National Insurance contributions, or lack thereof
Thread Starter
National Insurance contributions, or lack thereof
Doing a bit of checking the other day on Gov.UK with regard to the State Pension and it appears that, despite being in my 41st year of NI contributions through my RAF pay, I will still not qualify for the full State Pension when the appropriate time comes. I, and many others it would seem, was "contracted out" of making full NI contributions by my employer at some point. I can't tell when this happened and the staff in PSF can't tell me either. If I'm being slow on the uptake on this matter and should know better, I'll take the hit however, plenty of people I work with are similarly in the dark.
Any wise owls out there who know what the score is on this one?
My strong advice on this would be to check your status via the Government pensions website. It takes a few minutes to set things up, but you may find the results interesting / worrying.
Any wise owls out there who know what the score is on this one?
My strong advice on this would be to check your status via the Government pensions website. It takes a few minutes to set things up, but you may find the results interesting / worrying.
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My NI history post-RAF is sufficiently complicated that I don't think I want to go there.
Is there a useful link?
Is there a useful link?
The link is below. You have to register and there is a security function involving texts to a mobile phone. Also shows income tax as well.
https://www.gov.uk/check-national-insurance-record
https://www.gov.uk/check-national-insurance-record
Join Date: Mar 2010
Location: Often in Jersey, but mainly in the past.
Age: 79
Posts: 7,807
Received 135 Likes
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The link is below. You have to register and there is a security function involving texts to a mobile phone. Also shows income tax as well.
https://www.gov.uk/check-national-insurance-record
https://www.gov.uk/check-national-insurance-record
Knew of the change in the law when it happened, but thought the opt out was something done by the individual to get out of SERPS, not automatically if you worked for the Crown and I don't recall any information about it being put out at the time.
I found that out this year as well, however on another thread someone pointed out that if you were employed post military service and continued to pay in NI above the 35 years (?) required for a full state pension, you would then get the full amount (I think 7 years was the minimum), trouble was my civilian pension was also classed as opted out, so no full pension for me.
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Opting out, or being opted out, meant lower NIC. The idea was, you'd supplement retirement provision yourself. Spare a thought for members of the British Steel Pension Scheme as the scheme evolves into BSPS2 or passes to the Pension Protection Fund. In retirement, they stand to lose index linked raises on all pre 1997 contributions, unless they transfer out.
Not sure why this attracts so much ire. What you did was contract out of the 2nd state pension (SERPS) so that you could get your Forces pension without paying tax on it. Pretty well everyone who had a separate (forces/company/WHY) pension was strongly advised to contract out of SERPS to avoid your 2nd pension being eaten away in tax. Overall you're better off.
Could it possibly be that this was explained, but at that age you weren't really paying much attention to what some old duffer was saying about pensions (not a subject that was high on your personal priority list at the time)?
PDR
Could it possibly be that this was explained, but at that age you weren't really paying much attention to what some old duffer was saying about pensions (not a subject that was high on your personal priority list at the time)?
PDR
This has been covered at length on this forum:
http://www.pprune.org/military-aviat...pension-q.html
http://www.pprune.org/military-aviat...opted-out.html
Not quite - your state pension is reduced by a much smaller amount than your COPE amount. Work out the difference between full state pension and your forecast, and then check the COPE amount on the next page.
I'm pretty sure you are right. I do remember being told about contracting out, I think it was even mentioned on our pay statements, but I didn't really have much of a clue - or much interest. I do recall us being told it was a good thing. It may not however have been made apparent to subsequent joiners.
Overall, as said, you are likely to be better off due to contracting out.
http://www.pprune.org/military-aviat...pension-q.html
http://www.pprune.org/military-aviat...opted-out.html
Overall, as said, you are likely to be better off due to contracting out.
Last edited by Background Noise; 7th Nov 2017 at 08:58. Reason: Added the bit about those joining after 86
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Technically, you could argue that you didn't want to be contracted out and wished to reserve your right not to be so. At which point, of course, you'd have ceased to be a member of the pensions scheme and lost your death in service benefits.
