New State Pension & EVR

[fly-catchers]

As you know I am going for EVR which all being well is in September. I recently got a forecast from Department for works and pensions which said I had 40 qualifying years and based on the rules from april 6 2016 was due about £123 when I get my State pension at 66. As I am going much sooner than I expected when I got this forecast is it likely to be less than this or that figure still applies? I don't expect it to be higher- but would be nice if it is!

[RobertT]

The state pension is a tricky thing because everyone’s entitlement is going to be different and the way it’s worked out is hard to get your head round. But I see no reason why you would get less, although under the rules of the ‘new state pension’ from April 2016 you could get more if you continue to work and pay NI.

[arsenalbob]

I read that everyone with 35 years of NI contributions will get £155 state pension from April 2016. This will be reduced if at some point in your working life you were contracted out of the additional state pension. As far as I know Royal Mail workers have never been contracted out, and if we have were never told about it.

[baldrick]

The RM pension scheme is a contracted out scheme. So we do not get the full increase to £155pw when the new scheme comes in from April 2016.
I have worked for over 40 years, 32 for RM. I asked the DWP for a statement for how much State Retirement Pension I would get when I reach 65 in 2016, and the statement shows I will get £128pw.

[baldrick]

As you know I am going for EVR which all being well is in September. I recently got a forecast from Department for works and pensions which said I had 40 qualifying years and based on the rules from april 6 2016 was due about £123 when I get my State pension at 66. As I am going much sooner than I expected when I got this forecast is it likely to be less than this or that figure still applies? I don't expect it to be higher- but would be nice if it is!

Yes the quote will still apply, it is based on your contributions to the date it was issued, not on possible future contributions.
If you get another job and pay more NI it might be higher.

[RobertT]

I read that everyone with 35 years of NI contributions will get £155 state pension from April 2016. This will be reduced if at some point in your working life you were contracted out of the additional state pension.

The amount of ‘new state pension’ you get will be a very individual thing based on your own NI records over your working life. People who have been contracted out of the additional state pension will see a reduction from the new rate, which has yet to be announced but is expected to be around the £155 mark.

However two calculations will be made based on what you’d get under the current system and what you’d get under new one. You will then be given a ‘starting’ or ‘foundation’ amount which will be based on the larger of the two amounts. If that amount is less than £155(or whatever), you can still accrue more state pension entitlement up to a maximum of the new rate by working and paying NIC’s.

Also bare in mind that the whole point of contracting out, was that the sponsoring scheme would provide more pension than you would have got from the additional state pension anyway. The new rules actually allow some people to get the best of both worlds, although that will obviously depend on age.

As far as I know Royal Mail workers have never been contracted out, and if we have were never told about it.

Members of the RMPP, so that’s everybody who joined the pension scheme before 31st March 2008, will have been contracted out the state additional pension during their employment with RM. I don't think they've ever made a secret of it.

To find out what your state pension entitlement is, get yourself a statement:
https://www.gov.uk/state-pension-statement" onclick="window.open(this.href);return false;

[baldrick]

I was listening to Moneybox on Radio 4 on Saturday. There was a bit about how people could increase their State Retirement Pension by buying Class 3 (Voluntary) NI contributions. If you don't have the necessary 35 years for the full RP, you can buy additional years for about £700 for every additional year. Each year you buy will give you almost £200pa extra on your Retirement Pension, so it will pay for itself within 4 years.

I don't know if you can buy the additional years if you already have the minimum 35 years, or whether it would make any difference if you did. From what I can gather there will be more information about this by October, and you then have 6 months to buy the additional years before April 2016.

I already have the 35 years, but if buying additional years will boost my State Retirement Pension I would definitely do that.
I don't think it applies if I already have 35 years, but will wait to see. But anyone who has less than 35 qualifying years should probably buy the extra years if they can.

[RobertT]

If you already have enough qualifying years to get the ‘basic state pension’ currently 30 and going up to 35 from April 2016, paying additional contributions won’t make any difference.

As you say there will be more info later in the year, which may mean that anyone who stands to get less than the ‘new rate’ might be able to purchase more pension up to that amount. But that is pure speculation at this stage.