Contracting out of State Pension

[Eightiesgirl]

Just wondering if anyone can clear up a pension query for me. I've just checked my state pension forecast and it states I have 12 years to make another 6 years NI contributions to get state pension forecast of approx 185 per week, which I will have no problem doing. It also said that I was contracted out of the state pension years ago and that the private contracted out pension scheme should pay me approx £7 per week at retirement. This is from a job I worked at for about 4 years in my early twenties. At the time I probably took no notice of what was going on! However, now I'm wondering whether this contracted out pension will be deducted from my state pension when I eventually come to claim it or will it be extra? In other words, if I earn another 6 years worth of national insurance credits and I become eligible for the full state pension when I am 67, however much that may be at that time, will the £7 per week be deducted from it? Thanks to anyone who can help me.

Thank you . I will check it out.

I'm In your exact situation. A few years ago the pension forecast on the Hmrc page said that if you'd been contracted out then you could possibly get more than the maximum state pension.

It's a question that up until I read that I'd worried about. This statement is no longer on my page. But it was there for a couple of years.

I can only conclude that you'll get both. Mine is tiny as it was for 4 years part time. But still a little extra.

Thanks to everyone who has replied.

Mine says 30 years. But I'm reading elsewhere it's now 35 years.

My pension forecast says another year to pay then I've reached the maximum, that's 30 years of full contributions.

I'm worried they are changing this without notice as I'm planning on finishing work in the next few months once my NI is fully paid.

My husband reached 30 years last year and his pension forecast on the Hmrc stopped saying more contributions are needed. It just tells him he'll get £185 a week. He's late 40's.

@inloveandmarried I was under the impression everyone had to pay 35 years of full NI contribution to get the new state pension?

It's been 35 years for as long as I can remember (a long time)

I already have 40 years of contributions but, as I was contracted out, need to do another 2 years to get the full state pension, at the moment I only have enough contributions to get £177.

Or so my pension statement says!

ok, I may misinterpret what you’ve said here, but I think you may be confusing things. No one can withdraw their state pension before state retirement age. It doesn’t mean you have to work till you are 66, it means you can’t withdraw your pension before then. There is no early retirement age for state pension. The age is increasing rapidly - I’m 60 and won’t get my pension now to 67.5.

with respect to your 40 years contribution, the amount of pension you get is not scaled based on what you contribute unless you’ve worked less than 35 years in your entire life (and that should also include anytime you were a carer for children under 12 etc- everyone should check they get credits for time off for kids/maternity etc).

@sspanieleyes this gets even more confusing. So, in effect, I will have to pay NI contributions for an extra 4 years on top of the 6 to cover the years I was contracted out?

Please note that if you are short of a few years contribution to get full pension, you can pay voluntary payments. Depending on your health and risk factors this may be well worth it .
the main thing is to not even attempt to do this before you are close to state retirement age- otherwise there is a lot of track record with NI getting the calculation wrong and adding your extra payments into years that don’t actually qualify

what is on the statement of your future pension and how to pay excess by voluntary payment is notoriously bad and has had a lot of complaints. So be careful. Talk to someone in state pensions direct and talk through your exact circumstances and how much you need to pay into which years .

we did this for my ex. Worked well, he got the full pension for a relatively small outlay

ive looked into mine. I’m 60 and retired and by there reckoning 2 years short due to contracting out. . I will be getting in touch with them at around 65 to get exact quote and paying in for those,last few years. I’m not doing anything with it just now as there is no point.

I think it's 30 years. It's quite confusing, nothing seems straightforward.

This is from the government website.
'You’ll need 35 qualifying years to get the new full State Pension if you do not have a National Insurance record before 6 April 2016.'

I think the 35 years is for people who started paying NI after 6th April 2016.

That certainly follows with both mine and my husbands online government forecasts.

@inloveandmarried Wow this is even more confusing! I started work in 1984 so have paid NI for many years before 2016 yet my forecast states I have to pay 35 years, not 30 like yours, how strange!

No it hasn’t. It changed from 30 to 35 years in 2016, with the introduction to the new state pension (when SERP was phased out ). So, not very long ago at all
You can still qualify for the original “basic state pension” after 30 years at £141 ish pounds. The “New state pension” at higher universal rate is the 35 years

also bear in mind in terms of history it was only in 1995 (15 years into my career and 18 into my NI contributions that the ensign age for women was increased to 65, and in 2011 that change was both accelerated and increased even higher.

simialry, we were sold opting out of SERPS as a good thing by companies and the government. It wasn’t. Many companies like mine did not change their SERPS scheme on increasing state pension age, so my pension paid by my company will go down at 65, and be lower than I’m getting even now for 2 years before my state pension kicks in. Ok, I’ve known this for years and planned for it but many people don’t know this. Also the SERPS payment was reduced from 25% to 20% as the government clawed money back. The idea w all have a full new state pension to simplify it is a joke. It is even more complicated than it used to be. And agian changes happening in short term (realtivey speaking) when there is too little time to make long term safe investments to claw back the reductions

there have been way too many changes at short notice that have left people unable to mitigate detrimental changes in circumstances that they have planned to for years.

No it’s not . It applies to anyone who has not reached retirement age. You need 35 years to qualify for the full “New state pension”. Anything less but over 30 you can qualify for the older “basic state pension” which is roughly £40 less per week.
If you (your company really) opted out of SERPS it will make the situation and calculation a bit worse and way more complicated.

You’re right, I didn’t explain myself clearly. I mean I will need to carry on paying NI contributions up until April 2025 and then I will receive a full pension in November 2025, when I will be 66.
If I stop paying NI contributions now, I will get a reduced pension because I will be 2 years short.

I was scammed with contracting out - my company didn’t give anyone a choice, said it would be cheaper. The rebate that was paid into my private pension was something like £200 a year.
My forecast says I should get £17 odd per week from my private pension. I possibly will get that but not from the NI rebate, only from the other amount I added on top.
I can make up the missing years but if anyone had explained to me I could lose £1k in state pension I would have kicked up a stink.