So I found myself forced to get iunvolved with some financial planning, and the advisor firmly told me that it was ESSENTIAL that I joined the pension scheme of my new employer ASAP, because I had a girlfriend an they have a habit of falling pregnant (an accurate prediction, as it transpired). So at that point I contracted out of SERPS and joined the pension scheme, something I would have deemed dangerously conventional and domesticated as well as too low a priority to spend time on when there were still aeroplanes to be flown and pubs to be drunk-dry. So I was just lucky. Every now and then the devil vomits in someone ELSE'S porridge bowl and overlooks mine!
Of course seven years later the prediction came true, and marriage withdrew the time & funding to maintain the PPL, but at least I know that my family will have the umbrella of a rather rare final salary pension. That was 20 years ago, and I'm still wondering what the heck happened to my life and how I became such a boringly conventional person...
PDR
* this is a misnomer - it just means that the pension membership was compulsory rather than optional
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I think we have been around this buoy again recently. It will take until 5 Apr 2018 and nearly 12 years out for me to have enough stamps to qualify me for the full entitlement. But I knew I was opted out when I joined - I say I knew but actually I didn't understand fully what this meant. Indeed, I could have transferred the small amount of pension that I had accrued with a company I had joined when I left school to add years to my RAF pension but until I was told this, it was too late 4 years after Cranditz when I thought it would be a good idea, I don't recollect ever having been told although that index linked gem will keep Mrs B in shoes in our retirement 
.
I hope that financial planning is on the curriculum nowadays (I doubt). Financial bit of resettlement planning was blox too - or was I not listening again. Took my own research to discover that you could get the NI contributions back for any period when you remained in the service but had already started work in Civvi street.
.I hope that financial planning is on the curriculum nowadays (I doubt). Financial bit of resettlement planning was blox too - or was I not listening again. Took my own research to discover that you could get the NI contributions back for any period when you remained in the service but had already started work in Civvi street.
CG
*in name only, of course, it's not ring-fenced
Last edited by charliegolf; 7th Nov 2017 at 16:17.
Contracted Out
I wrote to the pension people in Newcastle and asked them how they had come to the figure that they had. It is a complicated way that they get your starting figure of 2016 when the new pension came into force. Eventually I gave up and put all the sharp objects away. The really galling point is that there is no correlation between a contracted out and a contracted in year despite there being well documented figures (CO we paid 88% of CI). What this appears to mean is that you could have made more than enough equivalent payments to make 35 years of contribution but that would be too easy.
Also lets not forget that NI goes towards the NHS which we did not use so much when we were serving esp when we actually had service hospitals.
Also lets not forget that NI goes towards the NHS which we did not use so much when we were serving esp when we actually had service hospitals.
Globe Trotter
Absolutely! It's as clear as mud in most cases. I'm reasonably intelligent (on my day and with a fair wind), used to be vaguely numerate enough to pass Meteorology courses and can now interpret and where required engineer policy to benefit ops. Ask me to understand pension issues and calculations and I break out in a cold sweat.
I've recently been looking into my own pensions and frankly I could be 180 degrees out in my calculations and understanding. Despite being contracted out, the HMRC website suggests I'm in line for a full state pension at 67 or whenever they do pay it. I can only assume that's because the reduced qualifying period and number of years left to run mean my contracted out time is made up by the years I have left contracted in. That's my assumption, the website isn't clear at all.
And don't even start with trying to fathom MOD pensions. That took 2 afternoons and help from FPS to resolve (long term forecasts will likely undershoot as they can only calculate your historical pay and pay up to the time you request a forecast; any forecast going forward doesn't factor in any increases, including annual increments so will be less accurate over time despite JPA holding all the relevant data.)
That so many relatively intelligent people have to come on here to ask what's going on, relying on a few in house 'experts' and the wisdom of the crowd is as much as a scandal as anything else.
