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I'm already getting my pension, so wasn't looking for a prediction.
It appears that a large portion of my pension was reduced due to being contracted out, and I was trying to find out if this was a sensible reduction.

The reduction can be quite large. If you have the required number of years contributions at full rate the State pension is currently £221.20 per week. If you have been contracted out then if contracted out maximum years the weekly pension can fall to as low as £169.50 per week. This figure equates to the standard (no serps) state pension for those refiring before April 2016. This is still known as the basic state pension and the higher one paid to those retiring with full contributions after April 2016 is known as the single tier pension. The only way you will know how many years of contracted out contributions is either using the HMRC App and being registered on Government Gateway system or phoning HMRC and asking them .
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I've emailed DWP a number of times, and had some useful replies, but they have always evaded giving information about the amount of reduction due to contracting out.
I fulfilled the 35 years, and maybe a quarter of those were contracted out.
So to lose a third of the pension seems quite a large amount to me.
I'm really only looking for a rule of thumb calculation, to ensure that they haven't made a big mistake in the reduction.

Were you born before 6 April 1951? If so you'll be receiving the 'old' State pension, which required 30 years of NI contributions for a full pension (less any contracted out years).

For example, if you were contracted out for 10 years that would comprise a third of your pension.

If you are on the old state pension then being contracted out does not reduce the pension. However it means you dont have SERPs for the contracted out years. Serps give an addition to the basic state pension.

I can only refer to my own position. I have 42 years contributions but with 40 of those years contracted out. I am on the new state pension (single tier) basically i get about £2 a week above the basic state pension (old state pension). So my weekly pension is reduced by around £49 per week as a result of being Contracted out. I presume the £2 per week I get over the basic state pension is for the couple of very early years when i wasn't contracted out. Extra years above the 35 count for nothing. All i can suggest is phoning them and they will tell you how many years you were contracted out and the affect that has on your pension amount.

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As I have said before, I was contracted out for at least 10 years and bought about 11 years of contributions as I retired early. I get more than the new full state pension plus the extra private pension that was paid into during the contracted out period.

I have no idea how they worked that out.

​​​​​​I think that will be you either had a number of Serps years or when you bought into tbe extra years you bought into Serps? Those retiring after April 2016 who had Serps rather than carry them over they were rolled into the new state pension. Only if one had sufficient Serps accrued from the old pension and those Serps took them over the new state pension amount did they get that amount added to the new pension.







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Does this mean that for each year you were contracted out, you don't receive any pension benefits?
I thought that for a contracted out year, your pension entitlement for that year would be reduced, but that was just an assumption on my part.

I was eligible for the pension a couple of months After April 2016.
Though I had the 35 years of contributions, they said that I would be better off getting the OLD state pension.
I didn't understand that at all.
I have made many queries to the DWP. Is this issue of receiving the Old pension, one I should have persisted with getting information from the DWP?
Does not having SERPS, give the same resulting reduction that Spouse of Scouse described?

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

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.

[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.

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.

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.