To be worried how I will manage to work until I am 67?

[brasty]

I am in my mid fifties. I already get more tired than I used to when younger. I wonder how I am going to manage to work full time until I am 67 years old. And continue to do my share of cooking, cleaning, family stuff and actually having some fun.

The state pension is 159 per week. Everyone who has paid full NI contributions for 35 years is entitled to it. Those who paid reduced contributions due to being contracted put should have had the difference between the reduced amount and full contribution paid into a company or private pension and this should make up any shortfall or be greater than the shortfall depending on the funds/investment managers chosen.

I was fully aware of this in the 1980s when I was in my 20s and ensured that I made wise decisions because I knew I would get old and stop earning. The issue is that too many people bury their heads in the sand and do not make adequate provision and many of them are highly skilled professionals so it isn't always about those who are disadvantaged or deprived. What I find shocking are the huge numbers of people who claim they "didn't realise."

I can turn this on it's heading you like. I'll have my contributions in the bag by the time I'm 58.5. I may work until I'm 67 so that will be an additional 8.5 years of full NI contributions from which I personally will not benefit. Do I resent that? No. Could I resent it? Yes, of course I could but I accept that I have a responsibility to help support those less well off than me via the tax system. I am pleased to help the sick, the carers, the very poor. I am not pleased to subsidise those who chose not to pay into a pension whilst going on exotic holidays, etc. There are members of my team now in their 30s who are not contributing to a fantastic occupational pension scheme. Refusing to pay 8% and foregoing 14.5% of employer's contributions because "they want the money now", "are saving for a car or wedding", "Don't known if they'll live until they are 68 and Don't want to waste the money". Post graduate professional people on £40k with rising career trajectories. Do I expect to hear them complain when I am 80 something and they hit their 60s. Most certainly. Will I have any sympathy. No, I'm sorry, I'll have absolutely none.

No the state pension is £122.30 for anyone who has been contracted out, so paid into a private pension. Not £159. And I have already worked for 37 years.

Refusing to pay 8% and foregoing 14.5% of employer's contributions

They are stupid. I get 1% of employers contributions, rising to 2% next year.

It did depend on the scheme but from 1988 most occupational schemes would have been opted out as it meant the employer, and employee, paid lower NI so for the employer it reduced the cost of the scheme. In effect if RaindropsAndSparkles didn't opt out and Brasty did then Raindrops would have been costing the employer more. Before 1988 it was only certain schemes but for Raindrops most of hers would have been post 1988.

In your calculations you haven't allowed for the deduction that will be made for the year or years you were contracted out, even if you have 35 years without that year or years it will still be deducted.

If people have worked and contributed for 35 years without being contracted out they will get a full pension, if they have been contracted out they won't. I think it was Which that was doing a campaign to alert people to this . This is the sort of confusion that means many people think they will get the full new pension but in fact they won't.

Govt figures in answer to a freedom of information request by Hargeaves Landown showed that in the first 5 years of the new flat rate pension less than half of people retiring would get the full amount, some as they didn't have 35 years contributions and some who did but were contracted out.

It is some years since there was a fixed retirement date, people have been working till 67 and beyond for many years and some of them were also taking their SRP and some were deferring.

I think everyone should ask for a pension forecast, the calculations make for interesting reading. My entitlement to the new pension is less than £100 a week although I have over 42 years of contributions.

RaindropsAndSparkles, do you work in the public sector? You are lucky to have such a good pension scheme, as brasty says many employers are contributing 1%.

Yes I do work in the public sector. My pension forecast through gov.uk tells me I will have the full amount.

You have missed the point about contracting out which should have meant alternative arrangements were made. Some people too would have paid the reduced rate by choice, ie, married women but they should have been aware of the consequences.

I didn't actually realise I was contracted out. I had a private pension as I thought it was the right thing to do. Only recently realised I was contracted out.

I didn't actually realise I was contracted out. I had a private pension as I thought it was the right thing to do. Only recently realised I was contracted out.

And if I had had the choice I would not have been contracted out.

Obviously if you were contracted out there will be a pension from that but the point is many people think they will get their occupational pension and the full SRP.

The reduction for being contracted out isn't about the reduced rate that some married women elected to pay that is a different issue.

I am surprised you were in a public sector pension that wasn't contracted out. I worked in payroll in the public sector and it certainly wasn't a choice if it was a "contracted out" scheme. I know the local govt, police, civil service, nhs and fire fighters schemes all meant you were automatically contracted out. Obviously you didn't have to join, well you did when I started work but that changed, so you could have a private pension but of course would have lost the employers contribution.

