With the income tax threshold frozen at £12,570 since 2021-22, anyone with a state pension next year of more than £242 a week will have some tax to pay.

Callistemon21

growstuff

"Of course, the New State Pension is now streets ahead of mine despite all that I paid in NI for 47 years. Summat ain't right."

Would you rather have waited until you were 66/67 to draw you state pension?

When the new State Pension began the age was 65.

Yes, I would liked to have worked until 65 but circumstances dictated otherwise.

I have 47 full years of contributions too, although I was opted out for some of the years, so still don't receive a full state pension. I had to wait until I was 66 to receive it. I would rather have received the lower amount (plus Pension Credit in my case) six years earlier.

Madmeg If your DH was opted out of SERPS, I have no idea why his pension is higher than yours.

growstuff

"Of course, the New State Pension is now streets ahead of mine despite all that I paid in NI for 47 years. Summat ain't right."

Would you rather have waited until you were 66/67 to draw you state pension?

When the new State Pension began the age was 65.

Yes, I would liked to have worked until 65 but circumstances dictated otherwise.

Madmeg, I sympathise. I worked term time (in education) for about ten years - not out of choice, but because I was on fixed-term contracts which made me dispensable. I worked exactly the same hours as someone permanent, and earned the same, so paid the same amount of tax and NI, but was counted as part-time and not allowed to pay into the pension scheme. It has made a huge difference to my pension. The idea that women's pensions have been 'equalised' with men's is laughable. There were numerous women on term-time contracts where I worked, and not a single man. This was not so that the women could be at home with children in the holidays - it was in a college, so full-time staff were off outside of term-time anyway. It was so that the management could see how many students enrolled each year and allocate teaching hours accordingly. It suited them to have a significant number of staff who were only paid when needed. Also, we would have been cheaper, as we didn't cost employers' pension contributions. As you say, the EU ruling put a stop to it, but it was too late for me. When I got a F/T contract in a university I had two young children, and no spare cash to buy the years back (it was hideously expensive, as I remember it).

Oh, 39 years not 37 for the full period of contributions.

Growstuff, I waited till I was almost 63 (no choice). My friend 4 months older than me got hers at 61-and-a-half.

My DH paid all his life into a company pension and opted out of SERPS, so his higher income would be irrelevant, wouldn't it?

All my working years were complete for NI purposes - the few where I didn't pay the full amount were covered either by HRP or the Class 2 contributions I made. I occasionally paid the extra to make them count. I believe I only needed 37 years for a full pension and I reckon I had 47 years. I had a bit of SERPS and we both had a bit of Graduated Pension too, but his is only a couple of quid more than mine.

We both worked in Education. In the early years part-timers weren't allowed to join the employer's pension scheme. A case was brought to the EU courts in the 80s that claimed this was sex discrimination as most part-time workers were women. The case took many years before being agreed and I was able to pay a lump sum into the pension scheme for those 12 part-time years. Of course, I should have had a rebate of NI contributions as they were lower for people who opted out of SERPS in this way, but I never got my refund.

As I said, it seems unfair. I wait with interest to see the report on faulty NI records cos I am sure mine must be one of them!

Everyone should check their NI records - there are so many errors, not just for SAHPs, but across the piece. I check mine every year, to be on the safe side. It means that I can correct any errors and/or make any payments before my SPA.

I don't want to set the cat among the pigeons but later this year we should hear more about how some parents, who took time off to care for children, have errors in their NI records.

www.moneysavingexpert.com/news/2023/07/state-pension-underpayments-caregivers-owed-claim/

"Of course, the New State Pension is now streets ahead of mine despite all that I paid in NI for 47 years. Summat ain't right."

Would you rather have waited until you were 66/67 to draw you state pension?

Probably because he earned more than you did, even if it was over fewer years. SERPS was supposed to "reward" people who earned more.

I had some SERPS, but I lost it when the new state pension was introduced because it was abolished.

I paid a tiny amount of NI on my school holiday job aged 14 - 16. I went into fulltime work at 16 till I had a year off with my first child when I was 28. I worked part-time employed and self-employed till my eldest child was 12. The self-employment was almost fulltime but a lot of it was done at home in the evenings. When daughter was 12 I worked fulltime plus self-employed for the rest of my working life, paying Class 1, 2 and 4 NI (the latter being essentially just an additional tax on income). There were only a couple of years when I paid tax at 40%. At nearly 72 I am still doing some self-employed work, though not paying NI on it since drawing the state pension at age 63.

