Unable to understand why I don’t get a full pension....

I think the voluntary contribution is £198 a quarter, but my next payment is nearly due, and it goes up slightly each year. I round it up to £800 a year in my head, although it is very slightly less than that.

I will have paid 8 year's worth of voluntary contributions by the time I get my pension, on top of over 40 years of NI contributions from working. It's maddening, but I can see the predicted amount increase each year on the website, and I can only hope that I live long enough to get past the break-even point. I haven't factored in the amount that I will lose in tax, but (longevity presumed) I think it is always worth paying the contributions if you can afford them.

Pantglas2

I also get mine at the end of this year Growstuff and was contracted out for a number of years in the Nineties but have paid for a couple of years since 2018 (having taken early retirement from public service post in 2017) to top up my shortfall.

Could you do the same? I’m gambling that £740 x 2 will bring me £10pw pension and I’ll break even after three years!

Is that how much nat. insurance per year is ?
I was supply teaching until the pandemic hit and have been told that I need to pay 3 more years before April 2023 to reach the full amount of pension despite having the equivalent of 39 years over the 40+ years.
Not sure whether to bother or not.
My husband who has taught for more full years than me but gets his state pension this August at 66 years of age, is actually going to receive less than me. ( Or rather less than what I have been forecast) I will also get my pension at 66 in just under 3 years time.
All rather complicated!

Maggiemaybe

Ailidh

Hm. I wrote to them nearly a month ago asking very politely for clarification on my amount which is £1,000+ a year less than the full amount. Always single, always worked, got more than enough years in.
Still waiting to hear back ?

I had a query in 2020 regarding years I worked abroad. No doubt I’m old-fashioned, but I prefer to have things in writing. From July to November I sent several messages to the Pensions Service via their website and email, then two letters. The only response was one random email in September asking for further details, and that wasn’t followed up. When I rang instead, I got good advice and knew how to proceed (though it’s still far from sorted). The person I spoke to could see all my correspondence duly logged on the system, and couldn’t explain why nobody had answered any of it.

In my experience, once you actually get through to the Pension Service (and I once nodded off while I was waiting) they’re very knowledgeable and helpful.

Thank you. I will try phoning.

I too prefer things in writing, having had experience of various organizations where one person promises something "absolutely" on the phone, and a follow up call to a second person has resulted in absolute denial.

Going to wait until after June 5th, which is when my first full month is due to arrive, and then ring, seeing writing has produced no response. I am definitely due to receive my pension monthly, not four-weekly.

Even if "it is what it is", which will be a kick in the teeth after the six year delay, the full contributions paid, and the decision to make provision through a pension scheme, I'd still rather know than wonder.

I seem to have hit lucky in that my written query to the UK Pensions hq was answered promptly and comprehensively. Others clearly have had a lot more difficulty getting a straight explanation.
Gosh, it's a complicated system!

I had questions about my state pension too. I will get it in July when I am 66.
My forecast told me the maximum I could get if I made voluntary contributions - and it was about £15 a week more than if I did nothing. It's very roughly £750-£800 per year.
As others have said, being contracted out can reduce your state pension.
Also - I noticed a couple of years about 40 years ago were "not full" and realised that while my kids were young, our family allowance was in my husband's name. It is sometimes possible to provide your husband's details and get those years transferred to count as your contributions instead - even if you are divorced or widowed I believe. Because I already had over 40 full years prior to 2016, this would not have made any difference to me. It might make a difference to others though if you fall short of the required number of years. ( It works the other way too I assume, if the father didn't work and the allowance was in the mum's name while she worked and made the necessary NI contributions).
I was, however, able to make voluntary contributions for three recent years after I retired- presumably because they were after 2016. It will take me about 3.5 years to "break even", but I decided to go ahead in the hope I will make it into my 70s!

Davida 1968 You are quite correct about marriage tax allowance working both ways - thanks for pointing that out. I probably assumed people would realise that but didn't make it clear. I wasn't assuming it was always the husband who earned more. My DH and I have swapped over a few times in who earned more!. I illustrated it the way it happened to apply to me. I earned more than my husband for a few years before I retired, but I retired at 62 , taking a lump sum and occupational pension ( OP) before state pension age and it just so happened my husband had 2 OPs which took him a bit over the threshold while my OP was under. Thanks again for clarifying.

And thank you all for your input into this very confusing subject...?????

By the way I got my pension at age 63 I am now 68...

grannyrebel7

Mine is going to be less than expected too Shinamae. Like you I tried to get through to the DWP but to no avail. I will be getting £695 when I qualify in July. A friend of mine who has her own business along with her DH and has never really worked in it receives £746. Another friend of mine who has only ever worked a few hours a week as a cleaner receives £631 and another about the same as I'll be having. It's a minefield and I have no idea how it's calculated. The friend who was a cleaner was told that as she raised children she qualified as if she'd worked! I raised 2 kids also does that not make me eligible for the full whack? Obviously not! I've decided to accept what I've been offered which is not the right attitude I know but I just can't be bothered to keep calling. Just wondering how the tax on my salary will be affected.

