Just a quick reminder, contracting out of AFPS ends next month.
Al R - and other experts,
So I now realise that I won't get the full £155 state pension, as my service NI contributions were apparently not at the full rate because of contracting out - but that is offset by getting a bigger service pension than I would have got if I had been contracted in. So overall, I am better off - I think!
It would help if the gov.uk pension forecaster and NI record showed those reduced contributions. My NI record shows that I have 36 'full' years of contributions, but that I will get somewhat less than the full £155 pw. It would help if it said that some, or all, of those years were somewhat less than 'full' contributions.
It also gives me the option to top recent unpaid years, and gives an amount that I can cough up for the last FY:
But it does not indicate how much that would increase my state pension. Is there any way of finding out how much I would need to top it up to get the full state pension - or, conversely, how much I might gain from how much top-up?
And why might the shortfall increase after Apr 2019?
So I now realise that I won't get the full £155 state pension, as my service NI contributions were apparently not at the full rate because of contracting out - but that is offset by getting a bigger service pension than I would have got if I had been contracted in. So overall, I am better off - I think!
It would help if the gov.uk pension forecaster and NI record showed those reduced contributions. My NI record shows that I have 36 'full' years of contributions, but that I will get somewhat less than the full £155 pw. It would help if it said that some, or all, of those years were somewhat less than 'full' contributions.
It also gives me the option to top recent unpaid years, and gives an amount that I can cough up for the last FY:
You can make up the shortfall
Pay a voluntary contribution of £722.80 by 5 April 2023. This shortfall may increase after 5 April 2019.
Pay a voluntary contribution of £722.80 by 5 April 2023. This shortfall may increase after 5 April 2019.
And why might the shortfall increase after Apr 2019?
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I did a full (almost) career from ages 18 to 54. Since then I have been paying myself £6k a year and drawing AFPS 05 EDP. So the £6k means I am counted as making NI contribs, albeit level is £0. The forecast is showing I will get £152.08 if I continue with qualifying years and if I pay £626.60 for the missing year it will take my state pension up to the maximum. The missing year is the one after I left the Services when I was not working. I only have to live 4 years after I pay the extra to make it worthwhile.
If the forecast is correct, it actually looks ok for me. That should mean most people will have time after they retire to make enough contributions if they choose to do so.
If the forecast is correct, it actually looks ok for me. That should mean most people will have time after they retire to make enough contributions if they choose to do so.
That's interesting that the £600 appears to give you an extra £3 pw - also interesting is that my missing year is quoted as £722 extra to pay.
I find it surprising that £0 per year contributions would count towards your pension give that our contracted out rate, which was still considerably more than £0, doesn't get us more that the basic state pension.
I find it surprising that £0 per year contributions would count towards your pension give that our contracted out rate, which was still considerably more than £0, doesn't get us more that the basic state pension.
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It is one of the quirks of the system that you are counted as contributing to NI if you are paid above the 'Lower Earnings Limit' but real contributions do not get deducted from your pay until you hit the 'Primary Threshold", which is higher.
I am guessing that a DCF sum might be done to get the current value of a particular year that was missed when they give you a cost to make it up.
I am guessing that a DCF sum might be done to get the current value of a particular year that was missed when they give you a cost to make it up.
Its handy to get an on-line forecast but there is some way to go before it is perfect. I have 33 years of NI most of which was my time in the RAF for which I was contracted out; I am assuming my time in a supermarket, behind a bar and a season at Butlins was contracted in. Currently I am forecast to get 119.81 out of the maximum 155.65. It does state I was contracted out so that my amount is less than someone who was not contracted out but it doesn't say by how much. Neither does it say how many more years I actually have to contribute (I am currently fully retired) to get to the 155.65. I can buy year 13/14 for 704.60 and 14/15 for 722.80. So I can't do any informed maths as to whether it would be worth spending an unknown number of 700 quid lumps to gain an extra 35 quid a week when I am ancient.
It must be time for a beer......
It must be time for a beer......
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I agree, the new state pension forecast is very short on detail. In particular, there is no working out shown to illustrate how the forecast pension has actually been calculated. I am guessing, because every one has a different NI history, but for most personnel who were contracted out for most of their working lives, there is little point in buying extra NI contributions relating to before April 2016 if they have already achieved the 30 year basic pension qualification time under the old scheme. It may be worth paying NI or working beyond 2016 to achieve the extra pension under the new scheme now that an individuals "foundation or starting" pension amount has been established, and that each extra year of NI from now on entitles one to about £4.40 per week extra until you get to the £155 single tier weekly pension amount. You could always try writing to DWP to see if they would tell you exactly how they worked out your forecast.
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I don't understand why there is an apparent linkage between the size of my AFPS pension and whether I was contracted out (someone said that contracting out allowed afps to pay me more). By that argument, the fact that everyone is paying full NIC from now on should mean that afps pays out less in the future. I have a private pension that can be as large or small as I like (within annual and lifetime limits etc) and that is not at all affected by whether I am contracted in or out. I consider my AFPS pension to be just a company pension that happens to be paid by the MOD. Does British Telecom pay more or less to its company pension scheme members depending on whether they are contracted in or out? Or have I missed the point altogether?
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Does British Telecom pay more or less to its company pension scheme members depending on whether they are contracted in or out? Or have I missed the point altogether?
