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New Retirement Pension
I’m entitled to retire in May of this year and, as invited to do so by them ‘s pays it, I have made my claim to Retirement Pension (RP); being aware that I will qualify under the NEW RP rules, it being post April 2016. Needing to know my entitlement so as to make decisions about retirement or continuing in work, and possible dates for a leaving do, I telephoned the RP help line today. The figure they gave me was a bit more than I had thought it would be, which is a little less than the NEW pension of £155. I asked why this wouldn’t be payable at this NEW rate and was told that no one will be for years yet, due to the complications associated with those who were, or were not Contracted Out. Has anyone tried to calculate the new pension? Dearie me, it is a bit of a difficult one. In my case, for example, I have so many years contracted in (no deductions from new RP), and so many years contracted out (deductions from NEW RP); with some years of “Graduated Pension”.
I must say that I was a more than a little surprised at the fact that “no one will get the new pension amount for years”. Is this right do you think? or did I misunderstand?
Thank you
Patrick
Best estimates seem to be that about two thirds of people initially receiving the nSP will get about the same rate as current SRP. It will take a chunk of time before anywhere near the full rate is the norm for recipients.
Guarantee Pension Credit will still be available for people getting nSP but Savings Pension Credit won’t which creates real issues for people taking income from pensions at average levels.
My experience is a very detailed letter issued by department confirming a state pension @ age65 from November 2016 at slightly more than the nSP and also advising on the pension provision that should be available due to any periods contracted out. What it did not take into consideration was any early access to any private provision, but allowing for that it was clear and allowed my own guesstimate to very close. Same opportunity to have pension in payment/defer and work will be there, not sure if NI contributions will cease under nSP as they currently do when someone reaches pension age at the moment.
I requested a pension forecast for new state pension which arrived promptly but the leaflet with it takes a few reads to fully understand..
Article in Adviser magazine estimates 37% of those turning state pension age in 2016/17 would receive full amount, and by 2020 50%, rising to 84% by 2035.
I requested a pension forecast for new state pension which arrived promptly but the leaflet with it takes a few reads to fully understand..
Article in Adviser magazine estimates 37% of those turning state pension age in 2016/17 would receive full amount, and by 2020 50%, rising to 84% by 2035.
Thank you Jac. I also applied for a pension forecast which, as you say, arrived promptly. However, it didn’t do anything so rash as to tell me how much my pension would actually be under the new system and gave me the amount of pension under the old scheme as it stood on the date sent. It did add, however, that due to my date of birth, I would be treated under the new rules but that they were unable to provide me with the exact figure until much, much later. Perhaps I applied for the forecast too early? Well whatever the reason, the figure they quoted under the old system was considerably less that the figure quoted under the new system as per telephone call today.
It’s all very confusing.
Patrick
I think it works like this. You will be treated under the new rules but it will not make much difference to you. The Pension Service look at the State Pension you have accrued under the existing scheme and compare it with the ‘starting point’ of £155.65 as at 6/4/16. If your entitlement (basic plus any additional pension) is worth less than the ‘starting point’, each full qualifying year you add to your NI record after 6/4/16 will give you an extra £4.44 (£155.65/35) per week extra up to a maximum of the full level of the new State Pension.
I think it works like this. You will be treated under the new rules but it will not make much difference to you. The Pension Service look at the State Pension you have accrued under the existing scheme and compare it with the ‘starting point’ of £155.65 as at 6/4/16. If your entitlement (basic plus any additional pension) is worth less than the ‘starting point’, each full qualifying year you add to your NI record after 6/4/16 will give you an extra £4.44 (£155.65/35) per week extra up to a maximum of the full level of the new State Pension.
But I also understand that, and I could be wrong here, that any contracted-out years would reduce the new pension amount by the same £4.44 per year contacted-out. However, this would be offset by the amount of contracted-in years; in my case the difference, I think, was 2 x £4.44s and thus the £8 odd-ish shortfall in the amount quoted - I think.
Thank you.
Patrick
Patrick,
It looks like you are right. It’s very complicated:
Patrick,
It looks like you are right. It’s very complicated:
Hello Mick D123,
Yep, I read the link once or twice a month or so ago; I had to stop when I began to feel dizzy. Put me in mind of the simplicity associated with Universal Credit. I do feel very uncomfortable about the admittance and apparent indifference about the slowness of introduction and any potential loss of income under the new scheme. Uncomfortable and, I’m afraid, not in the least bit surprised. An additional worry is that when I did speak to the “help line” the person I spoke to admitted that they had yet to attend any training about the new pension regime: “help line!!??”
Thank you.
Patrick.
The ‘deduction’ bit is very well hidden in all the explanations I have seen. None of the examples quoted seem to cover it at all.
New House of Commons Library briefing paper on the new state pension - http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06525
And a further one on transitional issues - http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7414