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Mossway:

Contracted out is

basically when an employee has paid in to a company pension scheme. They would not have been taxed on the part of their wages that went in to the company scheme. Thus they get  a state pension that is a bit less.

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13 hours ago, Anna B said:

But is that what people actually get? I've never met anyone who gets the full amount.

I do. Was getting £164.35 and will get the maximum state pension of £168.60 from 6th April this year.

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17 minutes ago, Janus said:

Mossway:

Contracted out is

basically when an employee has paid in to a company pension scheme. They would not have been taxed on the part of their wages that went in to the company scheme. Thus they get  a state pension that is a bit less.

That's not at all correct.

 

https://www.gov.uk/contracted-out

 

If you contracted out then some additional NI payments were not deducted from your pay and your state pension will thus be less.  Savings on PAYE tax from paying into a pension is nothing to do with it, you make this saving whether or not you were contracted out.

3 hours ago, mad-dad said:

I get £192  per week

More than the maximum amount?

Is that due to 

https://www.nidirect.gov.uk/articles/additional-state-pension

 

The additional bit (none of which applies to people who are on the new pension, ie retiring after April 2016)?

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Our state pension is scandalous. It is the lowest state pension in the civilised  world. The average working week is 40 hours and on our own government's stated MINIMUM, that should work out as £ 328.40 per week for each and every pensioner. If the government won't pay that then they have no right to go quoting any minimum amount.

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14 minutes ago, spilldig said:

Our state pension is scandalous. It is the lowest state pension in the civilised  world. The average working week is 40 hours and on our own government's stated MINIMUM, that should work out as £ 328.40 per week for each and every pensioner. If the government won't pay that then they have no right to go quoting any minimum amount.

As a 69 year old I await my £328.40 pension arriving, but not in my lifetime I suspect. There are too many sucking on the teat of plenty to be able to pay us a decent pension.

 

Angel1.

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My state pension is £128 per week ,my wife’s is £80 per week ,it was £34 but because when I came onto pension with full dues paid it went up to £80.Can’t claim additional pension because I made the mistake of saving for my retirement and have too much in savings.Not moaning we are ok but I am surprised at the huge discrepancy of state pensions

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Mossway it's not easy to grasp, don't worry about not understanding it. In easy to understand terms, basically when the 'Contracted Out' system came in and a person chose or 'elected to' be 'Contracted out', usually because of joining an occupational pension scheme at work, then a portion of their normal NI payment amount due to be deducted per the NI scales wasn't deducted via their paypacket, instead this portion was diverted to the occupational pension scheme and matched by the employer and paid into that OP scheme. Any additional amount (say 4%) of salary optionally could also be paid by the employee into the OP scheme (deducted in paypacket) often matched by the employer, depending on the individual scheme plan.

 

So.... because the state NI amount deducted from the person'spaypacket was reduced (i.e the amount going to the person's state NI account) by the diverted OP amount, the person's NI record has less in it than someone who wasn't 'Contracted Out' and that is fine, because their pension is topped up by their occupational pension scheme payment on retirement.

 

Whereas a person who was not 'Contracted out' at any time throughout their working life will receive a higher amount from the state pension at retirement, simply because none of their NI contributions were ever diverted to an occupational pension scheme, and it all went into tbe state pension NI account.

 

So to summarise, if part of your paypacket NI payment was creamed off into a private or occ pension scheme, you won't get the full state pension amount on retirement, as your private or occ pension will more than make up the shortfall difference. The creamed off (diverted) amount was put into the occ pension scheme, matched by the employer, plus any additional optional amounts paid by person and employer, all invested in agreed risk managed funds, and paid as a pension on retirement date. All in addition to state pension. All taxable on retirement, as not taxed via paypacket at time of deductions.

 

Is all that now understood?

 

Same principle as new Workplace Pensions at the moment, but more of a compulsory offer than in the old days, as it wasn't a compulsory offer by employers before, if was very much an optional offer by employers large enough to offer pension schemes.

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1 hour ago, fuddyduddy4 said:

My state pension is £128 per week ,my wife’s is £80 per week ,it was £34 but because when I came onto pension with full dues paid it went up to £80.Can’t claim additional pension because I made the mistake of saving for my retirement and have too much in savings.Not moaning we are ok but I am surprised at the huge discrepancy of state pensions

I'm guessing you are both in your 70s. If so you qualify for state pension via the old original system before the new system came in. No comparison between the two systems is possible, so don't even try. But it all works out in a fair way, even more so in the new system, as what you have put into the state system is what you get out, with optional top ups available before retirement.

 

The 'losers' are women born in the 1950s. I say 'losers' in inverted commas because they have themselves fallen foul of the changeover system. In that they have relied on the state system never changing. i.e. receiving a standard state  pension at pension age no matter what they actually contributed into it. The old system wprked that way but no more. A lot of 1950s born females contributed in a mixture of ways, minimal stamp because of husbands supporting them, or by full stamp paying for themselves. Also after a very small minimum amount on a NI record, a full standard state pension was received. Not a fair system to others paying full amounts of NI all their working lives.

