State Pension potential shortfall warning
Discussion
I retired in 2010 at 55 and I've been 'caught out' by the 2016 pension changes.
I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
You can't buy, or at least be credited, for years prior to 2016.
I was contracted out throughout my working life and therefore paid lower NI as I had a company pension but I didn't realise I would not get a full state pension as a result of the 2016 changes until it was too late.
I naively thought 38 years up to 2010 was enough
My pension forecast says I will get £xxx.xx per week....but that is only if I continue to contribute.
I can see that an early retired person and therefore not paying NI could, if they did not look too closely at their forecast, think they will be getting more than they actually will
I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
You can't buy, or at least be credited, for years prior to 2016.
I was contracted out throughout my working life and therefore paid lower NI as I had a company pension but I didn't realise I would not get a full state pension as a result of the 2016 changes until it was too late.
I naively thought 38 years up to 2010 was enough
My pension forecast says I will get £xxx.xx per week....but that is only if I continue to contribute.
I can see that an early retired person and therefore not paying NI could, if they did not look too closely at their forecast, think they will be getting more than they actually will
Here's a link for those looking for one 
https://www.gov.uk/government/publications/state-p...
The above page has a link to this - which is where it gets really interesting/worrying...
https://www.gov.uk/new-state-pension/how-its-calcu...
It makes for very interesting reading and supports the OPs warnings.
But still very confusing !
Need to work out how you find out what your "Starting Amount" is !
https://www.gov.uk/government/publications/state-p...
The above page has a link to this - which is where it gets really interesting/worrying...
https://www.gov.uk/new-state-pension/how-its-calcu...
It makes for very interesting reading and supports the OPs warnings.
But still very confusing !
Need to work out how you find out what your "Starting Amount" is !
OK, I'm 57, been working non stop since 17, state pension age is 67. Contracted out from 1987 - 2012. Pension forecast on the website says £168.60, due to having paid for over 35 years. I will be retiring long before I'm 67. Let's say 60. So once I retire, what do I need to do, if anything, to ensure I get full state pension at 67?
33q said:
I retired in 2010 at 55 and I've been 'caught out' by the 2016 pension changes.
I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
If you're not working are you sure that voluntary Class 2 contributions are the correct ones to be paying? I thought it would be Class 3 at around £761 a year. I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
TwigtheWonderkid said:
OK, I'm 57, been working non stop since 17, state pension age is 67. Contracted out from 1987 - 2012. Pension forecast on the website says £168.60, due to having paid for over 35 years. I will be retiring long before I'm 67. Let's say 60. So once I retire, what do I need to do, if anything, to ensure I get full state pension at 67?
Nothing.The government website value has the correct value for your personal situation.
The people being caught out are those that didn't check their status during the transition phase and assumed everything was ok. They now see they have a problem, they see this by using the same government website.
The OP suggested the government website was lying to you, it isn't.
Jasey_ said:
I think it all depends on this mythical "Starting Amount" figure.
f
k knows how you find out what that is !
That is covered in the links already posted. The royal London ones are probably the easiest to follow. f
k knows how you find out what that is !If you use the official government website service you don't need to work any of that out, it calculates your value on a personal basis, which is why you have to use your government gateway account to log on to it.
TwigtheWonderkid said:
OK, I'm 57, been working non stop since 17, state pension age is 67. Contracted out from 1987 - 2012. Pension forecast on the website says £168.60, due to having paid for over 35 years. I will be retiring long before I'm 67. Let's say 60. So once I retire, what do I need to do, if anything, to ensure I get full state pension at 67?
As above nothing.I’m similar although retired a year ago still with 7 years until I draw a state pension. I need a further 2 years to get the full pension (as obviously not paying NI any more). I’m only short by les than £10 pw.
33q said:
I retired in 2010 at 55 and I've been 'caught out' by the 2016 pension changes.
I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
You can't buy, or at least be credited, for years prior to 2016.
