Re: Pensions (plural)
 

You are misunderstanding what contracted out is. Before 2016 the state pension consisted of the basic state pension and SERps. Serps (second earnings related pension) was a way of increasing ones pension rather than standard basic pension. If you were in a private or government pension (military police fire Nhs and some others) you were opted out of the Serps as you had the benefit of the private/government pension to increase the basic state pension. The years you were opted out meant you paid slightly less NI contributions than those not opted out. Before 2016 you needed 30 years contributions to get your state pension. If you had that on retirement age you would get either basic state pension or basic state pension +amount the serps had earned in pension. That changed April 2016 when they brought in the New state pension for those reaching retirement age after April 2016. After that date there was no contracting out or Serps and they increased the number of years contributions for full pension to 35. That is why there are 2 different pensions being paid to people dependant on date of reaching state pension age. If you retire after April 2016 with 35 years contributions the minimum state pension you can get is basically the state pension without additional serps that someone who retired pre 2016 gets, this is still known as the Basic State pension. So you still get pension benefits for each year contributed whether contracted out or not. However contracted out years earn less pension as they are slightly lower contributions. This link explains it
https://www.gov.uk/new-state-pension...s%20you%20have

Re: Pensions (plural)
 

I didn't think it was optional whether you got old or new pension you qualify (by DOB) for the old or new - end of ?

I made Additional Voluntary Contributions (AVCs) to top up my state pension because all the experts said it was a good investment because if you lived long enough to draw the pension for more than 2 years the additional amount of pension more than paid back the AVCs..so far so good and of course I have hit the 'bonus' of the large percentage increases (Triple lock) we have had for the last 2 years...

When it became payable I was disappointed in the amount and wrote to DWP who said I could appeal. They would recalculate - I did - after around a month I received a 5-page letter which explained in excruciating and unintelligible (to me) why their calculation was right - I decided not to appeal further.

Re: Pensions (plural)
 

[QUOTE=spainrico;13260294]I didn't think it was optional whether you got old or new pension you qualify (by DOB) for the old or new - end of ?/QUOTE]

Spainrico thats correct you cant choose which pension to be on its dictated by dob and when you become eligible. If you reached state pension age pre April 2016 you get the old State Pension if you reached state pension age after April 2016 you get the new increased State Pension. Although if you were in an opted out private pension you dont get the full new state pension as i outlined in my previous reply. That said the minimum state pension that they can pay someone with full contributions and maximum contracted out years is the amount of the old state pension currently being paid without any additional Serps as that is still the defined basic state pension. As for buying extra years i looked at that and it read to me that i wouldn't be able to increase my state pension much as i was contracted out for most of my working life and i already have 42 years contributions so well over the required 35. I have just decided at 70 i will accept what i have state pension as government pensions i have more than make up for what i have deducted from state pension. It is annoying though to have 7 years contributions over the 35 required and still end up with a fairly large reduction. That said it is what it is and trying to understand the changes they made is far from straightforward. Duncan Smith when he was touting this new pension made out everyone would end up with more pension, that was just typical politicians smoke and mirrors.

Re: Pensions (plural)
 

OK, I understand and agree with your latest post - I made AVCs as I only had 29 years in (I left the UK years ago) so for me that option worked well - also when I did it the rates to pay in were lower than today.

Yes, most people have to pay in far more than is 'needed' ie start work at 16 - retire at say 67 - 51 years contributions when only 35 are needed!

I am lucky in that I have only paid in enough to qualify for the maximum albeit reduced by my contracted-out years but as my private pension came in OK for someone who didn't plan his pension I have done rather well.

Re: Pensions (plural)
 

How they calculate the deduction for having been contracted out is a mystery to me too. When I got my pension forecast it told me I had 35 years NI contributions (which surprised me as I started work aged 17 and only worked up to the age of 50, so I thought I would only have 33 - apparently I got a year credited for being in full time education from 16-17 but don't know where the other year came from, I only had a Saturday job for a couple of years before that and didn't think that counted). From the 35 years I spent 8 years contracted in and the rest contracted out, in final salary pension schemes and my pension forecast said I would get 35 pounds a week less than the amount of the new state pension. I paid 4 years' additional NI contributions and now get just over 201 pounds a week state pension, the full amount is 220 pounds I believe. What really annoyed me about the whole thing was the fact that people who were contracted out paid just 5% lower NI contributions (1.5% employee's contributions and 3.5% employer's contributions) yet the reduction in the pension paid is far more than 5%. The fact that we get an additional pension is irrelevant in my view because we (and our employers) paid additional contributions far in excess of the 5% of NI to earn that. Just another Tory scam.

Re: Pensions (plural)
 

Yes same as you i didn't really plan for pensions. I initially joined the military for 9 years after which i would have got nothing . However i was offered to sign on and ended up doing 22 years which gave me a pension at 40. I then left military and joined the police so paid into their pension for 18 years. So at 59 i could retire. So although its annoying re state pension it is what it is and i have what i have .
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Re: Pensions (plural)
 

There is another nasty trick in the system. Men used to get automatically credited with 5 years extra because their retirement age was later than women. Perfectly fair, but if you were not UK resident you did not get the “free” years. I remember it well as it effectively meant I had to buy 11 years when it should have been 6.

Re: Pensions (plural)
 

Yes, the pensioner didn't get the choice.
But for those who retired just after April 2016, the DWP calculated both values for the Old and the New state pension.
This was because some people would be badly disadvantaged by the change.

