Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Anonymous,MyNameIsUrl,6Tricia,staffordian, for Donating to support the site

another state pension qn

mc2fool
Lemon Quarter
Posts: 3205
Joined: November 4th, 2016, 11:24 am
Has thanked: 6 times
Been thanked: 1108 times

Re: another state pension qn

#449333

Postby mc2fool » October 11th, 2021, 4:58 pm

James wrote:Well, that's good news. So even if I chipped off work now at 56 I'd still be entitled to the full pension in 11 years?
What had confused me was the big statement somewhere on the site regarding needing 35 years and the calculations showing how to work out what you'd get without 35 years contribs.

Yep, you're already up for the full new state pension, so you don't have to worry about that (unless they change the rules of course)!

For folks that gained some qualifying years pre-2016 it's not generally reliably possible to figure out their entitlement without some extra information, although it can, in some cases, be inferred.

Greatly simplifying, what we can say in your case is that as you had 19 qualifying years from 1997/98 up to and including 2015/16, plus your 3 "mystery" years, for a total of 22 pre-2016 years, then your 2016 "starting amount" would have been the higher of (using current year figures):

Old system: £137.60 * (22 / 30) = £100.91pw plus (revalued) Additional State Pension (ASP)
New system: £179.60 * (22 / 35) = £112.89pw minus (revalued) Contracted Out Pension Equivalent (COPE)

Now, we don't know your ASP and while you can find the COPE in your online forecast (if you were ever contracted out), don't bother as we know from the fact that you've already reached the full new state pension with only an additional 5 years from 2016/17 onwards, that the old system £100.91+ASP figure must have been the greater and hence used for your 2016 "starting amount".

Further, we can say that as the 5 years since 2016/17 have added (at most) £179.60 * (5 / 35) = £25.66, then your 2016 "starting amount" must have been at least £179.60 - £25.66 = £153.94 and therefore your ASP must have been at least £53.03.

Of course, it's entirely possible that your ASP was higher and your starting amount was much closer to £179.60 and you could have chipped off work a few years back and still got a full pension. The only way to know is to contact DWP/HMRC and ask them.

BTW, I've used current year figures above, as it just makes it simpler to understand, but what one should do is use 2016 figures and then revalue. The answer will come to the same, so it isn't an issue here but should you contact DWP/HMRC be aware that they will quote you 2016 figures.

If you really want to know the ins and outs of the calculation (and the right buzz phrases for contacting DWP/HMRC about it), start here: viewtopic.php?p=402781#p402781, read and follow the links therein.

richfool
Lemon Quarter
Posts: 3140
Joined: November 19th, 2016, 2:02 pm
Has thanked: 770 times
Been thanked: 823 times

Re: another state pension qn

#449368

Postby richfool » October 11th, 2021, 6:48 pm

mc2fool wrote:For folks that gained some qualifying years pre-2016 it's not generally reliably possible to figure out their entitlement without some extra information, although it can, in some cases, be inferred.

Mc2, can I just ask, when you refer to years before 2016, does that mean before 2015/16 or before 2016/17? (My wife's first year's contribution is 2015/16).

mc2fool
Lemon Quarter
Posts: 3205
Joined: November 4th, 2016, 11:24 am
Has thanked: 6 times
Been thanked: 1108 times

Re: another state pension qn

#449377

Postby mc2fool » October 11th, 2021, 7:38 pm

richfool wrote:
mc2fool wrote:For folks that gained some qualifying years pre-2016 it's not generally reliably possible to figure out their entitlement without some extra information, although it can, in some cases, be inferred.

Mc2, can I just ask, when you refer to years before 2016, does that mean before 2015/16 or before 2016/17? (My wife's first year's contribution is 2015/16).

I was referring to tax years before the one starting on 6-Apr-2016, so in your wife's case she will be under the transition rules and have a 2016 "starting amount" as described previously, albeit with only one year in the calculation -- unless she decides to buy some prior years of course.

sloth
Posts: 38
Joined: August 7th, 2019, 5:54 am
Has thanked: 59 times
Been thanked: 8 times

Re: another state pension qn

#449724

Postby sloth » October 13th, 2021, 3:43 am

pochisoldi wrote:You can also pay voluntary class 2, currently around 5 times cheaper per week than class 3, but (as I said) can't be done retrospectively.

Two years ago, I paid 9 years of voluntary class 2 dating back to 2006 with no problem.

stevem01
Posts: 23
Joined: January 10th, 2019, 4:04 pm
Has thanked: 1 time
Been thanked: 1 time

Re: another state pension qn

#449929

Postby stevem01 » October 13th, 2021, 7:45 pm

James wrote:Okay, so have dug out the details again from HMRC.
I can't see any forecast on what I'll get from what I've contributed to date, but can work it out as above.
It says I'll get my full state pension of 179.60 on my pension day in 2032 (Age 67)
My national insurance contributions have records for 1997/8-2020/21, i.e. 24 years of payments.
But it also says I have 27 years of full contributions, so I appear to have picked up three along the way somehow.
Sill, that means I've still got eight to go to get to get to the 35 HMRC says is required to get to full pension payment.
Ideally, I want to stop working in four to six years.
I guess I'll just have to give my wife enough to pay me for doing the gardening as a self-employed person so I fall into the "Self-employed with income over £1,000 but with profits of less than £6,515" category and keep paying class 2.


The unexplained three years of NI contributions/credits that the OP refers to may be from the system of "starting NI credits". which was introduced on 06 April 1975, but scrapped after 05 April 2010.

