Bouleversee wrote:All that is beyond my comprehension. Although my state pension is paid as a lump sum, the basic pension (old rate) is calculated separately from the SERPS entitlement and they go up at different rates. I don't see why they should and nor do I see why those who didn ' t contract out should be penalised. You would think it would be the other way round, especially as those who contracted out can leave whatever unused benefits which accrued in a pension plan to heirs tax free. The difference between old and new basics is already significsnt and will go on compounding indefinitely. How did the govt. get away with that?
The advantage is for those who were contracted in who reached their NRA after 2016 since their S2P/SERPS was rolled into the new "flat rate" system (upto the maximum under the new system) which was then subject to the triple lock. (Anything which couldn't be rolled into the new "flat rate" pension because it would have taken them over the maximum then being designated as an additional protected pension which, like S2P/SERPs payments for those reaching the NRA before 2016, only then rises with inflation).
There was no extra advantage for those contracting out as they hadn't built up any S2P/SERPs for those years they were contracted out.
(The 2016 starting amount was calculated as the maximum of what one would get under the old system and under the new system but with a large reduction applied called COPE for the new system calculation if you had been contracted out. This removed any possibility of someone contracted out getting any pseudo S2P/SERPS addition to their new "flat rate" pension ie if someone had always been contracted out then their 2016 starting amount would have been the old basic pension that they had built up).