UK pensions

[chiang mai]

I rather like this explanation of the residency rules better:

http://www.cambridgetax.co.uk/ctp/New_Residence_Rules.html

[nong38]

And I expect the HMRC will interpret these new changes as they see fit to suit their own purposes, what we might assume to be our case proven may not turn out that way in the end, I am a cynical chap who has observed the powers that be bend, shape and move goalposts as the rules which then applied did not ensure a win.

[Rajab Al Zarahni]

At last we have a prominent politician publicly decrying the unfairness of frozen pensions. Given that his ancestry is Indian and most of his constituents are of Indian ancestry then it won't be long before somebody shouts out that it's racist. We can all then sit back and relax and anticipate a timely change in legislation.

http://www.theguardian.com/money/2015/aug/15/keith-vaz-frozen-pensions#img-1

[Lite Beer]

Inflammatory post and replies to it removed.

[Lite Beer]

We also have the future leader of the opposition onside.

Hope for expats in UK pensions ‘lottery’

http://www.theguardian.com/money/2015/aug/15/hope-for-expats-uk-pensions

SNP also give their backing:

http://pensionjustice.org/wp-content/uploads/2015/08/Scottish-Sunday-Express-2.8.15.jpg

[i claudius]

We also have the future leader of the opposition onside.

Hope for expats in UK pensions ‘lottery’

http://www.theguardian.com/money/2015/aug/15/hope-for-expats-uk-pensions

SNP also give their backing:

http://pensionjustice.org/wp-content/uploads/2015/08/Scottish-Sunday-Express-2.8.15.jpg

Well as Jeramy Corbin has about as much chance of leading labour to a win in the next election as Screaming lord Sutch has (and he is dead) of getting into no 10 with the monster raving loony party then i would not hold my breath. and as its in the Guardian i wouldnt bother as only about 2 people read it.Its a pity that the last leader of the Labour party Tony Blair was the one who faught tooth and nail right up to the court of human rights to make sure we did not get it.

[i claudius]

At last we have a prominent politician publicly decrying the unfairness of frozen pensions. Given that his ancestry is Indian and most of his constituents are of Indian ancestry then it won't be long before somebody shouts out that it's racist. We can all then sit back and relax and anticipate a timely change in legislation.

http://www.theguardian.com/money/2015/aug/15/keith-vaz-frozen-pensions#img-1

So let me get this right ,some politician of Indian ancestry, Jeramy Corbin , and the SNP are on our side , well how can we lose .

PS note to self "stop being so bloody cynical"

[billd766]

Sandy,

That is the link that I found the crap about S2P.

You are correct, my Service was between 89 & 03

BILL

My apologies Sir,

I gave you duff info.

My Pension provides 50% not 75% as I stated above. On checking my paperwork, I got my pension schemes mixed up.

If you want a redacted copy of my Oct 2014 letter, just let me know and I will forward to you.

Too many twists & turns. I had a feeling that I wasn't eligible but couldn't remember why. Had hoped you had come up with something I had missed.

Sorry Sandy.

Cannot help you. You have been sh@fted.

Not for the first time, being single I got screwed during the introduction of the military salary.

Its the pre 75 guys that really dipped out, if I was 2 years older I would have been among them, so not all bad.

I am one of the pre 75 guys and of my 22 years of pension, the barstewards have STOLEN 16 years worth leaving my wife only 6 years worth BEFORE any deductions.

We will after our ex military people says Big Dave.

In a pigs arse you will.

Guido Fawkes had the right idea, just a few hundred years too early.

[evadgib]

100 days: article by David Cameron

(Don't shoot the messenger!)

[transam]

100 days: article by David Cameron

(Don't shoot the messenger!)

But the pensioner can't put their feet up in Thailand, Thai folk can in the UK....Gawd..

[billd766]

100 days: article by David Cameron

(Don't shoot the messenger!)

That will be the last time I read anything you post (sorry that Big Dave posts).

I only just made the cludgie in time to puke up after reading such sanctimonious clap trap.

What a bleeding winker he is.

[jacky54]

I just got a forecast for pension due in 2017. 36 years contributions with 16 contracted out, so I was expecting at least half the new increased rate. Not so, instead of that the £121 amount forecast is little more than the present level. How do they work it out? it comes with a booklet on how they do it, but it does not explain it properly.

[Rajab Al Zarahni]

I just got a forecast for pension due in 2017. 36 years contributions with 16 contracted out, so I was expecting at least half the new increased rate. Not so, instead of that the £121 amount forecast is little more than the present level. How do they work it out? it comes with a booklet on how they do it, but it does not explain it properly

Why not try writing to them stating that you don't believe your forecast has been calculated correctly and ask for the method of calculation and the specific calculations relevant to your record, so that you can check it yourself. Private sector pension providers make mistakes all the time and in the event of a dispute they would have to show the basis of calculation.

