sent off a request for another one, so I'm interested to see what the new one says.

Originally Posted by rebs

When do you reach state pension date, Dunroving? As I understand it, they are rolling out new forecasts which include new world details a bit at a time. If you don't fall within those parameters, you might not get the new info yet, although you will get an update on your pension as far as the old system goes.

Originally Posted by Editha

If you look on the pension site, you'll see they are only giving forecasts for people born before April '55. Everyone else has to wait until 2016.

Originally Posted by Editha

What I meant was that you will be given the higher of the old style or the new style pensions. You don't get a choice, but it isn't determined by your date of birth either.

So my husband, for example, will get the old style pension, even though he reaches pension age in 2017, because his entitlement under the old rules is higher than under the new rules.

Originally Posted by dunroving

This is the first time I have seen anyone post an actual forecast indicating the possible effects of the new pension arrangements. I'm in a similar situation (will have 29 or 30 years when I reach retirement age and have largely works in jobs where I have paid into an occupational pension and therefore was contracted out of SERPS). I imagine many people on BE will be similar, was we seem to have largely people who have worked in professions that have occupational pension schemes (so they'd have been contacted out).

Several times, people have posted about the change from 30 years to 35 years. Several times I have read replies to such posts saying "What are you complaining about? You will be better off under the new pension rules" This forecast indicates this is not necessarily true.

As others have indicated, the general message on the government sites seems to be, "You will not be worse off under the new pension than you would have been under the old pension". Hopefully that is true.

But as with all these things, I don't think we will know the full story until people actually start to receive a pension under the new scheme. I already received one pension forecast about 4 years ago, that is now out of date/incorrect. I just sent off a request for another one, so I'm interested to see what the new one says.

Originally Posted by Editha

If you look on the pension site, you'll see they are only giving forecasts for people born before April '55. Everyone else has to wait until 2016.

Originally Posted by Editha

OK. I'll be interested in your forecast. I was surprised at how much of a reduction was made from the single-tier forecast for contracting out.

We've worked out that my husband was in contracted out schemes for 25 years out of 29 years employment in the UK. For some of that time he was also in non contracted out employment, which accounts for the amount of SERPS he has.

Originally Posted by dunroving

Just out of interest - anyone know whether SERPS was a standard amount, and whether it resulted in a standard additional amount of state pension? Or was it (contribution) proportional to salary?

Additional, but different issue: One of the things I like about the US Social Security that is different than the UK state pension is that if you pay in more, you get more. In the UK, I pay a stack more in NI than many other people (including people who are not contracted out of SERPS), but I get the same (or even less) in state pension.

Originally Posted by rebs

I think it is proportional - State Earnings Related Pension Scheme ie based on earnings.

SERPS and the State Second Pension | nidirect

The current system is massively complex - loads of elements have come and gone over the years - additional pension, graduated pension, serps, sp2 - all sorts.