...the railway pension is a salary sacrifice final salary pension. Until April this year the (contracted out) sacrifice was 10.64% of (basic salary)-(state pension).
Fom April onwards it was decided that as employees would pay more NI the sacrifice would be reduced to circa 8.5% (I don't have the exact figures to hand).
The rail pension is payable at (final salary-1.5x(state pension))x(years accrued*/60). The reduced sacrifice will supposedly match the reduced railway pension with the increased state pension to give an overall (rail plus state) pension of a similar amount for any given wage.
*to a maximum of 40 years
Much like other final salary schemes that changed (AFPS '15 for example), employees will have accrued a guaranteed certain amount before a given date, and will accrue it at a different rate thereafter.
Last edited by Willard Whyte; 10th May 2016 at 20:02.
Does British Telecom pay more or less to its company pension scheme members depending on whether they are contracted in or out? Or have I missed the point altogether?
Hi, I do work for BT (please, not British Telecom - that name went out with good old Buzby.) And yes, BT moved those in it's older 'defined benefits' pension schemes back into 'Contracted In' status from being previously 'Contracted Out' when the pension rules changed.
For info, it is possible to work out what your entitlement to the new State Pension is from information on line - but boy, is it hard work to knit it all together.
And as an ex-member of the RAuxAF (now partly rebranded to 'RAF Reserves) it was vastly entertaining when MoD was forced to admit that the base pay for reservists, in common with that for those in regular service, was abated in recognition of the pension contibutions made by 'the employer' (i.e. MoD) - when they've never ever made any such contributions for reservists. Hey ho.
Hi, I do work for BT (please, not British Telecom - that name went out with good old Buzby.) And yes, BT moved those in it's older 'defined benefits' pension schemes back into 'Contracted In' status from being previously 'Contracted Out' when the pension rules changed.
For info, it is possible to work out what your entitlement to the new State Pension is from information on line - but boy, is it hard work to knit it all together.
And as an ex-member of the RAuxAF (now partly rebranded to 'RAF Reserves) it was vastly entertaining when MoD was forced to admit that the base pay for reservists, in common with that for those in regular service, was abated in recognition of the pension contibutions made by 'the employer' (i.e. MoD) - when they've never ever made any such contributions for reservists. Hey ho.
Even regulars can get stung for both 'pay abatement' and contracted-out NI whilst actually accruing zero pension entitlement. In my case this was for 3 years service before the age of 21 on AFPS75.
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On the bright side, Mrs F.O.D had a letter from HMRC yesterday approving her request for NI credits for her time overseas accompanying me on posting to Germany and Belgium decades ago - result!
Just to remind everyone that you can backdate claims for wives NI credit whilst on accompanied tours overseas as far back as the 1970s so it is a good way to build up state pension entitlement for wives who weren't working or claiming child benefit at the time.
Just to remind everyone that you can backdate claims for wives NI credit whilst on accompanied tours overseas as far back as the 1970s so it is a good way to build up state pension entitlement for wives who weren't working or claiming child benefit at the time.
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Haha - I thought the new system was supposed to be simple. I suppose once all us inconvenient transitioners have died off it will be - but I'm sure they will have changed the system several times by then
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If you consider doing so appropriate, the online HMRC service which allows you to declare pension protection has just gone live.
https://www.gov.uk/guidance/pension-...time-allowance
https://www.gov.uk/guidance/pension-...time-allowance
Reference claiming NI credits for wives overseas back to 1972. Just had a letter back from HRMC saying that they are unable to credit my wife with the six & a half years she claimed as she reached state pension age before 6 April 2016. apparently it is tied in with the new state pension and only men born after 6/4/1951 and women after 6/4/1953 can benefit.
Most of the question asked here are answered in the DWP booklet "Your State Pension Explained", Google DWP042, and download it as a .pdf from the .gov site.
You can get a State Pension Statement by crayoning in the form BR19, or search for "State Pension Statement". This gives you the date you will reach state pension age,qualifying years,weekly pension amount & amount deducted if you were contracted out, (COPE).
You can also check your National Insurance Record by filling in the online form at the .gov site, search for NIStatement. This will show you any gaps in your record, what your qualifying years are, any years you can pay for, what it will cost & the date you have to pay by.
You get 1/35th of the full state pension for every year that you pay, at present this works out at £4.45 per week per year paid.
You can get a State Pension Statement by crayoning in the form BR19, or search for "State Pension Statement". This gives you the date you will reach state pension age,qualifying years,weekly pension amount & amount deducted if you were contracted out, (COPE).
You can also check your National Insurance Record by filling in the online form at the .gov site, search for NIStatement. This will show you any gaps in your record, what your qualifying years are, any years you can pay for, what it will cost & the date you have to pay by.
You get 1/35th of the full state pension for every year that you pay, at present this works out at £4.45 per week per year paid.
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Steve Webb was a very good pension minister. This, from today's FT, may be useful to some - 'how to bump up your state pension'.
https://next.ft.com/content/46a54a64-330e-11e6-bda0-04585c31b153?myftTopics=MTQw-U2VjdGlvbnM%3D#myft:my-news:grid
https://next.ft.com/content/46a54a64-330e-11e6-bda0-04585c31b153?myftTopics=MTQw-U2VjdGlvbnM%3D#myft:my-news:grid
