Yet another final salary question relating to State Pension
Discussion
Trying to get my head around a conversation yesterday.
I was in discussion with a lady who is mid 50's and had worked in various Health Authorities for most of her working days. About 34 + 3 as student.
She has tried to find out what her State Pension will be (at the age of 67?) She's still working with NHS now.
.
She was checking on the gov.uk site and she seems to think that, having paid into the NHS scheme her State Pension would be less than the full figure (current figure of £168) as she was paying reduced NI but the NHS pension(s)( as it were different NHS areas) payout would make up the difference. The difference would be about £35 - £40.
Is what she's been told correct or has she interpreted the info incorrectly or have I got this all wrong?
I was in discussion with a lady who is mid 50's and had worked in various Health Authorities for most of her working days. About 34 + 3 as student.
She has tried to find out what her State Pension will be (at the age of 67?) She's still working with NHS now.
.
She was checking on the gov.uk site and she seems to think that, having paid into the NHS scheme her State Pension would be less than the full figure (current figure of £168) as she was paying reduced NI but the NHS pension(s)( as it were different NHS areas) payout would make up the difference. The difference would be about £35 - £40.
Is what she's been told correct or has she interpreted the info incorrectly or have I got this all wrong?
My speculation is that:
She paid reduced NICs because for some period of employment she was contracted out of SERPS, the old State Earnings Related Pension Scheme. In order for this to have happened, her then employer would have made the decision that their company sponsored pension plan members would be in contracted out employment, and as a result they would pay reduced NICs but the pension arrangement would be required to provide a guaranteed minimum level of pension at least as good as what she would have got from SERPS if not contracted out. That pension arrangement could have been the NHS Pension Scheme from what you say.
Did the info she received about her State pension forecast mention a COPE? If so, that's the amount of the guaranteed minimum pension. Note that if she had several periods of contracted out employment and with different employers, the COPE figure is the aggregation of all the separate guaranteed minimum pension amounts.
R.
She paid reduced NICs because for some period of employment she was contracted out of SERPS, the old State Earnings Related Pension Scheme. In order for this to have happened, her then employer would have made the decision that their company sponsored pension plan members would be in contracted out employment, and as a result they would pay reduced NICs but the pension arrangement would be required to provide a guaranteed minimum level of pension at least as good as what she would have got from SERPS if not contracted out. That pension arrangement could have been the NHS Pension Scheme from what you say.
Did the info she received about her State pension forecast mention a COPE? If so, that's the amount of the guaranteed minimum pension. Note that if she had several periods of contracted out employment and with different employers, the COPE figure is the aggregation of all the separate guaranteed minimum pension amounts.
R.
If she’s in her 50’s and not retiring until 67 then she will in all likelihood received the full pension wether she was contracted out or not. The contracted out bit or COPE mentioned affects the 2016 starting pension calculation when the state scheme started.
If she is married she may have opted to pay a reduced NI rate (the option stopped in 1977 I think) which did reduce the state scheme pension (under the old scheme).
If she is married she may have opted to pay a reduced NI rate (the option stopped in 1977 I think) which did reduce the state scheme pension (under the old scheme).
I think people are getting confused between the basic State pension and SERPS/S2P.
AIUI if you've paid your NICs then everybody but everybody gets the full basic state pension.
If you've not Contracted Out you get a top-up called SERPS/S2P.. If you HAVE contracted out you'll get a pension from your employer
AIUI if you've paid your NICs then everybody but everybody gets the full basic state pension.
If you've not Contracted Out you get a top-up called SERPS/S2P.. If you HAVE contracted out you'll get a pension from your employer
Countdown said:
I think people are getting confused between the basic State pension and SERPS/S2P.
AIUI if you've paid your NICs then everybody but everybody gets the full basic state pension.
If you've not Contracted Out you get a top-up called SERPS/S2P.. If you HAVE contracted out you'll get a pension from your employer
Last sentence is wrong - you don’t get a top up called SERPS/S2P if you’ve not been contracted out. Everything changed in 2016 and the only thing that contracting out affects is the calculation made then to see your starting pension at April 2016. There is only one state pension now which stands at £168 pw. which everyone qualifies for IF they have the right number of qualifying NI years.AIUI if you've paid your NICs then everybody but everybody gets the full basic state pension.
If you've not Contracted Out you get a top-up called SERPS/S2P.. If you HAVE contracted out you'll get a pension from your employer
craig1912 said:
Last sentence is wrong - you don’t get a top up called SERPS/S2P if you’ve not been contracted out. Everything changed in 2016 and the only thing that contracting out affects is the calculation made then to see your starting pension at April 2016. There is only one state pension now which stands at £168 pw. which everyone qualifies for IF they have the right number of qualifying NI years.
I've asked again and from the gov site she seems to think that she's destined for the £168 but will miss out on this additional "top up"I wonder if the gov site is may be a bit confusing? Reading the other thread on this would seem to confirm this.
34 years and a possible 11 more years (although apparently this is unlikely) should give her max £168 (+inflation)
Plus NHS pensions.
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