 

So these 1950s women didn't keep an eye on their own personal NI accounts, in terms of qualifying years clocked up. Leaving it to the 'magic man' to somehow look after their NI affairs, and assume the gravy train of unfair state pension payments would continue forever. So it suddenly then changed, and all those 1950s born women who had neglected their NI accounts for whatever reason, - ignorance of the system, complacency, laziness, reliance on Labour nanny state to pay them a pension, not taking any action on receipt of tax year end notices of underpaid tax and NI, not noticing that the Labour Gov't stopped sending underpayment notices out etc etc. So the 1950s women have only themselves to blame if they are losing out now in a reduced pension amount forecast. The ability to make sure your NI account is up to date has always been there. Get a forecast NOW and you still have time ( up to six years) to make up some neglected qualifying years before retirement.

 

Go online and check your record.

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3 hours ago, Cyclone said:

That's not at all correct.

 

https://www.gov.uk/contracted-out

 

If you contracted out then some additional NI payments were not deducted from your pay and your state pension will thus be less.  Savings on PAYE tax from paying into a pension is nothing to do with it, you make this saving whether or not you were contracted out.

More than the maximum amount?

Is that due to 

https://www.nidirect.gov.uk/articles/additional-state-pension

 

The additional bit (none of which applies to people who are on the new pension, ie retiring after April 2016)?

TO Cyclone.

 I haven't a clue what the maximum State Pension is.  All this financial stuff is beyond me, but I have been receiving my  pension at this (inflation related) rate since 2016 (October). Should I be worried? Sorry about QUOTE  mistake.

 

Edited by mad-dad

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2 hours ago, spilldig said:

Our state pension is scandalous. It is the lowest state pension in the civilised  world. The average working week is 40 hours and on our own government's stated MINIMUM, that should work out as £ 328.40 per week for each and every pensioner. If the government won't pay that then they have no right to go quoting any minimum amount.

Well if we didn't have so many scroungers draining the system, the real unfortunates and needy in society would have a decent amount to live oneither on dole or via pensions. There is only so much money in the system.

 

And before anyone suggests taxing the rich even more, don't forget tax is calculated on a percentage basis, so the rich are already paying much more tban tje averagd bear in terms of actual £ and pence paid. Taxing them more means they will retire earlier and close down their businesses, putting folk out of work. Or close up and move to anotber country like they did when Labour were in power.

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Top ups

 

Top ups to your state pension should be considered in the light of how many years you believe you have left to live. Sounds harsh I know, but when working out the return on the investment you intend to

make i.e the number of qualifying years you intend to make up on your NI  record. Considering that a qualifying year can cost £700 odd plus, per qualifying year (increases each year) it is not a small sum to have to pay all at once, but remember the extra pension you get per week on retirement will be index linked and will therefore increase over time If you live longer too you'll be quids in. Also, with the poor rates of interest these days at bsnks, it might actually be a better investment. i.e better sitting in your NI account to give you a higher index linked future receipt, than sitting in a bank now getting kess than 1%.

 

Also take into account future bank interest rates.

 

I've developed a sliding scale spreadsheet for my own qualifying years top ups so Iknow when to stop.

 

Qualifying years are increasing on a sliding scale now for a full state pension. The clerks don't tell you that when you ring up.  By tbe time a friend of mine retires she will have 44 qualifying years on her NI record. People seem to forget that NI payments cover heath services (doctors/hospital treatment etc) as well as pensions.

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11 hours ago, Annie Bynnol said:

The full amount of £168.50 is only available to those who:

are of pensionable age from April 2016 i.e. currently below 70

and

have full NI class one contributions for 35 years

and

have not 'contracted out' i.e. have never been a teacher, NHS worker, BSC steelworker, NCB miner, council worker, government worker, soldier, firefighter etc. (Check they have counted your contracted in service first if you have 35years+ contributions.)

 

People over 70 will be on the old system but can get an Additional Pension if eligible.

Everyone else will be on a sliding scale- use the link provided by Mike10.

Also, the NI records are can be inaccurate, for example for students who worked or signed on during vac., or maternity leave, temporary jobs, or jury service etc.

 

Women in particular need to know if they, or husband for them, paid the full Class 1 National Insurance particularly if either or both were self employed or if widowed.

 

It is taxable.

I also have full NI contributions for 35 years and as a teacher for some of that time I assume I was contracted out. When i retired I just missed the new rate by a month. I am at least £25 a week short of the £168 new rate. That works out at £1,300 a year (or £26,000 over 20 years) down. I get a small works pension so not entitled to any extra state pension 

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