I was contracted out throughout my working life and therefore paid lower NI as I had a company pension but I didn't realise I would not get a full state pension as a result of the 2016 changes until it was too late.
I naively thought 38 years up to 2010 was enough
My pension forecast says I will get £xxx.xx per week....but that is only if I continue to contribute.
I can see that an early retired person and therefore not paying NI could, if they did not look too closely at their forecast, think they will be getting more than they actually will
I think people are looking at this the wrong way.I now pay voluntary class 2 at about £150 a year to build my pension up but I can't get sufficient years in before my pension age to get a full pension.
You can't buy, or at least be credited, for years prior to 2016.
I was contracted out throughout my working life and therefore paid lower NI as I had a company pension but I didn't realise I would not get a full state pension as a result of the 2016 changes until it was too late.
I naively thought 38 years up to 2010 was enough
My pension forecast says I will get £xxx.xx per week....but that is only if I continue to contribute.
I can see that an early retired person and therefore not paying NI could, if they did not look too closely at their forecast, think they will be getting more than they actually will
The section in bold above - you are not receiving a reduced stated pension as a result of the 2016 changes
If you were contracted out, the end situation was always going to be that you received a reduced state pension and that additional NI payments would be rerouted to a private/occupational pension. So the additional (private/occupational) pension received would at least cover the shortfall in the state pension and in many case more
(The SERPS element of the pension which existed pre 2016 would come from your non-state pension)
With the 2016 changes, if you are working (or contributing in some way) beyond 2016, those who were contracted out now have the opportunity to put themselves in a better position than those who were not contracted out. If you have enough years beyond 2016 (possibly as little as 5 or 6 years) then you can end up with an enhanced private/occupational pension having received additional NI payments into it, AND a full state pension.
If you don't continue to pay beyond 2016 then you are back in the situation that you were originally supposed to be in - a reduced state pension and extra in your private/occupation pension paid for by the contracted out NI contributions.
I think the confusion in the O/P is that the poster implied that the issues are all to do with retiring early when they are actually only to do with contracting out. He failed to mention contracting out in the O/P.
Having said all that, it's a government office and they do get things wrong so its always worth checking the figures they provide on their forecast site. There have been instances where they show a full pension with no COPE forecast even though a person has been contracted out.
I'm not a finance person so you need to do your own research - the above is just my understanding.
i4got said:
I think people are looking at this the wrong way.
The section in bold above - you are not receiving a reduced stated pension as a result of the 2016 changes
If you were contracted out, the end situation was always going to be that you received a reduced state pension and that additional NI payments would be rerouted to a private/occupational pension. So the additional (private/occupational) pension received would at least cover the shortfall in the state pension and in many case more
(The SERPS element of the pension which existed pre 2016 would come from your non-state pension)
With the 2016 changes, if you are working (or contributing in some way) beyond 2016, those who were contracted out now have the opportunity to put themselves in a better position than those who were not contracted out. If you have enough years beyond 2016 (possibly as little as 5 or 6 years) then you can end up with an enhanced private/occupational pension having received additional NI payments into it, AND a full state pension.
If you don't continue to pay beyond 2016 then you are back in the situation that you were originally supposed to be in - a reduced state pension and extra in your private/occupation pension paid for by the contracted out NI contributions.
I think the confusion in the O/P is that the poster implied that the issues are all to do with retiring early when they are actually only to do with contracting out. He failed to mention contracting out in the O/P.
Having said all that, it's a government office and they do get things wrong so its always worth checking the figures they provide on their forecast site. There have been instances where they show a full pension with no COPE forecast even though a person has been contracted out.
I'm not a finance person so you need to do your own research - the above is just my understanding.
