Pension National Insurance Contributions Retrospective Change to Opted-Out
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It's not new news, alas. In terms of back-filling NI contributions, you cannot fill a gap-year for which you were contracted out (in other words, those years that you were contracted out of the basic state pension (bps), and consequently, into AFPS). There has been a drip feeding of bad news about pension stuff, generally.
Just a quick reminder, contracting out of AFPS ends next month. [Archive] - PPRuNe Forums
Everyone has a 'starting/foundation amount' for their bsp. There are two types of starting amounts' one is linked to the old basic pension plus state earnings-related pension (SERPS), and there is the new bsp based on 35 years of contributions minus a deduction for past contracting out in a public sector pension, such as AFPS. It is this latter one which is causing so much grief for those so close to bsp retirement. For most others still serving, it's not so much as issue. By the time you get to bsp age (97 at the last count, I think), you'll have accrued thirty five years. It won't apply to everyone, but if in doubt, contact TPAS:
http://www.pensionsadvisoryservice.org.uk
More: https://www.theguardian.com/money/20...-state-pension
As an aside, we have seen the government being holed left, right and centre by the WASPI campaign. Part of that campaign is based on the premise the ladies weren't contacted. I believe I'm right in saying this, but everyone who may have been able to make good any shortfall, should (could?) have been contacted.
Call TPAS - a superb pension service. Run by Michelle Cracknell, a great chief exec, ex scaley brat and a fondness for the RAF - her dad was aircrew on the V Force.
Just a quick reminder, contracting out of AFPS ends next month. [Archive] - PPRuNe Forums
Everyone has a 'starting/foundation amount' for their bsp. There are two types of starting amounts' one is linked to the old basic pension plus state earnings-related pension (SERPS), and there is the new bsp based on 35 years of contributions minus a deduction for past contracting out in a public sector pension, such as AFPS. It is this latter one which is causing so much grief for those so close to bsp retirement. For most others still serving, it's not so much as issue. By the time you get to bsp age (97 at the last count, I think), you'll have accrued thirty five years. It won't apply to everyone, but if in doubt, contact TPAS:
http://www.pensionsadvisoryservice.org.uk
More: https://www.theguardian.com/money/20...-state-pension
As an aside, we have seen the government being holed left, right and centre by the WASPI campaign. Part of that campaign is based on the premise the ladies weren't contacted. I believe I'm right in saying this, but everyone who may have been able to make good any shortfall, should (could?) have been contacted.
Call TPAS - a superb pension service. Run by Michelle Cracknell, a great chief exec, ex scaley brat and a fondness for the RAF - her dad was aircrew on the V Force.
Thanks Al! Can you offer any info on how the MOD would claim that I was reasonably informed about my pension rights in 1975? Sorry if that sounds crass but, they must have some get-out clause to avoid responsibility for lack of care? Cheers!
OAP
OAP
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You have to look at how belligerent the government is with WASPI, and vice versa! It all goes, I imagine, to reasonableness.. was it reasonable for someone to know, or enquire, how their scheme was run? Don't get me wrong, I didn't have a clue either.
Another example for a pensions body (and federation?) acting unequivocally in the interests of all service personnel?
Another example for a pensions body (and federation?) acting unequivocally in the interests of all service personnel?
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I don't disagree at all. In the state's defence, I think, at the time, it was just the done thing. Even then, we all secretly knew the state retirement system was entirely dysfunctional, but there was mileage yet in kicking the can down the road to buy votes. No excuses, it was incredibly irresponsible, and it wasn't until the early 90's that everyone started to realise the game was up. I can't remember, but I'm pretty certain that as recently as two years or so ago, DWP obfuscated about the two different types of foundation point starter. Was its reasoning to help? I doubt it. Staff at DWP weren't properly trained and consequently, I imagine many people approaching retirement and requesting information were incorrectly briefed by call-centre staff.
Going back to your point about MoD culpability, the information was out there, in various scheme booklets, but its potential consequences were never interpreted (and why would they be?) and the implications were unforeseen. Ending 'contracting out' was the right thing to do for a much wider arc of reasons, the fillet of your pension that was attached to the contracted out element demanded a level of Guaranteed Minimum Pension that was unaffordable.
But it was only one of many reasons to be aggrieved with how all public sector pensions were going at the time (CPI/RPI revaluation etc). Another 1% pay rise continuing to decimate the value of any defined benefit pension, increasing inflation (the Trump switching off of fiscal restraint when the US job market is healthy anyway), (still) low interest rates, bond yield caps.. all point to financial repression and the governments of the world attempting to impede the markets. I'm seeing clients with defined benefit transfer values of between forty and fifty times annual,pensions at retirement.