The reasoning behind the introduction of "starting NI credits" was that in 1975 the number of "qualifying" years of NI contributions, or NI credits, that were needed to earn a full basic state pension was 44 years for a male and 39 years for a female. Consequently, when state pension age was 65 for males and 60 for females, the years spent in full-time education after an individual’s 16th birthday were quite important periods as regards potential NI contibutions. Between 05 April 1975 and 05 April 2010, National Insurance Class 3 voluntary contributions were credited to people for the tax year in which they reached age 16 and for the following two full tax years if they were in full-time education. The policy intention was to ensure that young people staying on in full-time education beyond the minimum school leaving age (which was age 16 in 1975) did not lose future pension benefit entitlement as a result of not making NI contributions whilst they were in full-time education. This helped them satisfy the NI contribution conditions on a claim for basic state pension entitlement and for bereavement benefits.

NOTE - there was NO requirement for the individual to actually in the UK at the relevant age whilst they received NI starting credits. This was to ensure that young people who could have been educated in the UK but were being educated outside the UK, were not penalised - for example children of parents who were posted to work outside the UK, who may have accompanied their parents and been in full-time educationd overseas.

After 06 April 2010 the number of "qualifying" years of NI contributions, or NI credits, that were needed to earn a full basic state pension was reduced to 30 years for both males and females. This change was applied to everyone who had not reached state pension age by 06 April 2010. As a result of the change in the number of "qualifying" years of NI contributions, or NI credits, required as of 06 April 2010, the system of awarding of "starting NI credits" was scrapped from that date, but any "starting NI credits" that had already been awarded to an individual were retained.

I believe the DWP system no longer shows "starting NI credits" for those who were awarded them for the tax year in which they turned 16, but I believe it should show them for the two years after that, provided they were in full time education.

Lootman
The full Lemon
Posts: 11247
Joined: November 4th, 2016, 3:58 pm
Has thanked: 144 times
Been thanked: 2493 times

Re: another state pension qn

#449933

Postby Lootman » October 13th, 2021, 7:57 pm

stevem01 wrote:The unexplained three years of NI contributions/credits that the OP refers to may be from the system of "starting NI credits". which was introduced on 06 April 1975, but scrapped after 05 April 2010.

The reasoning behind the introduction of "starting NI credits" was that in 1975 the number of "qualifying" years of NI contributions, or NI credits, that were needed to earn a full basic state pension was 44 years for a male and 39 years for a female. Consequently, when state pension age was 65 for males and 60 for females, the years spent in full-time education after an individual’s 16th birthday were quite important periods as regards potential NI contibutions. Between 05 April 1975 and 05 April 2010, National Insurance Class 3 voluntary contributions were credited to people for the tax year in which they reached age 16 and for the following two full tax years if they were in full-time education. The policy intention was to ensure that young people staying on in full-time education beyond the minimum school leaving age (which was age 16 in 1975) did not lose future pension benefit entitlement as a result of not making NI contributions whilst they were in full-time education. This helped them satisfy the NI contribution conditions on a claim for basic state pension entitlement and for bereavement benefits.

NOTE - there was NO requirement for the individual to actually in the UK at the relevant age whilst they received NI starting credits. This was to ensure that young people who could have been educated in the UK but were being educated outside the UK, were not penalised - for example children of parents who were posted to work outside the UK, who may have accompanied their parents and been in full-time educationd overseas.

After 06 April 2010 the number of "qualifying" years of NI contributions, or NI credits, that were needed to earn a full basic state pension was reduced to 30 years for both males and females. This change was applied to everyone who had not reached state pension age by 06 April 2010. As a result of the change in the number of "qualifying" years of NI contributions, or NI credits, required as of 06 April 2010, the system of awarding of "starting NI credits" was scrapped from that date, but any "starting NI credits" that had already been awarded to an individual were retained.

I believe the DWP system no longer shows "starting NI credits" for those who were awarded them for the tax year in which they turned 16, but I believe it should show them for the two years after that, provided they were in full time education.

That's interesting and explains an enigma of mine. I retired after 14 years of work but my record showed 18 years of contributions. Those "starter years" might explain some of that discrepancy, plus the fact that my 14 years spanned 15 tax years. I also had some summer jobs as a student for which I may have gained some credit.

I then purchased 9 back years of contributions taking me to 27 years. Even so my pension at age 66 was stated as being more than the new state pension, actually about £182 a week. So it is possible to get more than the maximum with fewer years, presumably because of the earnings-related component of years worked before 2016.

mc2fool
Lemon Quarter
Posts: 3205
Joined: November 4th, 2016, 11:24 am
Has thanked: 6 times
Been thanked: 1108 times

Re: another state pension qn

#449954

Postby mc2fool » October 13th, 2021, 8:48 pm

stevem01 wrote:The unexplained three years of NI contributions/credits that the OP refers to may be from the system of "starting NI credits". which was introduced on 06 April 1975, but scrapped after 05 April 2010.

Yes, I did mention that those were probably the "free" years for being 16-18 some posts back, although was unsure of any residency requirements, or lack thereof as it turns out.

I take it you cribbed a lot of your info from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/220274/eia-ni-credits-changes.pdf, as some of it is almost verbatim. ;)

There is what must be an error in that though ... on page 3 there's a bullet point that says:

"The removal of Starting Credits will not impact on State Pension customers until at least 2025. Starting Credits were introduced in 1975, so can only be awarded to people aged 16 and under in 1975, so people born before 1959 and reaching SPA after 2025. "

(My underlining). Well, firstly that's either got to be under/after or over/before or it doesn't make sense, and in any case, I was 16 in 1971, and have already reached SPA, and I got my three starting credits, so that section just seems to be wrong...


Return to “Pensions - Practical Problems”

Who is online

Users browsing this forum: No registered users and 3 guests