Not strictly a RM pension question but maybe a silly one.

[Pharox]

Not strictly a RM pension question, but hoping someone could give me an answer. Looking at various pension websites, they all seem to say that most people would like to retire on around 65% - 70% of their current salary. In RM’s case a FT postman salary is around £25,000.00 basic. 65% of £25k = £15k, 70% of £25k = £17.5k, state pension = £9.4k.

Now, does this mean,
A). State pension (£9.4k) + RM pension (£5.6k) = £15k @ 65%
B). State pension (£9.4k) + RM pension (£8.1k) = £17.5k @ 70%
C). RM pension of £15k or £17.5k with the state pension as a bonus?

[RobertT]

I think most of them include the state pension in their figures.

Although had the RM final salary scheme stayed open, someone with 40 years pensionable service in section C would have got a pension 66% of pensionable pay. Bearing in mind that section C members have their pensionable pay reduced by the Lower Earnings Deduction.

While someone in section B would have got a pension of 50% of pensionable pay, plus a lump sum of 3x pension.

[JKSmudge]

Don't forget the taxman taking 20% of anything over your personal allowance

[Subman]

State pension, max £9.4k.

Depending on years 'contracted out' maximum not guaranteed.

[RobertT]

The amount of state pension you're entitled to will depend on individual circumstances, but being contracted out for a length of time can reduce it. The older you are and the longer you've been contracted out, the more you're likely to be affected.

Equally if you haven't been contracted out at all, or just for a short time, it's possible some people may have built up a higher Additional State Pension amount, which in turn entitles them to an amount higher than the 'maximum'.

This is quite a good guide to state pensions: https://www.which.co.uk/money/pensions- ... kgp6n9jkcz

[heapsy]

Correct me if I'm wrong, but I thought when the higher state pension, together with the increased state pension age, that we didn't qualify for anything extra. In other words, just a flat pension, albeit a higher one, no 2nd SP.

[RobertT]

Correct me if I'm wrong, but I thought when the higher state pension, together with the increased state pension age, that we didn't qualify for anything extra. In other words, just a flat pension, albeit a higher one, no 2nd SP.

The link I provided tells you the answer!

When the state pension changed in 2016 everyone will have been given a 'starting amount' based on their entitlement at the time. If what they'd built up then under the old system was more than they would get under the new system, they were allowed to keep that extra, and so will potentially have more than the flat rate amount, currently £179 per week.

It's a common misconception that you need 35 years to get the full amount!
In practice that only applies to people with all their state pension entitlement accrued after the 2016 changes. Anyone with state pension before then will still have any contracted in or out employment factored in and so might need more or less than 35 years qualifying years.

It might be worth noting that a qualifying year is based on how much you earn in a tax year, rather than the actual 12 months of time. You normally only need to earn the equivalent of £120 per week or £6,240 per year to get one qualifying year of state pension.

[Pharox]

I think most of them include the state pension in their figures.

Although had the RM final salary scheme stayed open, someone with 40 years pensionable service in section C would have got a pension 66% of pensionable pay. Bearing in mind that section C members have their pensionable pay reduced by the Lower Earnings Deduction.

While someone in section B would have got a pension of 50% of pensionable pay, plus a lump sum of 3x pension.

That's perfect. Thanks for your help, I thought that it would be that, but could not find anything to that effect.

[Pharox]

Correct me if I'm wrong, but I thought when the higher state pension, together with the increased state pension age, that we didn't qualify for anything extra. In other words, just a flat pension, albeit a higher one, no 2nd SP.

The link I provided tells you the answer!

When the state pension changed in 2016 everyone will have been given a 'starting amount' based on their entitlement at the time. If what they'd built up then under the old system was more than they would get under the new system, they were allowed to keep that extra, and so will potentially have more than the flat rate amount, currently £179 per week.

It's a common misconception that you need 35 years to get the full amount!
In practice that only applies to people with all their state pension entitlement accrued after the 2016 changes. Anyone with state pension before then will still have any contracted in or out employment factored in and so might need more or less than 35 years qualifying years.

It might be worth noting that a qualifying year is based on how much you earn in a tax year, rather than the actual 12 months of time. You normally only need to earn the equivalent of £120 per week or £6,240 per year to get one qualifying year of state pension.

When I last checked the government gateway, I need to contribute for another year before 2040 to get the full state pension, currently £179.60. Up to April 2021, my forecast is sitting at £174.79.

[RobertT]

When I last checked the government gateway, I need to contribute for another year before 2040 to get the full state pension, currently £179.60. Up to April 2021, my forecast is sitting at £174.79.

You've probably already earned enough this tax year.

[mr hil.]

I thought the state pension was based on having a full 52 weeks of NI contributions or credits and the total earnings in a particular year is irrelevant. I may be wrong but this is my understanding of how they work out if you have a qualifying year or not.

[RobertT]

You have to earn at least the equivalent of the Lower Earnings Limit(currently £6,240) each year to get a qualifying year.

These links give more info:

https://www.thisismoney.co.uk/money/pen ... d-out.html

https://www.gov.uk/government/publicati ... -explained

https://www.moneysavingexpert.com/savin ... -pensions/

*The Lower Earnings Limit in this context is not related to the LEL/LED RM use for calculating pensionable pay for section C & F members of the RMPP.