Back to the point about financial repression and the insidious long term effect of (how many now?) years of 1% pay increases, will the PPRuNe of 2037 be asking 'why did no one advise us of the consequences of this? More importantly, why are 'we' sleepwalking into it? On a wider note, Hammond's budget was conspicuous by no references to pensions. Expect something in the next one. New, general rules of saving for retirement thumb? Expect to save for retirement for at least 45 years, start by putting away at least 12.5% per annum (if you trust AFPS enough to include in that the notional contribution, crack on) and build steadily on that level, and aim to have at least ten times your final salary set aside, when you retire.
My kids, I am certain, won't draw the miserable vestiges of what's left of their state pensions until they're seventy five. We're entering the third phase of pensions - the first was the bribe (to get knackered fifty year olds out of the mills and fields and into obscure, retirement misery until they died four years later of whatever it was they were expected to die of) to make way for the kids). The second was the sell (boomers were told that a retirement of walking through crashing surf was a forty year gin soaked, linen clad birthright), and now, the stick. Unless you look after yourself, financially, a bleak retirement in some local council dump being manhandled to the ward potty once every two days by a twenty eight year old from Asia who doesn't speak your language is the spectre.
Going back to your point about MoD culpability, the information was out there, in various scheme booklets, but its potential consequences were never interpreted (and why would they be?) and the implications were unforeseen. Ending 'contracting out' was the right thing to do for a much wider arc of reasons, the fillet of your pension that was attached to the contracted out element demanded a level of Guaranteed Minimum Pension that was unaffordable.
But it was only one of many reasons to be aggrieved with how all public sector pensions were going at the time (CPI/RPI revaluation etc). Another 1% pay rise continuing to decimate the value of any defined benefit pension, increasing inflation (the Trump switching off of fiscal restraint when the US job market is healthy anyway), (still) low interest rates, bond yield caps.. all point to financial repression and the governments of the world attempting to impede the markets. I'm seeing clients with defined benefit transfer values of between forty and fifty times annual,pensions at retirement.
Back to the point about financial repression and the insidious long term effect of (how many now?) years of 1% pay increases, will the PPRuNe of 2037 be asking 'why did no one advise us of the consequences of this? More importantly, why are 'we' sleepwalking into it? On a wider note, Hammond's budget was conspicuous by no references to pensions. Expect something in the next one. New, general rules of saving for retirement thumb? Expect to save for retirement for at least 45 years, start by putting away at least 12.5% per annum (if you trust AFPS enough to include in that the notional contribution, crack on) and build steadily on that level, and aim to have at least ten times your final salary set aside, when you retire.
My kids, I am certain, won't draw the miserable vestiges of what's left of their state pensions until they're seventy five. We're entering the third phase of pensions - the first was the bribe (to get knackered fifty year olds out of the mills and fields and into obscure, retirement misery until they died four years later of whatever it was they were expected to die of) to make way for the kids). The second was the sell (boomers were told that a retirement of walking through crashing surf was a forty year gin soaked, linen clad birthright), and now, the stick. Unless you look after yourself, financially, a bleak retirement in some local council dump being manhandled to the ward potty once every two days by a twenty eight year old from Asia who doesn't speak your language is the spectre.
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"Zedder"
In my case (28 years service) my COPE estimate is £90.53 a week. So I assume that if I supposedly achieve the £155.65 a week state pension, they will then deduct the COPE figure. Ouch!!
Is it not that you still get the basic state pension £155.65. The £90.53 is what you would have had as your secondary state pension. You only opted out of the secondary state pension not the basic pension?
In my case (28 years service) my COPE estimate is £90.53 a week. So I assume that if I supposedly achieve the £155.65 a week state pension, they will then deduct the COPE figure. Ouch!!
Is it not that you still get the basic state pension £155.65. The £90.53 is what you would have had as your secondary state pension. You only opted out of the secondary state pension not the basic pension?
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The COPE is a frightener, but as I understand it, you won't get less than the amount the 'old' state pension would have delivered, so it's more like £155 -90 (ouch!) but back to £119 (whew!).
@Al - is this right?
@Al - is this right?
Avoid imitations
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Back to the point about financial repression and the insidious long term effect of (how many now?) years of 1% pay increases, will the PPRuNe of 2037 be asking 'why did no one advise us of the consequences of this? More importantly, why are 'we' sleepwalking into it? On a wider note, Hammond's budget was conspicuous by no references to pensions. Expect something in the next one. New, general rules of saving for retirement thumb? Expect to save for retirement for at least 45 years, start by putting away at least 12.5% per annum (if you trust AFPS enough to include in that the notional contribution, crack on) and build steadily on that level, and aim to have at least ten times your final salary set aside, when you retire.