I agree with you GR17 and I cannot be bothered because no matter how much I try I cannot understand.....?‍♀️?

I do know how it works for tax though,they put your pension with your wages and after the allowance you pay normal tax rate 20% I think that is.....(i’m sure somebody will correct me if that’s not right)...

Have you taken into account that the State Pension is paid every 4 weeks not calendar monthly, so you get 13 payments a year?

I don’t know if this is relevant shinamae but when I received my notification of my state pension it was less than I had worked out on my own pension forecast.
I managed to speak to someone at the Pensions’s office (it was a lot easier then)
As the conversation went on he asked if I had always lived I. The UK which I had and then he asked me about how old my children were.
Too cut a long story short it turned out that the years I had stayed at home to look after my boys had not been included in their projections, even though I had been getting family allowance and because I was getting family allowance these years should have counted towards my pension
It was all sorted out but wondered if they might have made a mistake in and missed out something in your contributions.
Hope that makes sense.
I wondered if you had all you paperwork with regards to your contributions would Citizens Advice be able to help you if you can’t speak to anyone at the Pensions department.
Good luck.

Mine is going to be less than expected too Shinamae. Like you I tried to get through to the DWP but to no avail. I will be getting £695 when I qualify in July. A friend of mine who has her own business along with her DH and has never really worked in it receives £746. Another friend of mine who has only ever worked a few hours a week as a cleaner receives £631 and another about the same as I'll be having. It's a minefield and I have no idea how it's calculated. The friend who was a cleaner was told that as she raised children she qualified as if she'd worked! I raised 2 kids also does that not make me eligible for the full whack? Obviously not! I've decided to accept what I've been offered which is not the right attitude I know but I just can't be bothered to keep calling. Just wondering how the tax on my salary will be affected.

Elaine R155 - can I add that the "marriage tax allowance" that you cite, works both ways. (Either spouse can claim it, if you're married or in a Civil Partnership.) I had it when DH's income was well under the "personal tax allowance" level.

I had a strange explanation when querying my state pension forecast to the effect that my ‘state pension had been calculated under the old system using the new rules’. A very helpful accountant friend said to look at an old pay slip, and if you have a D or an N under NI category your pension was contracted out ie the full amount was not paid in even if you worked full time (40 years in my case).

"Contracting out and what it means to you"

The term contracting out came about when occupational pension schemes made a contract with the government which allowed the employer to make a lower rate of NI contribution in return for providing greater benefits to the works pension scheme. Employers paid 3.4% less ( 2015 rate ) and employees who joined the scheme paid 1.4% less. In return for this, the pension scheme had to guarantee that they would provide at least the same amount that you were giving up in additional pension through SERPS and later S2P, both of which were earnings related.

So before the introduction of the new State Pension in April 2016 you were entitled to the Basic State pension based on your NI qualifying years. Being contracted out did not affect your Basic State pension entitlement. However what was affected was your entitlement to the earnings related schemes of SERPS and S2P ( State 2nd pension ). If you were a member of a contracted out pension scheme you did not build up entitlement to the additional pension but instead it was paid along with your occupational scheme benefits - please note that it's not a separate payment, it's just part of it. In tax year 2015/16 the Basic State pension was £119.30 but it was possible to get anywhere up to £300pw if you had SERPS/S2P. It was quite a complicated system though and very difficult to know exactly how much additional pension you earned.

Some people who did not belong to a contracted out scheme were able to contract out into a Personal Pension. In this scheme, HMRC paid a rebate of 1.4% of your NI into a Personal Pension. There were no guarantees in this scheme though and no employer contributions. Many people have done very well with this method though but some have not been so lucky. This kind of pension is subject to investment returns. Contracting out for this method was ended in 2012.

From April 2016 the new State Pension began and contracting out for Defined Benefit ( also know as final salary or salary related schemes ) ended. The new State Pension had no additional pension element and is simply a flat rate amount. However it will take many years till it's fully flat rate for all as Transitional Arrangements were put in place to ensure that no-one who paid into the old system would lose out. The rate was set at £155.65 in 2016 which was basically the lowest amount that was considered enough to live on - ie the old Pension Credit level plus a few pence extra. Eventually this would do away with the need to apply for Pension Credit and make the process simpler. What it is not is an increase of around £35pw on the Basic State Pension as some think.

These Transitional arrangements are what is causing confusion for many people, especially those who have been contracted out. Basically, as I explained in a previous post, 2 calculations were done in April 2016 - one under the old rules and one under the new rules - and you got the higher of the 2 calculations. This protected those who were not contracted out by ensuring that they would still get their entitlement to a state pension which was higher than the new State Pension rate. It also protected those who were contracted out to make sure they would get no less than they always expected to get under the old system.

