Just a quick reminder, contracting out of AFPS ends next month.
It'll mean less going into the bank.
Bleakly and desperately scrambling around looking for any positives, the state pension is intended to provide more (plenty of time for that to be moved). And you'll not be paying more than civvies (this brings you into line with their NIC) so that makes it hard to complain specifically about this. Because after all, we are in it together. But really, on the back of waves of token pay increases, it's going to be a very bitter pill to swallow and for some, it'll mean actively cutting back instead of downplaying aspirations (which is the effect of those 1% pay increases). Lots of folk still don't know about it so if you have a Twitter account, please feel free to retweet it. Chapeau. https://twitter.com/raf_ifa/status/714747727251443712 |
Just tried the new state pension calculator, in beta. It's very good. If you're over fifty, give it a go - find out what the new state pension is estimated to give you, and when.
https://www.gov.uk/check-state-pension |
Quick question Al R; I am assuming that when we hit state pension age, post full military career, we get the full state pension on top of our military pension? In the case of the new state pension that is an extra £8093 at age 65 or 67 or 70 or whenever!
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Wokkamate,
AFAIK, you should get the state pension you have earned at state pension age. At present, a full state pension will require 35 years of qualifying NI payments but, I fully expect that level will increase to 50 qualifying years by the time that the state pension age reaches 70yo. Just my opinion OAP |
It's interesting to see that even the so called 'experts' don't seem to understand what's going on with the new NICs and the new State Pension.
Paul Johnson, Director of the IFS, was recently quoted in the DT as saying; “Members of final salary occupational pension schemes and their employers will now be paying the same NI contributions as the rest of us. "Since they will be building up just the same state pension rights this can only be right.” I wonder if he conveniently forgot about this or just didn't realise ... politics or incompetence, which noose would you rather hang yourself with Mr Johnson? |
Originally Posted by Melchett01
(Post 9328050)
It's interesting to see that even the so called 'experts' don't seem to understand what's going on with the new NICs and the new State Pension.
Paul Johnson, Director of the IFS, was recently quoted in the DT as saying; Well that might be correct for individuals just starting out on their working life, but if reports are correct, those already well into their careers will be hit very hard by the contracting out, with even a short period contracted out, a year or 2 for example, leading to a hefty reduction in the new pension seemingly out of proportion to the time spent contracted out. I for one expect to get nothing close to the widely touted State Pension of £155 or whatever it is in a couple of decades time because of the time spent in AFPS. I wonder if he conveniently forgot about this or just didn't realise ... politics or incompetence, which noose would you rather hang yourself with Mr Johnson? |
It's a downright disgrace IMHO that you serving guys don't get support from the MOD/RAF with such important issues as Pensions and seemingly just left to figure it out yourselves ... No disrespect to Al and his valiant efforts on here.
Say what you like about 'HR Functions' in civvy street Corporates ... But the majority even manage to get that right ... There would be open revolt if they didn't. |
Coffman,
Absolutely no offence taken. To further prove your depressingly prescient point, Katie Morley possibly pulled a rabbit out of the hat with this one the other week. The separation of NIC from HMRC and the fact that DWP and HMRC just don't work together has created, potentially, a holy mess. It will be interesting to see if MoD still keeps records (post 2012, it wasn't required to do so) and whether the data that it does hold on you, in respect of your Guaranteed Minimum Pension, equates to that which the government assumes you have. http://www.telegraph.co.uk/finance/personalfinance/pensions/12143174/Four-million-people-retiring-from-April-could-get-the-wrong-state-pension.html In 2008, there was a big drive to empower SP financially. That seems to have withered on the vine though. |
Melchett,
It's a complete disaster. This news crept out over the Easter weekend. http://www.bbc.co.uk/news/business-35904417 |
OAP,