So I believe that I am getting the Old pension.
But if I understood one of the explanations above, contracted out deductions only applied to the New state pension.
So maybe I have misremembered or misunderstood some of the information from the DWP.
Communications with the DWP have been bad.
I find it very difficult to discuss issues like this over the phone, so have relied on email.
But the responses from the DWP have been tardy, and didn't cover the questions I asked.
The last email came after about 9 months, so I had completely forgotten about which issues I had asked them about.
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Re: Pensions (plural)
 

Did you reach state pension age after April 2016?
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Re: Pensions (plural)
 

I wasn't aware of that on Fred.
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Re: Pensions (plural)
 

Yes, I reached state pension age a couple of months after April 2016.

So if I was contracted out for 10 years, would the Old pension value be about two thirds of the New pension value?
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Re: Pensions (plural)
 

​​​​​​⠀‹Ok so you will officially be on the new state pension. Like myself you may well have quite a large reduction on amount you get as a result of your contracted out years. If thats 10 years contracted out that would make a significant reduction. The only people who will be able to really explain your actual amount of reduction etc will be HMRC. It may be that before you were contracted you paid some into serps which may put a bit back into what pension you get. Only HMRC will know the calculation they use.

Re: Pensions (plural)
 

​​​Sorry i miss read your comment re my previous post. Basically with the new state pension so long as you have the required 35 years contributions the minimum it can be reduced to per month as result of being contracted out is £678 . If your monthly state pension is above that i would guess the reason is your contracted out years. If your pension is below £678 then something other or as well as being contracted out for 10 years is reducing it.
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Re: Pensions (plural)
 

My apologies, I may have been asking the wrong questions due to my lack of knowledge about the State Pension.
I've noticed in this post that two phrases must have very specific meanings, which I think are:

Basic state pension = the basic value of the OLD state pension
Full state pension = the basic value of the NEW state pension.

And for the Old pension you can get additions due to SERPS.
And for the New pension you can get reductions due to being contracted out.

Is that roughly true, or have I got it completely wrong?

Re: Pensions (plural)
 

Yes that is correct .

Re: Pensions (plural)
 

Do you have a reference for this minimum value of £678 per month?
I won't be able to get access to my details until next week, but a very rough estimate comes up with about £640 a month.
DWP have only given contracted out as a reason for my pension reduction.

So there might be an anomaly with my monthly value.

I thought that the DWP only used weekly or 13 weekly periods?

Re: Pensions (plural)
 

I think bobd22 mentioned earlier that when he was referring to monthly amounts he meant payments made every 4 weeks (I certainly get my UK state pension paid into my Spanish bank account every 4 weeks)-. The basic state pension for those who reached retirement age before April 2016 is now 169.50 per week and 4 x 169.50 is 678 pounds.

Basic State Pension (before 2016) (ageuk.org.uk)

Re: Pensions (plural)
 

This uk government link shows the UK Basic State pension. it is £169.50 per week so if you draw it monthly every 4 weeks it equals £678 per month so 13 payments per year. The basic state pension as it explains is the minimum pension payable to some who has the full number of NI contributions including contracted out years . The basic state pension is the basic amount of the old state pension for someone with 30 years contributions. Thats why they call it the basic state pension and still do even though there is now the higher state pension for those that qualify although that requires 35 years contributions. So if the only thing that you have reducing your state pension is being contracted out the basic state pension is the minimum they can pay you. One other thing up to April 2024 the basic state pension was around £640 per month. Dont forget for your calculations pensions went up 8.5% this April. You can have your State pension paid weekly, monthly (4 weekly), quarterly or annually as far as im aware, i have always had mine paid monthly into my Spanish bank in euros. You should also have received before April every year a letter from HMRC showing future weekly payment after April which is when they apply the annual rise.
Heres link re basic pension

https://www.gov.uk/state-pension/how-much-you-get

Re: Pensions (plural)
 

Sorry Lynn i had missed your reply when posting my last. So you had already said much of what i said .

Re: Pensions (plural)
 

No worries, there was plenty of additional information in your post!

Re: Pensions (plural)
 

I now have access to my DWP correspondence, but cannot check that I am getting the £169.50 per week.
This is because I deferred, and they have not given a breakdown of the values.
The original letter did give a breakdown, but it is not clear whether this was for the year starting April 2022, or April 2023.

Where could I find the values for the Old State pension for the years 2022 and 2023?

Re: Pensions (plural)
 

​​​​​​I dont know if you can get copies of previous pension letters sent to you? I think you are meant to keep them yourself.
However this link shows what the previous years were for uk state pension including the year you are asking about. The 2 columns are STP Single Tier Pension or new higher stare pension and BSP Basic State Pension or state pension paid to those who started drawing their state pension before 2016.

https://www.tfpcalculators.co.uk/state-pension-history/

Re: Pensions (plural)
 

That link gives the information I was asking for (correspondence from the DWP
didn't give the value of the Basic State Pension BSP, or enough information to work it out)

It seems I was getting slightly less than the BSP for the year 2022/23.
Using that BSP value, I can work out what % increase I get for deferring.

Using this % and the BSP of 169.50 for 2024/2025, I can make a check for my weekly 2024/25 value.
This gives a value slightly lower than the weekly figure that DWP quoted.

Though there appears to be a slight contradiction in these values, I am not particularly worried, as my concern
was that a major error had occured. This obviously isn't the case, based on my calculations above.

Thanks for all the help in getting to this result.
I now have a basic understanding of something that was a mystery to me before.

Re: Pensions (plural)
 

Glad it helped you sort it all out.