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Having followed this thread I dug out my pension forms from leaving.
I am entitled to a pension from age sixty which only becomes index linked when I claim at sixty.
I was under the impression it was index linked from leaving.
Am I reading this correctly?
My COPE is £24 something.
Thanks for any responses Al R maybe need to see an advisor I'm currently working for state.
I am entitled to a pension from age sixty which only becomes index linked when I claim at sixty.
I was under the impression it was index linked from leaving.
Am I reading this correctly?
My COPE is £24 something.
Thanks for any responses Al R maybe need to see an advisor I'm currently working for state.
Your preserved pension is increased at age 60 by all the pension increase measures which have occurred since you left service and then by CPI (the current pension increase measure) each year going forward.
My online estimate on the .gov website gave me the full pension of £155. However, having been contracted out in the RAF and in a company pension scheme, my COPE is going to be £69 per week. What I don't understand is that by the time I retire I will have 48 full and 2 partial years of NI contributions, whereas to qualify for a full pension 30 years contributions are required. Do my extra years not count towards the full pension?
My online estimate on the .gov website gave me the full pension of £155. However, having been contracted out in the RAF and in a company pension scheme, my COPE is going to be £69 per week. What I don't understand is that by the time I retire I will have 48 full and 2 partial years of NI contributions, whereas to qualify for a full pension 30 years contributions are required. Do my extra years not count towards the full pension?
How many of your 48 years were not contracted out? The way I read it you would need 30 years of contracted in to get the full whack as this new pension was effectively produced by adding the old basic and SERPS bits.
The 12.5% is of course on top of their university loan repayments. How the hell my youngest is ever going to have room to pay a mortgage is beyond me. The many thousands of school leavers who were encouraged to go to university by Blair's Government (mainly to avoid them appearing on the unemployed list ahead of an election) are going to struggle to pay back their "taxes for life".
Thanks for the reply. I was contracted in for about 14 years. Your summary of how the new pension was produced is probably the most succinct I have read in this morass. After poking around on the web for a day I think I have a grasp of this and it looks like I'll end up with £119 pw and not the £155 advertised. What galls me more than anything was the suggestion was that it was possible to top up the NI contributions, to achieve the full pension, taking no account of the extra years of contributions over and above the 35 I've already made.
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Still a little confused. Here is my pension forecast:
Estimate based on your National Insurance record up to 5 April 2016
£135.74 a week
Forecast if you contribute another 5 years before 5 April 2034
£155.65 a week
I have a COPE of £48.
On 5 Apr 2021 I will have contributed enough to reach the full £155, including the £48 COPE, giving me an actual state pension of £107. This is based on (roughly) 18 years full contribution and 17 years opted-out. If I continue to contribute for say another 5 years, will they take the extra full years over the opted-out years and credit me with 23 full years, and a "balance" of 12 years opted-out? Or are any extra contributions past 2021 effectively wasted in terms of my state pension?
Estimate based on your National Insurance record up to 5 April 2016
£135.74 a week
Forecast if you contribute another 5 years before 5 April 2034
£155.65 a week
I have a COPE of £48.
On 5 Apr 2021 I will have contributed enough to reach the full £155, including the £48 COPE, giving me an actual state pension of £107. This is based on (roughly) 18 years full contribution and 17 years opted-out. If I continue to contribute for say another 5 years, will they take the extra full years over the opted-out years and credit me with 23 full years, and a "balance" of 12 years opted-out? Or are any extra contributions past 2021 effectively wasted in terms of my state pension?
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JTO and OF. My understanding is that the "COPE" deduction is rather theoretical. In other words, they compared your pension under the old scheme with the new one on 5 April 2016. So OF might have accrued £119 and some additional SERPS/S2P under the old scheme adding up to £135.74 this was compared with the new scheme which was £155 minus COPE of £48 (ie £107) because of contracting out. Your starting amount would have been the higher of the two figures - therefore £135.74. Since contracting out finished last year, any NI paid since Apr 16 adds to your pension starting amount until you reach £155. Provided you pay the full stamp, you get over £4.40 per week extra pension for each year of NI. So as per the estimate provided to you, you have to work/pay NI for 5 more years to reach the full £155 figure.
That is how I understand it works as I am in a similar position. I would, of course stand to be corrected by professionals such as Al R or VOXPOP.
That is how I understand it works as I am in a similar position. I would, of course stand to be corrected by professionals such as Al R or VOXPOP.
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jonw66
As I understand it (though I may be wrong): preserved pension increases:
https://www.gov.uk/government/public...-increase-2017
As I understand it (though I may be wrong): preserved pension increases:
https://www.gov.uk/government/public...-increase-2017