[evadgib]

Pressure growing for an end to ‘discriminatory’ policy that denies annual increase to thousands living overseas, writes Jeff Salway

http://www.scotsman.com/lifestyle/money/drive-to-unfreeze-pensions-of-scots-expats-hotting-up-1-3859826

The comments are worth reading too, but as usual the stock photo serves to deceive...

[sandyf]

I just got a forecast for pension due in 2017. 36 years contributions with 16 contracted out, so I was expecting at least half the new increased rate. Not so, instead of that the £121 amount forecast is little more than the present level. How do they work it out? it comes with a booklet on how they do it, but it does not explain it properly.

It was my understanding that where there were contracted out years, the contracted out benefit would be deducted from the new basic rate on some predetermined basis.

You must have a private pension due from your 16 years contracted out so it is possible that the private pension plus what you receive as state pension could exceed the new basic rate.

When it comes to additional pension, many forget that it is not on a straight line basis. Contributions add a great deal more to additional pension in the later years than they do early on.

[evadgib]

Updated 17 Aug 15:

Your State Pension statement explained (DWP040)

[sandyf]

Updated 17 Aug 15:

Your State Pension statement explained (DWP040)

Additional pension and contracting out has always been a bit of a grey area. The leaflet does little to clarify the situation.

Is my starting amount affected because I have been in a pension at work, or paid into a private pension?

If you are or were in a final salary or salary-related pension scheme or, before 6 April 2012 you were in any pension scheme at work, you are likely to have “contracted out” of the additional State Pension. Some stakeholder and personal pension schemes were also contracted out. If you have been contracted out of the additional State Pension at any time before April 2016, we will make a deduction when working out your starting amount. The deduction will be made when working out both your new and existing scheme amounts. This is because, depending on the type of scheme:

• you would have paid NI contributions at a lower rate, or

• some of the NI contributions you paid were used to contribute to your stakeholder or personal pension instead of your additional State Pension.

[MaeJoMTB]

I just got a forecast for pension due in 2017. 36 years contributions with 16 contracted out, so I was expecting at least half the new increased rate. Not so, instead of that the £121 amount forecast is little more than the present level. How do they work it out? it comes with a booklet on how they do it, but it does not explain it properly.

It's essentially 134GBP + 17GBP of any SERPS entitlement for those paying in before 2016.

If you were contracted out, the max payment would be 134GBP for 35 years contributions.

You should be able to read your SERPS entitlement off any previous calculation your were issued.

[jacky54]

No idea what serps is, I do have a small local authority pension that I get now so i imagine that is taken into the calculation,

[MaeJoMTB]

No idea what serps is, I do have a small local authority pension that I get now so i imagine that is taken into the calculation,

If you worked for a local authority or the forces you probably won't have any SERPS entitlement.

So your max state pension would be 134GBP under the new system.

[sandyf]

I just got a forecast for pension due in 2017. 36 years contributions with 16 contracted out, so I was expecting at least half the new increased rate. Not so, instead of that the £121 amount forecast is little more than the present level. How do they work it out? it comes with a booklet on how they do it, but it does not explain it properly.

It's essentially 134GBP + 17GBP of any SERPS entitlement for those paying in before 2016.

If you were contracted out, the max payment would be 134GBP for 35 years contributions.

You should be able to read your SERPS entitlement off any previous calculation your were issued.

Not true. The forecast is taken as the day of the forecast. so at the moment any forecast would be under the current scheme.

In this case it would be current basic, approx £115, plus any additional pension accrued.

After April 2016 a different approach will be taken. It will be the higher value of a current scheme calculation and a new scheme calculation. A new forecast should be obtained in April.

[loppylugs1]

No idea what serps is, I do have a small local authority pension that I get now so i imagine that is taken into the calculation,

If you worked for a local authority or the forces you probably won't have any SERPS entitlement.

So your max state pension would be 134GBP under the new system.

post 2016 perhaps,pre would not apply local authority ,public sectored pensions (govt. pensions) would more than likely be a 30 year employment term then retirement at approx 50 years old then 15 years of serps (or additional) added to whatever the OAP stands at at that precise moment

[sandyf]

No idea what serps is, I do have a small local authority pension that I get now so i imagine that is taken into the calculation,

The NI contributions are in 2 parts, one part towards basic state pension and the second part goes to additional pension. When you are contracted out you do not pay the second part. It goes towards an occupational pension or private pension.

Contributions to the additional state pension have had various names over the years, SERPS being one of them. Others have been Graduated Pensions, SERPS2 and Second State Pension.

In your current forecast there would be no reference to your LA pension as they would only consider contributions made and not those that went elsewhere.

