Pension advice

[midlife]

It's more they won't than they can't.

The NHBSA will give you an estimate but won't commit to exactly what you are entitled until you actually retire.

https://faq.nhsbsa.nhs.uk/knowledgebase/article/KA-04243/en-us

 

[kingrollo]

That is why I did say above "Unless you are in a final salary pension (very rare nowadays)".

There is absolutely no reason with those that they cannot tell you what you will be entitled to (at today's rates if they are inflation linked).

A final salary is different to defined benefit.

Most public sector pensions are average salary based now - but still defined benefit - and of course has nothing to do with the stock market.

 

[T4tomo]

A final salary is different to defined benefit.

Most public sector pensions are average salary based now - but still defined benefit - and of course has nothing to do with the stock market.

And that's why they won't give you a definite value because your average salary will change over time...

 

[kingrollo]

And that's why they won't give you a definite value because your average salary will change over time...

Yes but when they do the estimate they ask for a date you would like the pension payable on.

So unless youre asking years in advance (I'm not) - they know my pensionable pay and my retirement date.

So they can do it. They just don't.

 

[PaulSB]

Some may not be aware its possible to top up their state pension by "buying additional years." This Guardian article explains the position and that the deadline has been extended to July 31st. At the very least it's worth using the government calculator to check your own position as it may differ from what you're expecting.

Mrs P bought additional years up to the full SP last summer. Come April when pensions rise 10% the return on investment will be far better than we had expected.

https://www.theguardian.com/money/2...national-insurance?CMP=Share_AndroidApp_Other

 

[DCLane]

+1 to the above. We've done a check; I'm four years from full payments, SWMBO five but with a year short due to redundancy in 2015/16. It was a small top-up needed only.

Given I'm probably moving from full-time to part-time at 60-ish I'll have a full set, and had no gaps. SWMBO is a bit older but may also go part-time when I do.

 

[PaulSB]

Can I add another comment. I'm not sure exactly how the system works but do speak from the experience of my wife buying extra years. I would advise people to be aware of falling in to the "I've worked all my life" or "I've got full contributions" trap. Whatever one may think this does not seem to be how the DWP works!! Mrs P retired at 60 after working from age 19. Her state pension date was 66, at the time of retiring her contribution record showed as full and has continued to do so BUT with each year that passed between age 60 and 66 .gov.uk calculator showed she could buy an increasing number of additional years to reach the maximum SP. Being retired Mrs P was not paying NI and this appears to be crucial, far, far more important than having a full contributions record. Summer '22 we purchased all the years between 60 and 66 when she did not pay NI despite her record showing as "full." It seems to me one must have been paying NI up to the date of taking the SP.

We spoke to the DWP who confirmed to receive the full SP she needed to buy the additional years. Currently one can purchase years going for the past 16/17 or so - check the article. From August it will only be 6 years.

My advice would be do not rely on what you believe is your position, check it regularly with the .gov.uk pension forecast tool. DWP will only give you what they think is due not what you believe is your entitlement!! Keep a close eye on this.

 

[Tail End Charlie]

The other thing to be aware of is, although your record says you have 36 years of full contributions (yippee!!), your employer may have contracted out for some of the years (COPE - Contracted Out Pension Equivalent) so you are actually missing some years, which you have to buy back. @PaulSB I suspect your wife's situation was this. No, I don't understand it either.

 

[The Central Scrutinizer]

@PaulSB
My wife had the same thing.
She retired early at just under sixty years old from the NHS and the fact she was contracted out and no NI payments between sixty and sixty six left her with a sizeable gap in NI contributions.
We discussed this and decided although she would have to pay quite a few thousand pounds just to reach the standard state pension payment we thought it would be worth it.
On the other hand with my state pension i am getting well over the odds of the standard state pension even though i never ever paid any av's.I don't know why but i'm not complaining.