I am rarely flummoxed by Pay/Pension/Entitlement rules and Regs, and policy - in this case I am. Not because I do not think that it is fair ........ but because I judge it is not clear.
I've recently been looking into my own pensions and frankly I could be 180 degrees out in my calculations and understanding. Despite being contracted out, the HMRC website suggests I'm in line for a full state pension at 67 or whenever they do pay it. I can only assume that's because the reduced qualifying period and number of years left to run mean my contracted out time is made up by the years I have left contracted in. That's my assumption, the website isn't clear at all.
And don't even start with trying to fathom MOD pensions. That took 2 afternoons and help from FPS to resolve (long term forecasts will likely undershoot as they can only calculate your historical pay and pay up to the time you request a forecast; any forecast going forward doesn't factor in any increases, including annual increments so will be less accurate over time despite JPA holding all the relevant data.)
That so many relatively intelligent people have to come on here to ask what's going on, relying on a few in house 'experts' and the wisdom of the crowd is as much as a scandal as anything else.
Last edited by Melchett01; 7th Nov 2017 at 21:38.
Nigerian In Law
It's a complete clusterf**k. I got a letter out of the blue 3 years ago telling me that I had fulfilled my obligations vis a vis NI contributions (I had been paying Class 3 for 25 years while working overseas after 15 years of Class 1 payments in the mob) and that I was qualified for a full pension when I reach 66. So I stopped paying.
A pension forecast request confirmed this. The system, such as it is, obviously kept some sort of track.
NEO
A pension forecast request confirmed this. The system, such as it is, obviously kept some sort of track.
NEO
Last edited by Nigerian Expat Outlaw; 7th Nov 2017 at 21:34. Reason: Karnt spell.
Nothing to do with service pensions(I don't have one)but I was several years short on my NI contributions,You can pay back up to five previous years which I did.Also if you defer your state pension one year you get an extra 10%.Mind you its fifteen years since I got mine!!
I have looked into this in great detail too, and it does seem quite impossible to get a definitive answer!
COPE is one aspect, another is the change in pension age (Old / New State Pension amounts).
One of the problems seems to be that they changed the qualifying years required to access the "new" state pension amount. So you can check on the site and be fully "paid-up" (but that is calculated in "old" qualifying years)!
(Also beware: The headline figure, in colour, stated three times, makes it look like you are OK, you have to go to the small B&W figure later on to see how much you actually have earned!)
If you speak to them, they will do the calculations & tell you if you fall short in "new"qualifying years (35, as Vascodegama says). Then, provided you are in the window, you can pay extra to access the "new", higher, state pension flat rate (c£8k). It is about £720 to buy each extra year. At c£3500 to buy all five years (max allowed), I thought it a worthwhile risk. You can pay in installments.
If you can afford to defer, as oldpax says, that is good. But the rate has now dropped to just over 5% for each year of delay in pickup!
lsh
COPE is one aspect, another is the change in pension age (Old / New State Pension amounts).
One of the problems seems to be that they changed the qualifying years required to access the "new" state pension amount. So you can check on the site and be fully "paid-up" (but that is calculated in "old" qualifying years)!
(Also beware: The headline figure, in colour, stated three times, makes it look like you are OK, you have to go to the small B&W figure later on to see how much you actually have earned!)
If you speak to them, they will do the calculations & tell you if you fall short in "new"qualifying years (35, as Vascodegama says). Then, provided you are in the window, you can pay extra to access the "new", higher, state pension flat rate (c£8k). It is about £720 to buy each extra year. At c£3500 to buy all five years (max allowed), I thought it a worthwhile risk. You can pay in installments.
If you can afford to defer, as oldpax says, that is good. But the rate has now dropped to just over 5% for each year of delay in pickup!
lsh
Last edited by lsh; 8th Nov 2017 at 08:01. Reason: spelling!