After April 2016, the fact you contracted out will be taken into account in calculating your pension. As they will consider 2 options, based on current scheme and new scheme, the same amount would be applied in both calculations.

The example in the leaflet shows a deduction of £32 for contracting out but it is not clear if this is a fixed amount or not. On the basis that it is, your pension under the new scheme would be the new rate less £32, approx £130/week.

Example – the amount under the existing scheme rules is higher On 6 April 2016,

Yvonne has 30 qualifying years on her NI contribution record. During her working life, Yvonne has periods when she was contracted out of additional State Pension.

Using the new State Pension scheme rules, Yvonne would get £97.64 a week (£129.64 (£151.25 x 30/35ths) less a deduction of £32).

Using the existing scheme rules, Yvonne would get £139.95 a week (£115.95 basic State Pension and £56 additional State Pension less a deduction of £32).

Yvonne’s starting amount will be the higher of these two amounts, which is £139.95 a week.

[Liquorice]

Very informative post Sandy. Thank you.

I have 42 years contributions with 4 years contracted out.

However from what I read my full Pension could still be reduced for the 4 years contracted out period, even though I would still have more than the 35 years qualifying period of full contributions.

That seems an injustice.

[sandyf]

Very informative post Sandy. Thank you.

I have 42 years contributions with 4 years contracted out.

However from what I read my full Pension could still be reduced for the 4 years contracted out period, even though I would still have more than the 35 years qualifying period of full contributions.

That seems an injustice.

It certainly does.

If what has been presented so far is right, and it is a fixed deduction,then your 4 years would incur the same deduction as some one who had been contracted out their working life.

It certainly seems like pensions are to be reduced.

Fortunately I already have my pension but if it was due say next May it would be a bit different. I did the 44 years contributions, not sure if any of my service was contracted out as it was non pensionable at the time. I certainly have Graduated Pensions in my additional pension. I did one year contracted out employment shortly before I finished work. During my working life I accrued about £82 in additional pension.

After next April it would be calculated as follows.

Current scheme - Basic of £115 + Additional pension £82 - contracted out deduction £32 = £165/week

New scheme - New basic £152 - contracted out deduction £32 = £120/week

They would pay the higher amount of £165/ week, nearly £30 a week less than I am getting now.

[Liquorice]

My additional Pension will be very similar to yours.

As you say, the example shows a contracted out reduction of £32, but it's not clear for what period.

I simply can't see that being a fixed amount, it must be variable dependant on the years.

I guess we'll know for sure come April 2016.

I don't get my Pension until 2018.

[chiang mai]

You'll forgive me for not seeing things the same way, but:

if a person contracts out of the NI system they are expected to and in most case do receive a higher rate of return for their payments. The fact that the state pension is reduced as a result of that gamble seems entirely appropriate to me, indeed, my state pension was reduced for this reason but overall I am substantially better off for having contracted out.

[JohnC]

The whole point of SERPS was you contracted out and paid lower NI contributions, in return your employer should enrol you in a company pension scheme that's pays equal to or greater than the state pension of SERPS.

If you later contract into SERPS this is reflected in your state pension by a proportional increase.

For example

I was in the Royal Navy for thirty one years and contracted out of SERPS, On retirement I receive a substantially better pension, however, I took up a second career and was contracted into SERPS, on receipt of my state pension it was broken down into three components, a) Graduated Pension Contributions, Contracted out contributions and finally c) Contracted in contributions, when these three components were added together that gave me my state pension amount which was more than the basic pension.

As an aside when I applied for my state pension they gave me full details of all the pension schemes I had joined in case I had forgotten some old scheme!

[sandyf]

The whole point of SERPS was you contracted out and paid lower NI contributions,

Incorrect. In a nutshell the whole point of SERPS was to provide additional pension benefits to people who were not in an occupational pension scheme.

The administration and benefit of the system is another discussion altogether.

[sandyf]

You'll forgive me for not seeing things the same way, but:

if a person contracts out of the NI system they are expected to and in most case do receive a higher rate of return for their payments. The fact that the state pension is reduced as a result of that gamble seems entirely appropriate to me, indeed, my state pension was reduced for this reason but overall I am substantially better off for having contracted out.

There are 2 different routes here, occupational and private. Generally speaking the occupational schemes gave a much better return than the state additional pension.

In 1988 when the option for individuals to opt out became available, all the advisors said pack it in and get an APP, then 10 to 15 years later they all did a U turn. I stayed in but know many that went private and most have failed to make a decent return.

If you are better off for opting out as an individual, then well done. The majority of people that are better off, the decision to contract out was taken for them.

The point that has been in question is not how contracting out has affected pensions, but how contracting out will affect pensions after next April.