Thats not correct. The section in bold above - you are not receiving a reduced stated pension as a result of the 2016 changes
If you were contracted out, the end situation was always going to be that you received a reduced state pension and that additional NI payments would be rerouted to a private/occupational pension. So the additional (private/occupational) pension received would at least cover the shortfall in the state pension and in many case more
(The SERPS element of the pension which existed pre 2016 would come from your non-state pension)
With the 2016 changes, if you are working (or contributing in some way) beyond 2016, those who were contracted out now have the opportunity to put themselves in a better position than those who were not contracted out. If you have enough years beyond 2016 (possibly as little as 5 or 6 years) then you can end up with an enhanced private/occupational pension having received additional NI payments into it, AND a full state pension.
If you don't continue to pay beyond 2016 then you are back in the situation that you were originally supposed to be in - a reduced state pension and extra in your private/occupation pension paid for by the contracted out NI contributions.
I think the confusion in the O/P is that the poster implied that the issues are all to do with retiring early when they are actually only to do with contracting out. He failed to mention contracting out in the O/P.
Having said all that, it's a government office and they do get things wrong so its always worth checking the figures they provide on their forecast site. There have been instances where they show a full pension with no COPE forecast even though a person has been contracted out.
I'm not a finance person so you need to do your own research - the above is just my understanding.
The contracted out section affected your ASP, not the basic state pension.
The ASP is an addition on top of the basic state pension.
The government changed this in 2016 to gradually get rid of the ASP element and are using a tapered value system to bring everyone into line to receive the full higher basic state pension.
So you previously got the lower basic state pension so long as you paid your full NI, then either had the ASP on top, or didn't get an ASP but had your private pension paid for via SERPS redirected payments.
People who earned enough and didn't contract out of SERPS can get a hefty lift up via the ASP, how much that is depends on your personal circumstances.
During the transition period is where the complications on money paid show themselves.
jsf said:
Thats not correct.
The contracted out section affected your ASP, not the basic state pension.
The ASP is an addition on top of the basic state pension.
The government changed this in 2016 to gradually get rid of the ASP element and are using a tapered value system to bring everyone into line to receive the full higher basic state pension.
So you previously got the lower basic state pension so long as you paid your full NI, then either had the ASP on top, or didn't get an ASP but had your private pension paid for via SERPS redirected payments.
People who earned enough and didn't contract out of SERPS can get a hefty lift up via the ASP, how much that is depends on your personal circumstances.
During the transition period is where the complications on money paid show themselves.
I simplified the language but that is pretty much what I said.The contracted out section affected your ASP, not the basic state pension.
The ASP is an addition on top of the basic state pension.
The government changed this in 2016 to gradually get rid of the ASP element and are using a tapered value system to bring everyone into line to receive the full higher basic state pension.
So you previously got the lower basic state pension so long as you paid your full NI, then either had the ASP on top, or didn't get an ASP but had your private pension paid for via SERPS redirected payments.
People who earned enough and didn't contract out of SERPS can get a hefty lift up via the ASP, how much that is depends on your personal circumstances.
During the transition period is where the complications on money paid show themselves.
Old system your full pension from the state was made up of basic plus any ASP.
New system it is combined into one.
The 2016 changes allow (if you have the time) you to double dip - get a full (new) state pension and also have had the benefit of your contracted out contributions in your private/occupational pension.
TwigtheWonderkid said:
OK, I'm 57, been working non stop since 17, state pension age is 67. Contracted out from 1987 - 2012. Pension forecast on the website says £168.60, due to having paid for over 35 years. I will be retiring long before I'm 67. Let's say 60. So once I retire, what do I need to do, if anything, to ensure I get full state pension at 67?
If you message me I will give you some information that will help. I'm not posting information on here due to the unnecessary abuse Im being given for trying to help with highlighting a potential future problem that some may encounter, but this thread has little to do with contracting out and more to do with retiring earlier than state pension age. Contracting out will affect you as well, but the other changes may affect you even more. Message me and i will explain it the best i can.Edited by LeadFarmer on Friday 3rd January 12:17
LeadFarmer said:
If you message me I will give you some information that will help. I'm not posting information on here due to the unnecessary abuse Im being given for trying to help with highlighting a potential future problem that some may encounter, but this thread has little to do with contracting out and more to do with retiring early after 2016. Contracting out will affect you as well, but the other changes may affect you even more. Message me and i will explain it the best i can.