I was contracted out throughout my working life and retired aged 60 with 42 years worth of NICS. I took my OP and lump sum on retirement but didn’t appreciate that although my SP would be delayed until I was 66 later this yr that I should continue to pay NICS. Having worked it out I wouldn’t break even until I was 70 so decided not to pay the missing years of NICS and put the money towards a newer car. Currently I’m paying £157 pm income tax which is going to increase to £279 pm once my SP kicks in. It would have been more than helpful if we had fully understood these changes when they were implemented.

If she is only "a few pounds" over the Pension Guarantee Credit[PGC} (which is what you are getting) she should be able to get Pension Savings Credit[PSC]. It would certainly be worth her asking. There are many online calculators or she can ring and someone will go check if her income and savings.

She must have received her pension before 6 April 2016. The first £10,000 of savings is disregarded and you can have up to £16,000 (this is the same as PGC) and it is still possible she may get something. The big difference is that, unlike you, she would have to apply for help with council tax and apply for help with dental treatment and glasses separately (It doesn't get any easier does it ).

You should also be getting a £140 Warm Home Discount against your electricity bill. Again she will have to claim this and, not being in the "core" group may not get it. PGC is in the core group so you should always have the discount against your bill (not sent to you). I think there are a few very small energy companies who are exempt from this scheme but all the bigger ones are involved. This is dealt with by them, not the government.

I could not agree more that this couldn't be more overly complicated if it tried!

I’m also 67 but wasn’t able to get my state pension till aged 65 1/2 despite having 47+ years of contributions . I was contracted out for some time apparently but I still get over £700 every 4 weeks. Guess I’m on the new system and you are on the old.

After reading all of the above.........my head hurts! Why is the system so complicated?
I’m 81, and was a stay at home mum for my 5 children. I also fostered, then child-minded, and had various part time jobs after the children grew up, and finally retired from my last part-timer when I was 70. I am now widowed, and receive the full pension, and pension credit. This entitles me to exemption from Council Tax , and help with dental treatment and glasses.
My friend also gets the full pension. Because she receives a very small pension from her late husband’s job she isn’t eligible for Pension Credit because her income is just a few pounds over the limit. She therefore loses out on a great deal of help. Very unreasonable. The Government doesn’t do much to advertise Pension Credit, and the application form is long and quite complicated. I believe that there are a huge number of people whose lives could be made easier, but who either don’t know about the extra cash or don’t know how to go about claiming it.
They are quick enough to snatch back, though, as I found out when my DH died. No leeway on HIS pension payout. Chop! The minute they are gone.

I joined the Waspi women's cause, 1950's women who were "robbed" of their correct State pensions. We were not given the 10 years Legal notice when our ages were raised & not once, twice!! I had to wait 6 extra years & I also received less each month as mine were "contracted out" too.

We don’t all get the new pension levels. It was introduced later. It is paid every 28 days and you are lucky to have paid in the full years required for a full pension. I have a teacher’s pension as well thank goodness as I would not be able to manage by relying on the state pension alone. ?‍♀️

Not exactly about the level of state pension, but some folk might not know about marriage tax allowance. If you earned below tax threshold and your husband earned a reasonable amount above the threshold ( not a higher rate taxpayer though), you can transfer 10% of your tax allowance to him. I think you can go back 5 years and you can ask for it to be applied from now on until you cancel the request if you're going to be in that situation for next few years.
I've just claimed for 2018-19 and 2020-21. You are asked to select each year that you want to apply for ( I was not eligible in 2019-20). I will pay about £200 tax as I was just below the threshold and it is a fixed amount you transfer, but my husband will get over £400 back, so we should still be just over £200 better off. Many people get back a lot more.
Don't apply if you are just below the threshold and your husband was just above without checking you won't pay more tax than he gets back!

www.gov.uk/marriage-allowance

www.moneysavingexpert.com/family/marriage-tax-allowance/

Chinesecrested

Surely £637.92 x 13 = £691.08?
That's the full pension, isn't it?

Now you’ve lost me completely. I am now getting £651.84 I’m not sure if that’s every month or every four weeks....?

If there was a period, or periods, of time, when you didn’t work, but you were in receipt on Child Benefit, make sure the pensions agency knows that as that counts.

Hi MaggieMaybe... I have heard this from other people too so thanks and I will write to them. I have quite a bit of time before I reach the ripe old age of 62 so have time to pay to make up the missing year. I wish I had known at the time of course but at least have the chance to do something about it now.

I have just got my pension I was contracted out for 20 years and stopped working at 60. I get £550 a month after 44 years contributions and now pay over £130 tax on my local gov pension....makes you wonder why bother working