My husband didn't start work till he was almost 23. He is 5 years older than me, went to Uni, and retired at the state pension age of 65. Despite doing some self-employed work as well, he never had to pay Class 2 NI.

Despite extensive research, including getting my NI record, I have never worked out why my SP is over £20 a week less than his - both Legacy SPs - when I paid contributions for 5 years more than him and technically had Home Responsibilities Protection for 18 years.

Of course, the New State Pension is now streets ahead of mine despite all that I paid in NI for 47 years. Summat ain't right.

Fortunately I have an Occupational Pension as well as two small private pensions as well, and am not complaining about my overall income - just the unfairness of it all.

4asllweknow You won't have accrued SERPS if you had an occupational pension.

Callistemon21

4allweknow

I'd love a state pension of £242 a week and would willing pay tax on it. Worked 42 years, 7 of which were part time (had a family) but no where near the amount mentioned. Due to having paid into a works pension I do pay tax on my total income of both pensions.

I'm amazed that anyone would have a state pension of £242 per week too!
I didn't have quite the 39 years required for a full state pension (4 years short) so not far off but my state pension is well below that amount.

I don't know the exact figures, but somebody who has worked from 16 to 65 will have accrued a fair bit extra with SERPS. It was mainly men.

4allweknow

I'd love a state pension of £242 a week and would willing pay tax on it. Worked 42 years, 7 of which were part time (had a family) but no where near the amount mentioned. Due to having paid into a works pension I do pay tax on my total income of both pensions.

I'm amazed that anyone would have a state pension of £242 per week too!
I didn't have quite the 39 years required for a full state pension (4 years short) so not far off but my state pension is well below that amount.

oodles

@songstress60, you mention private pensions should be tax free. I believe that there are tax breaks for saving into a private pension so those with a private pension have not been taxes on that money they put aside into their pension

Correct!

I'm self-employed and have a private pension.
The pension provider claims the 20% tax relief from the government and adds it to my fund.
So for every £80 I pay in, £100 is the total credited.

I can draw out up to 25% of the fund tax free.
Any other withdrawals are included in my annual income figure for that year alongside state pension and earnings, and taxed accordingly.

oodles

@songstress60, you mention private pensions should be tax free. I believe that there are tax breaks for saving into a private pension so those with a private pension have not been taxes on that money they put aside into their pension

I believe my husband pays into private pension funds pre-tax and will pay taxes at withdrawal, after a lump sum is deducted. All the money is growing tax free at a good yield.

I may seem an idiot here but HOW does one pay this tax?
Is Pension Credit included?
I have been self-employed for decades, and have had to do my paperwork and have an accountant who charges me nearly £400 per year.
The last couple of years I was ill and not trading for a while, now I am 77 and 85% retired but still trading in a very small way.
I still have to do paperwork and see my Accountant - so obviously he will have to adjust if my Pension is also included.
It drives me batty and I am getting very tired of the paperwork - I can’t do it online, (I hate figures) but still want to keep my small business going as I love it!
How are even older people going to manage this??

GrannyGravy13

DAR the full state pension is £815.40 every four weeks.

I'm not sure why you are telling me this GrannyGravy. I have quoted the pension amounts several times in this thread.

There are two basic pensions (you seem to have only considered one).

If you’re a man born before 6 April 1951 or a woman born before 6 April 1953, you will be getting the old (legacy) State Pension. If you get the full amount you will receive the either £156.20 weekly or £624.80 four weekly.

All pensions are calculated on a weekly basis by the DWP although they now encourage everyone to receive it 4-weekly.

You then have the younger pensioners, born after the above dates. If they get the full amount they will receive £203.85 weekly or £815.40 four weekly.

I agree with others, the state pension doesn't exactly enable any pensioners to live the high life if they have no other income. Some people really struggle to manage on the pension and get extra benefits (Pension Credit) so the idea of the standard pension being clawed back because it is above the personal allowance really doesn't make sense to me.
As we have other income we've always paid some tax but can afford to put money aside to pay this every year.

Hopefully any accountants on here can explain clearer than I did in my last post.

oodles

@songstress60, you mention private pensions should be tax free. I believe that there are tax breaks for saving into a private pension so those with a private pension have not been taxes on that money they put aside into their pension

There are tax advantages when you put money into a pension scheme.

You are allowed to draw down 25% lump sum tax free and the rest is taxed at 40%.

Or you can invest in a product which gives you a monthly income and you will be taxed according to your tax code.

@songstress60, you mention private pensions should be tax free. I believe that there are tax breaks for saving into a private pension so those with a private pension have not been taxes on that money they put aside into their pension

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