 

[Alex321]

Can I add another comment. I'm not sure exactly how the system works but do speak from the experience of my wife buying extra years. I would advise people to be aware of falling in to the "I've worked all my life" or "I've got full contributions" trap. Whatever one may think this does not seem to be how the DWP works!! Mrs P retired at 60 after working from age 19. Her state pension date was 66, at the time of retiring her contribution record showed as full and has continued to do so BUT with each year that passed between age 60 and 66 .gov.uk calculator showed she could buy an increasing number of additional years to reach the maximum SP. Being retired Mrs P was not paying NI and this appears to be crucial, far, far more important than having a full contributions record. Summer '22 we purchased all the years between 60 and 66 when she did not pay NI despite her record showing as "full." It seems to me one must have been paying NI up to the date of taking the SP.

We spoke to the DWP who confirmed to receive the full SP she needed to buy the additional years. Currently one can purchase years going for the past 16/17 or so - check the article. From August it will only be 6 years.

My advice would be do not rely on what you believe is your position, check it regularly with the .gov.uk pension forecast tool. DWP will only give you what they think is due not what you believe is your entitlement!! Keep a close eye on this.

Rather confusingly, when I do the check on eth government site, it is predicting my pension to be greater than the maximum and (quite reasonably) saying I can't buy any extra.

It shows me as having 44 years full contributions, but the site says the only way you can get more than the full basic pension of £185.15 per week is if you have additional state pension or defer your pension beyond state pension age, but you can only have additional state pension if you were born before 6 April 1951 (for a man). Yet it is predicting my pension as £198.91.

 

[PaulSB]

Rather confusingly, when I do the check on eth government site, it is predicting my pension to be greater than the maximum and (quite reasonably) saying I can't buy any extra.

It shows me as having 44 years full contributions, but the site says the only way you can get more than the full basic pension of £185.15 per week is if you have additional state pension or defer your pension beyond state pension age, but you can only have additional state pension if you were born before 6 April 1951 (for a man). Yet it is predicting my pension as £198.91.

I can see it states this on the .gov website but its not what has happened in my case. I was born in 1954, was both contracted in and out of SERPS, and my state pension is considerably higher than this.

No, I don't know why. 🤔

 

[SpokeyDokey]

The confusion lies between whether you reached retirement age before or after April 2016. Different rules apply.

I was born in 1956 and I currently receive 11600 Total State Pension made of the basic New State Pension plus S2P payments equalling 14600 which is then reduced by 3000 due to bring contracted out.

 

[Alex321]

The confusion lies between whether you reached retirement age before or after April 2016. Different rules apply.

I was born in 1956 and I currently receive 11600 Total State Pension made of the basic New State Pension plus S2P payments equalling 14600 which is then reduced by 3000 due to bring contracted out.

But I won't be reaching State Pension Age until January 2025.

 

[SpokeyDokey]

But I won't be reaching State Pension Age until January 2025.

Sorry, I am not sure what your point is re 2025 unless it is because I should have said reach instead of reached? The basic principle remains the same in either case.

Some of the quotes above are mixing up the terms of the Basic State Pension (old scheme) with the New State Pension (new scheme).

Under the terms of the New State Pension scheme in 2025 you will receive, provided you have the required number of qualifying years the full amount if the New State Pension plus an uplift for any S2P or SERPS contributions, if you made any, less an amount for any contracted out period you may have had - the latter having resulted in you paying lower NI contributions.

The uplift is a protected payment for those who have already paid above the normal rate of contributions of NI under S2P/SERPS - as these schemes are now finished then going forward it will not be possible to get more than the basic New State Pension rate if you have not already contributed to S2P or SERPS.

 

[SpokeyDokey]

@PaulSB
My wife had the same thing.
She retired early at just under sixty years old from the NHS and the fact she was contracted out and no NI payments between sixty and sixty six left her with a sizeable gap in NI contributions.
We discussed this and decided although she would have to pay quite a few thousand pounds just to reach the standard state pension payment we thought it would be worth it.
On the other hand with my state pension i am getting well over the odds of the standard state pension even though i never ever paid any av's.I don't know why but i'm not complaining.

Are you receiving the New State Pension?

If yes and you are receiving more than the basic rate of NSP (not to be confused with Basic Rate State Pension) then you will have contributed to S2P/SERPS at some point in your career.