He doesn’t need to as he is in a very similar position to me. I retired early and currently won’t get full state pension as I haven’t enough years in after 2016 (I need two more) despite over 40 years contributions (although quite a bit of that contracted out).The Government website makes it clear that I need two more years and as he isn’t intending retiring for another three years he will get what the Gov site states.
Not sure why you are being so defensive- instead of sending PM’s why don’t you just post? Yes some people may disagree with you but at least you are highlighting a potential issue.
craig1912 said:
He doesn’t need to as he is in a very similar position to me. I retired early and currently won’t get full state pension as I haven’t enough years in after 2016 (I need two more) despite over 40 years contributions (although quite a bit of that contracted out).
The Government website makes it clear that I need two more years and as he isn’t intending retiring for another three years he will get what the Gov site states.
Not sure why you are being so defensive- instead of sending PM’s why don’t you just post? Yes some people may disagree with you but at least you are highlighting a potential issue.
Or so you believe. But my offer to give him information by PM still stands as he will be retiring before state pension age. The Government website makes it clear that I need two more years and as he isn’t intending retiring for another three years he will get what the Gov site states.
Not sure why you are being so defensive- instead of sending PM’s why don’t you just post? Yes some people may disagree with you but at least you are highlighting a potential issue.
As for being defensive, I won't post any more information on here, not because others disagree, I can cope with that, but becuse of the verbal abuse I have received, particularly being told to 'bugger off' when all Ive tried to do is try and help those who may be affected.
If folk are happy to believe their state pension forecast without questioning it then good for them, but a time bomb may be ticking for them.
LeadFarmer said:
.... but this thread has little to do with contracting out and more to do with retiring earlier than state pension age.
The two things are connected though. Mostly, people would be fine if they'd never contracted out - unless they retired very early.Contracting out first stated in 1978. It finished in 2016. So some early retirees could have been contracted out their whole working life. They'll have a private pension though, which will be far greater than what they've "lost" by not qualifying for the full state pension.
Sheepshanks said:
The two things are connected though. Mostly, people would be fine if they'd never contracted out - unless they retired very early.
Contracting out first stated in 1978. It finished in 2016. So some early retirees could have been contracted out their whole working life. They'll have a private pension though, which will be far greater than what they've "lost" by not qualifying for the full state pension.
So far, I've paid NI for 40 years, during which I was contracted out for 25 years. I am lead to believe by the govt website that even if I retire today, aged 57, in 10 years I will get the full basic state pension of £168.60 (or whatever it is then) but that I've lost out on an additional COPE payment (that I'm not worried about because my contracted out pension pot more than compensates for that).Contracting out first stated in 1978. It finished in 2016. So some early retirees could have been contracted out their whole working life. They'll have a private pension though, which will be far greater than what they've "lost" by not qualifying for the full state pension.
But now people are suggesting I won't get the full basic state pension?
TwigtheWonderkid said:
So far, I've paid NI for 40 years, during which I was contracted out for 25 years. I am lead to believe by the govt website that even if I retire today, aged 57, in 10 years I will get the full basic state pension of £168.60 (or whatever it is then) but that I've lost out on an additional COPE payment (that I'm not worried about because my contracted out pension pot more than compensates for that).
But now people are suggesting I won't get the full basic state pension?
Well it seems one person is claiming that the Pension Forecast website isn't accurate & cannot be relied on. I'm not sure how we can get a definative answer as I suspect that if we all ring up & ask if the website is correct they are hardly going to say "no it isn't". Who do we ring anyway? The Future Pension Center?But now people are suggesting I won't get the full basic state pension?
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