I think it'll be seventy five in very quick order. I spoke with someone at the Treasury - what it's gearing up for is the next public sector pension slash and burn. The lifetime ISA will herald the end of the pension, as we know it, for those about to join the workplace. If we want to see how the Tories tacitly see retirement 'evolving', look no further than its left field mouthpiece, floating the idea a week ago. To an extent, a pragmatic reality check (after all, we know affordability is long past the point of being a contentious debating point) but the evangelical fervour with which it conceptualises the future, makes for depressing reading. http://www.conservativehome.com/thetorydiary/2016/03/we-should-face-up-to-the-end-of-retirement.html The entire concept of ‘a retirement’ is, after all, an artefact of the welfare system. It was clumsy of the original architects of pensions to base their end-of-life benefit on a fixed age, rather than need. That the pension age then fell so far behind life expectancy was politically inevitable, but the consequences have caught up with us. Simply put, today’s young people face the fact that they will not have a long retirement. The state cannot afford for an increasing number of physically able older people to drop out of the workforce years, or decades, before they need do so. In the future, the idea of decades of life out of work will probably seem as unreal as the old, final-salary corporate pensions of the yesteryear do today, a few public-sector holdouts notwithstanding. As medical advances help us stay active longer, the expectation in the future must surely be that whilst you can work, you work – unless you can save enough to pay for a period of idleness yourself. We have already started in that direction: where once the retirement age was a guillotine that fell across a person’s career, it is now simply a milestone at which one unlocks an entitlement. Eventually it will not even be that. These additional years in work, combined with measures such as the Lifetime ISA to encourage life-long saving, will afford people more time to accrue the money they need to provide for themselves in their twilight years. Meanwhile the original function of the state pension – to provide for those incapable of supporting themselves financially from the end of work until they died – could be served by some form of needs-based infirmity payment. |
Al,
An interesting post from Conservative Home there. And I use the word interesting in the same way one might use the word egregious to describe someone like politicians or Treasury officials. The use of the word 'idleness' will surely get peoples' backs up and probably isn't the way to get people on board after a 40-50 years of slogging away, before spending their final years with family and doing things they want to do rather than have to do. And whilst they may have a point about the general direction of travel vis-a- via life expectancy and affordability, I wouldn't be at all surprised if any Govt that decided to pull the plug on pensions retrospectively after people have contributed via NICs (I do realise they pay for current rather than future liabilities) wasn't challenged, both in the Commons (more likely if we continue to move towards a true multi-party system with smaller majorities & Coalitions) and in the courts. But what really astounds me about the Conservative Home post is that they talk as though they genuinely believe that Govt policy on pensions, savings and retirement etc is coherent and that this plan will actually work. It's nothing of the sort and you only have to look at the example of politicians on the one hand extolling the virtue of responsibility and saving for the future whilst simultaneously doing everything they can to tax us into penury and wrap us up in red tape. The public will only accept what is being discussed here when the politicians accept that they need to stop screwing people over to plug the gaps due to their fiscal incompetence. |
So if someone served 30 years in the armed forces, how many years of NICs would that amount to?
|
Al ...
AOC 1 Group recently Tweeted ... 2 days with the leadership of 1Gp discussing how to deal with the significant challenges ahead in 2016/17. People 1st across the Whole Force I would have thought that providing effective/timely pension information/support should be an important item on any 'People 1st' Agenda ... It's a basic employment responsibility. |
OAP, I think it'll be seventy five in very quick order. I spoke with someone at the Treasury - what it's gearing up for is the next public sector pension slash and burn. The lifetime ISA will herald the end of the pension, as we know it, for those about to join the workplace. If we want to see how the Tories tacitly see retirement 'evolving', look no further than its left field mouthpiece, floating the idea a week ago. To an extent, a pragmatic reality check (after all, we know affordability is long past the point of being a contentious debating point) but the evangelical fervour with which it conceptualises the future, makes for depressing reading. We should face up to the end of ‘retirement’ | Conservative Home Yes, I expect the moving goalposts will continue with increasing the age and qualifying work years for state pension. Let's face it, there has been little voter rebellion to the huge change in female state pension age due, I think, to the fact that it has not yet effected many ordinary people. But, it will! I do not think many people realise that the present delay of female state pension age has cost all future female OAP's around £50,000! One important factor that is purposely not highlighted is, that living longer (alegedly) in old-age does not make you suitable for productive work in old age. Cheers OAP |
Just been on the beta UK Gov pension calculator. It came out with £155 ish at age 67. My details are 37 years contributions so far - 2 civil service, 34 military, 1 civil employment.