I don't suppose you want to let us know which public sector pension wasn't automatically opted out? Just interested as friends often discuss pensions, we are that age.

brasty I think pensions are so complicated that people often don't know the full details. Their is confusion over the new SRP, which they like to call flat rate but actually is paid at many different rates. Many people assume people who retired after April 2016 will be getting the new advertised rate, £159 or whatever, when in fact some will still be getting more due to S2P/SERPS and many will be getting less.

I find it annoying when people say I am lucky as I will get the new pension as I will be getting the pension I was always going to get as it is slightly more than £159 but the bigger issue is people who are assuming they will get the £159 but won't get anywhere near it not to mention the people who actually know they won't get it.

I wasn't in the public sector until 2003. In 2013 I transferred my private and occ pensions (3 in total) into the LGPS. Doing that purchased me 12 years. In addition to my service from 2003.

Everyone can log onto the government website to get a pensions forecast. There shouldn't be any surprises. Based on what you say, I think I contracted out of the serps bit and invested the money into NPI. Based on my forecast I have full NI contributions from 1981 and I didn't expect to have this. I expected a gap from about 1988-1992.

Okay you were lucky in that your occupational scheme did not contract out.Most did I think as it made it cheaper for them. Most people will not be in that position.I knew all about the married woman's stamp and never opted to pay less.

Weren't you contracted out from 2003 to 2016? I understand about the extra years in your occupational scheme, that is fairly standard. But if you were in a public sector scheme from 2003 to 2016 it would be unusual for you not to be contracted out leaving 13 years of deductions from your SRP. You might not have been contracted out for earlier schemes but all the public sector schemes I know were automatically opted out.

Raindropsandsparkles makes some very good points. I know pensions can seem complicated, and it’s not the most exciting thing to sit down and do financial planning, but quite frankly saying ‘I didn’t realise’, ‘I didn’t think about it’ is no excuse.

And like raindrops I’ve come across loads of people- intelligent professionals in many cases- who make the decision to have the money in their pocket in the here and now, rather than invest in their future. Which is fine, if you weight it up and decide that you want more spending money now and are prepared to accept a frugal lifestyle in your older age. Not fine if you’re then going to whinge about it.

I have a number of female colleagues in the same age range as me (50s) who have never returned to full time work since having kids 20 or so years ago. They work maybe half time, or 3 days a week, and it only now seems to be dawning on them that they’ve screwed their pensions.

Once again, fine to work part time if that’s what you want and you accept that it will impact not just on your earning now, but in your future. Just don’t complain that you ‘didn’t really think about’ the consequences of your own decisions

I can't have been contracted out if the government website tells me I have full contributions from 1981 and will have made sufficient contributions by the time I'm 58.5 for the full state pension of 159 at today's rates. The quote on my current contributions is 155.

How are you supposed to realise you are automatically contracted out? I read the annual pension statements I get, I never remember this being mentioned. And that was probably because until 2016, being contracted out had no impact on your state pension. The rules have only just changed, and I have known this since 2016.

Did you never look at the forecasts brasty? Also if you were contracted out the money would have been invested elsewhere and this should makenupnthe shortfall should it not. Have you ever asked your payroll/pensions dept for advice?

Yes I get annual statements that I read. No the money was not invested elsewhere.

So you knew you were saving on NI and didn't question it's impact or think to invest it yourself elsewhere? Did you really think you would get the same as others who paid the full rate?

The reduced NI was sold by Government as a way to encourage private pensions. As a low paid worker, it was actually a pretty small amount. And yes, until 2016 everyone got the same state pension. Why should I think that would change? Remember I did not opt out, I did not have the choice as part of my pension scheme.

That is the problem, things keep changing. I would not have paid into my pension scheme if I knew I would lose out on the increased pension scheme. No one knew that would happen.

RaindropsAndSparkles aren't you going to tell us the public sector pension scheme that wasn't automatically contracted out?

Okay I have just got out old pension statements. I keep them. It does say I was contracted out, I did not have a choice. It says that the reduced NI is a benefits provided to encourage pensions, and actually quotes the Government saying that.

And it means someone who has never worked will get a state pension worth £1924 a year more than me. I will have worked and paid NI for 47 years by the time I get my state pension. Do you really think that is fair?

Thank you Totallypearshaped. I’m going to keep your post to remind myself what an idiot I am when I put my judgy pants on.