State Pension Deadline Approaching

[NWpostie]

At 67 it wouldn't be worth deferring you may not live long enough to enjoy it as long as you like to.

[BenacreNick]

After watching Martin Lewis money show and reading information here, I've registered for the Government Gateway to check my state pension.

I've qualified for Full Years National Insurance since 1990, which I am very grateful for.

But I started at RM on a part time contract (because that's all that was on offer at the time) and it took over 10 years to upgrade to full time.
Also I used SERPS scheme when I was younger because that was recommended to me at that time, although ceased in 2016 I believe.

I would have thought both these scenarios might have counted against me, any ideas - Robert ?

Many thanks.

RobertT - I've just read backwards and can see that I get the benefit on SERPS, whilst luckily qualifying for full years.

[NWpostie]

Can you sign up to SERPS while in company pension scheme ?

[BenacreNick]

NW. I think I joined RM after already contracting out of Serps, I'm not too sure of the dates.

Perhaps the Serps deferred to the RM pension instead ?

Good question though.

[RobertT]

At 67 it wouldn't be worth deferring you may not live long enough to enjoy it as long as you like to.

I would agree, particularly with the current terms.

You get an extra 5.8% added onto your state pension for each year you defer it, which works out as 1% every 9 weeks. My maths says, you won't start to make a profit on the deal for about 17 years, not including inflationary increases.

The previous rules were a 10.4% per year increase, or 1% every 5 weeks. Which was a much better deal.

An average 67 year old man is expected to live to 83.5, while for a woman it's nearly 86.

[RobertT]

Can you sign up to SERPS while in company pension scheme ?

Many company DB pension schemes were contracted out of SERPS. It tended to be the bigger companies, such as RM.
You didn't really have a choice, as it was a case of be a member and be contracted out, or leave the scheme and be contracted in.

The whole idea of contracting out was that your company scheme would provide at least as much as you'd have got from the state second pension. So in most cases it was probably best anyway.

Some workplace DC schemes were also contracted out, where your money would be invested as per your choices. Generally the end benefits were probably lower than with contracted out DB schemes.
I don't think the RMDCP was ever contracted out.

Contracting out ended in 2016 with the introduction of the new state pension. That also meant that NIC's increased for those in previously contracted out schemes – from 10.4% to 12% for employees, and from 10.4% to 13.8% for employers.
RM introduced PSE to counteract that.

[Jack1960]

At 67 it wouldn't be worth deferring you may not live long enough to enjoy it as long as you like to.

I would agree, particularly with the current terms.

You get an extra 5.8% added onto your state pension for each year you defer it, which works out as 1% every 9 weeks. My maths says, you won't start to make a profit on the deal for about 17 years, not including inflationary increases.

The previous rules were a 10.4% per year increase, or 1% every 5 weeks. Which was a much better deal.

An average 67 year old man is expected to live to 83.5, while for a woman it's nearly 86.

I dont know why you cant take the deferral as a lump sum, i think this option was open to the pre 2016 changes , someone in our place has stayed on for 2 years
and finds It hard to go as he is paying no NI now and getting the full pension, on top of pay and RM pension and 20 hours a week overtime.

[RobertT]

I dont know why you cant take the deferral as a lump sum, i think this option was open to the pre 2016 changes , someone in our place has stayed on for 2 years
and finds It hard to go as he is paying no NI now and getting the full pension, on top of pay and RM pension and 20 hours a week overtime.

Yes, there used to be the option of taking a lump sum rather than a higher state pension after deferment, but that was stopped in 2016.

I suppose working beyond SPA is quite a good financial move in some ways, with no NIC's to pay. But I bet he's still paying a lot of income tax.

[Jack1960]

I dont know why you cant take the deferral as a lump sum, i think this option was open to the pre 2016 changes , someone in our place has stayed on for 2 years
and finds It hard to go as he is paying no NI now and getting the full pension, on top of pay and RM pension and 20 hours a week overtime.

Yes, there used to be the option of taking a lump sum rather than a higher state pension after deferment, but that was stopped in 2016.

I suppose working beyond SPA is quite a good financial move in some ways, with no NIC's to pay. But I bet he's still paying a lot of income tax.

Yes , he says his total income was about 55000 last year , HMRC have estimated even more this year and with tax threshold the same yes he will be caned, we've suggested he goes job share but he even works his leave .

[Subman]

I've just checked my pension forecast on Government Gateway, I've had enough national insurance years to qualify for the full state pension of £203 a week.

So that's one thing out of the way, however the next five years of NI contributions won't make any further difference to my pension.

Yes, once you've hit the full rate, it doesn't matter how long you work or how much NIC's you pay, you won't be able to earn more state pension.

Although when the new state pension was brought in, everyone would have been given a starting amount based on their entitlement at the time. They compared what you would have got under the old system to the new system, and if your old amount was higher than the new, you were allowed to keep the extra.

So there are people who've been contracted into SERPS previously who are actually entitled to more than the full rate. That applies to my mate as I previously mentioned.

You can also get more by deferring.

Am I correct in thinking that when you check your pension forecast and it states that you have enough NI contributions to qualify for a pension of £203 a week, it is also necessary to check in the COPE link on the same site, to see how much your state pension will be reduced for the periods contracted out.

[RobertT]

Am I correct in thinking that when you check your pension forecast and it states that you have enough NI contributions to qualify for a pension of £203 a week, it is also necessary to check in the COPE link on the same site, to see how much your state pension will be reduced for the periods contracted out.

The COPE amount doesn't get taken off your state pension entitlement, it's included in your RM pension and any other contracted out pensions you may have.

It's an estimate of how much state second pension you would have got, had you been contracted in.

This link explains things in simple terms:
https://www.wypf.org.uk/pensioner/all-a ... pe-amount/