Am I right in thinking that the reduced NIC I have paid will reduce that figure once they get factored in? //trk |
No idea how it works now, but as a datum I did something like 29 years [over 21] and then 5 of paid voluntary work. I get £121 a month.
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Originally Posted by PARALLEL TRACK
(Post 9330093)
Just been on the beta UK Gov pension calculator. It came out with £155 ish at age 67. My details are 37 years contributions so far - 2 civil service, 34 military, 1 civil employment.
Am I right in thinking that the reduced NIC I have paid will reduce that figure once they get factored in? //trk |
SERPS
Back in the old days the service opted out of the state pension system, we all thought, and were encouraged to think, you just lost the increased element earned by higher pay levels and paid a lower NIC, WRONG.
That's why it was called State Earning Related Pensions System. Only when you reached retirement age did you discover that you earned no state pension credit for those years and because you were no longer earning you could not buy them back. My state pension is reduced by £95 per week for the lost years of contributions but naturaly I am happy to know it helps the service meet the deffence need |
Forgive my total ignorance, but do I understand correctly that all military service was "opted out" so you get nothing for years contributed to state pension? I did 37 years and now working abroad so not paying any more NI. Does that mean I'll get nothing?
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Originally Posted by Onceapilot
(Post 9329933)
Hi Al,
Yes, I expect the moving goalposts will continue with increasing the age and qualifying work years for state pension. Let's face it, there has been little voter rebellion to the huge change in female state pension age due, I think, to the fact that it has not yet effected many ordinary people. But, it will! I do not think many people realise that the present delay of female state pension age has cost all future female OAP's around £50,000! One important factor that is purposely not highlighted is, that living longer (alegedly) in old-age does not make you suitable for productive work in old age. Cheers OAP |
ALCON
If one serves as a serviceman from age 18 to 60 paying lower rate NICs for the majority of that time (say 35 years plus) and does not work from age 60 to 67 will he get a greatly reduced state pension? Yes or no? Regards //trk |
It's not that simple alas. But in principle, for most people, the time and the specific years that you spent contracted out and what the legislation was at the time, won't count towards your state pension. Henry is one of, if not the most credible commentators on state pension provision.
http://henrytapper.com/2016/04/04/the-new-state-pension-winners-and-losers/ |
DWP are going to write to you telling you your 'foundation amount' as at 6 April 2016 - so that is what you have built up so far in the old arrangement - then the higher rate NICs will build on that 'foundation amount'.
|
@//trk
A ex-colleague of mine in those circumstances had his State Pension reduced to £75 p/week. |
A loss of over £1,300 per year from my pension plans. Editted as I was wrong |
As I understand it, the DWP will compare what one has accrued under the old state pension scheme with the new single tier pension (which will be lower for Service personnel because of the Contracted Out reduction). The higher of the two figures will be the basis for future pension rights (was called the "foundation amount"). From today, every extra year one pays the full NI rate equates to an increase of £4.40 approx additional pension per week(not including any indexing) on top of the foundation amount. Someone who has 30 years of contributions, even contracted out, will have accrued approx £119 on the old scheme. If they work an additional 10 years from 2016, they should therefore be eligible for the full single tier pension. The govt pension service is running a state pension forecast "beta" service which will calculate your current and projected pension entitlement under the new state pension scheme.
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The internet address for the new state pension forecast is: www.gov.uk/check-state-pension
There are a series of security hoops to jump through but you can get an immediate forecast online. |
Thanks FOD - so not as bad as I feared then.
It's about time the Government sent out accurate forecasts to everyone - every year, they tell me how my taxes are spent so should be able to tell me what my NI contributions will give me as a pension. |
I understood that the gov.uk pension site did take the contracting out into account - I think it did with my forecast today. Someone with 35 years of NI (contracted out) will get £119 on the old system which is more that the £70 or less one would be entitled to under the new scheme. These two figures are then compared and the higher figure is the starting amount. I got the terminology wrong earlier as the higher of the two calculations is called the pension "Starting Amount" and not the "foundation Amount" as it was previously known as. Any additional years of NI accrued in future under the new scheme get added to the "starting amount" at a rate of about £4.40 per week per year of NI paid.
One thing is sure, the new scheme is going to be fiendishly complicated for a few years. I have yet to meet a politician who understands it fully. |
Thanks again FOD - I understand it now. I misunderstood what contracting out meant and how it added to the SERPS / S2P rather than the basic state pension.
Orignal posts editted as I was wrong. |
Does anyone know when the MOD contracted us out?
Also, am I right that service before age 18 i.e. apprentice training, counts for nothing from a pension perspective? |
My simple pilot brain is struggling to understand how the state pension works. I've run through the calculator and its saying that I will get the full 155.65 in about 30 years time when I eventually hit retirement age (assuming I haven't died of liver failure). The amount is made up of state pension and something called COPE. But it seems that when the COPE, which appears to be the private contribution towards your pension from your contracted out scheme, goes up then the state pension amount goes down. In simple terms, I always assumed (maybe wrongly) that when I hit retirement age I would get my Armed Forces pension (amounts as per the estimate on the AFPS online calculator) plus a state pension (based on NI contributions) but the GOV.UK estimate site seems to suggest they will wind back my state pension if the AFPS amount is big enough. Is this correct or am I misunderstanding this?
|
AFPS is only 'big enough' or rather, it's only the size that it is, because of the contracted out element. The argument goes that in the past it has only been as generous as it was because you were contracted out, and that, in theory, if you weren't contracted out then you would get a larger basic state pension provision and subsequently, a smaller occupational one. I assume that's what you're referring to in your final point and not means testing. But that's another topic.. :(
COPE - pages 10-14 refer: https://www.gov.uk/government/upload...ned-dwp042.pdf |
Hi Al!
Am I correct to say that Service personel are financially injured by this retrospective change in state pension law and, that personel had no choice in the way that their NI was charged during their service?:oh: If so, is this not a breach of the "Military covenant" that DC should correct? OAP |
Originally Posted by egdg
(Post 9336285)
I don't think you'd have a blade of grass to stand on, on that one. I've always known I've paid less NI for having a military pension accruing.
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Originally Posted by Onceapilot
(Post 9335475)
Hi Al!
Am I correct to say that Service personel are financially injured by this retrospective change in state pension law and, that personel had no choice in the way that their NI was charged during their service?:oh: If so, is this not a breach of the "Military covenant" that DC should correct? OAP On another note, this revised guidance is useful for everyone serving overseas, and who has a co-located partner. Thanks to Navy Phil for bringing it to my attention. https://www.gov.uk/government/publications/national-insurance-credits-for-partners-of-armed-forces-personnel-overseas-after-6-april-1975 |
Originally Posted by 4everAD
(Post 9336313)
I think you are probably in the minority there as no one I have spoken to was even aware of what "contracted out" was until this raised it's head (including me).
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Thanks Al,
I had an e-mail from Steve Webb about 4 years ago assuring me that they would change the system to allow wives of Service personnel posted overseas to claim NI credits. It all went quiet, but I have today claimed Class 3 NI credits for Mrs F.O.D for several years in the 80s and 2000s when we were in RAF Germany and Belgium. Hurrah - It will all help to maximise the New State Pension entitlement. It would appear that you can apply on-line as far back as 1975. Hope that helps for other old timers like me! |
Thanks for your thoughts Al!:ok: Beware though, you might be falling for some of the revisionist political tripe, if you believe the "it all comes out in the wash" cobblers.:* TBH, I cannot honestly ever remember being given any choice whatsoever about my NIC when in the Service? Can that be correct? Did I have any choice? And, if I had a choice, I was not informed!:mad: So, now that I am to be penalised retrospectively, I call again for, "The Military Covenant" to be invoked!:) Speak up, DC.............:rolleyes:
OAP |
Hi FOD,
Yes, those changes are a bonus, but one that was promised. Bear in mind though that Mrs FOD is probably delayed in her right to a state pension by 7, or so, years from what she might have expected and, the qualifying years for a full state pension have risen from 30 to 35. Overall, this will probably have cost her around £50,000. :oh: OAP |
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