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Old 23rd September 2019, 17:03   #1
Stevie25
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Default State Pension Forecast

I am due to receive my State Pension in 4 years time.
Ok, so I can check on-line what the forecast is - in my case £164.72/week.
However, that is the same figure for the last three years.
Question: I understand it only a forecast but Should it not increase with inflation?
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Old 23rd September 2019, 18:22   #2
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Originally Posted by Stevie25 View Post
I am due to receive my State Pension in 4 years time.
Ok, so I can check on-line what the forecast is - in my case £164.72/week.
However, that is the same figure for the last three years.
Question: I understand it only a forecast but Should it not increase with inflation?
Yes it will - but as we don’t know what inflation will be over the next three years they cannot accurately predict what the increase will be.

Looks like you have your full 35 years NIC - so even tho’ you pay more NIC each year you will not see an increase in your State Pension under current rules.

One thing people are poor at is to a) make sure your spouse achieves their full 35 years NIC and b) plan effectively for the increase in pension age from 60 for women.

I think the State OAP is now quite generous for couples since scrapping the old SERPS and the S2P. - But whilst both spouses can benefit from c£165 a week - or £330 combined a week - which is far better than the old system - sadly women have to wait a good few years before they now get it.
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Old 23rd September 2019, 19:06   #3
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I have also been told because I contracted out with SERPS for a few years I won't get full pension. The thing that REALLY annoys me, is that by the time I retire I will have OVER my full 35 years contributions not counting the SERPS time, so how can they justify taking money off me.
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Old 23rd September 2019, 19:29   #4
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I have also been told because I contracted out with SERPS for a few years I won't get full pension. The thing that REALLY annoys me, is that by the time I retire I will have OVER my full 35 years contributions not counting the SERPS time, so how can they justify taking money off me.

That’s a fair point.
I worked for the Local Electricity Company for 25 years, all of them contracted out, but I have 15 odd years not contracted out.
So is the pension forecast accurate?
I use the HMRC website and log in.
I wonder how often it’s undated?
With only 4 years left until I am 66 - not much time to rectify any mistakes.
Perhaps it will all sort itself out, but anyone out there either just about to receive the pension or just started to receive.
Has it all worked out as you imagine?
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Old 23rd September 2019, 19:47   #5
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I have also been told because I contracted out with SERPS for a few years I won't get full pension. The thing that REALLY annoys me, is that by the time I retire I will have OVER my full 35 years contributions not counting the SERPS time, so how can they justify taking money off me.
It’s “the law” Dawn - and to be honest I think it is quite generous.

We only need to work for 35 years to accrue what is now quite a generous State Pension. They Scrapped SERPS and the Second State Pension (S2P) because it only benefitted the well off.

The low paid never paid enough NIC to qualify for a good SERP (State Earnings Related Pension) but the high earners did. So not only did they get a good occupational Pension but the State paid them the standard OAP and a good top up via SERPS. - the clue is in what SERPS stands for.

If you were low paid or self employed you either didn’t earn enough to qualify, or if you were self employed you were not eligible for SERPS benefits.

The new system gives everyone a good solid State Pension and all you have to do to get it is to pay NIC for 35 years.

Dawn - if you contracted out of SERPS - it means that you opted to take a rebate on your SERPS contributions and have them paid into your own pension or the pension scheme of your employer.

So it would seem that you have a Private Pension Scheme or membership of an employers pension scheme that you can access. If you are not sure what you have it would be wise to check it out. For example if it’s in a Personal Pension I suspect it’s in a cash fund - which was, in the past, a good option being safe and getting reasonable interest.

But these days a cash fund may only be getting 0.75%pa and most old Personal Pensions have annual management charges of about 1%. - So whatever you have in the plan could be steadily declining in value. If you can find out what it is a simply matter use a less expensive plan and/or a better fund choice.

If you want to know your personal options are rather than discuss it on an open Forum then PM me and I’ll do what I can to help.
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Old 23rd September 2019, 19:50   #6
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I retired 12yrs ago,at 62.Worked continually for 47 yrs.I receive about £860 every 4 weeks.If i remember right when i had my 1st pension statement,it stated it was extra because i contracted out for 5yrs. Which i can't remember anything about that. I just hope they have not made a mistake,and will want some money back in the future. I've spent it.
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Old 23rd September 2019, 20:06   #7
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Originally Posted by Stevie25 View Post
That’s a fair point.
I worked for the Local Electricity Company for 25 years, all of them contracted out, but I have 15 odd years not contracted out.
So is the pension forecast accurate?
I use the HMRC website and log in.
I wonder how often it’s undated?
With only 4 years left until I am 66 - not much time to rectify any mistakes.
Perhaps it will all sort itself out, but anyone out there either just about to receive the pension or just started to receive.
Has it all worked out as you imagine?
Have a look at your company pension statement - you will see it is in two parts - the main scheme and the “Protected Rights” - the later is the bit accrued via you contracting out of SERPS.

At one time very different rules applied to Protected Rights whereas the Employer and the Scheme Trustees dictated the rules of the main scheme - although they did have to abide by HMRC/Inland Revenue rules overall. For example - initially you could not take Tax Free Cash from Protected Rights.

Now those rules are relaxed.

From 2016 all NIC have been increased and we ALL - even the self employed now get a MUCH improved basic state pension.

Those who earned a LOT and paid a lot of SERPS used to be eligible for enhanced benefits which could be substantial whereas the low paid and Self Employed just got the minimum.

Now it’s a level playing field - a long overdue improvement IMO.

Edit - Had to check the date - SERPS and S2P were scrapped in April 2012 and as far as I am aware whilst funds accrued via contracting out are still identified as separate to benefits accrued in the main scheme - taking the benefits are no longer subject to the original restrictions.
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Old 23rd September 2019, 20:16   #8
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Originally Posted by Darcydog View Post
Have a look at your company pension statement - you will see it is in two parts - the main scheme and the “Protected Rights” - the later is the bit accrued via you contracting out of SERPS.

At one time very different rules applied to Protected Rights whereas the Employer and the Scheme Trustees dictated the rules of the main scheme - although they did have to abide by HMRC/Inland Revenue rules overall. For example - initially you could not take Tax Free Cash from Protected Rights.

Now those rules are relaxed.

From 2016 all NIC have been increased and we ALL - even the self employed now get a MUCH improved basic state pension.

Those who earned a LOT and paid a lot of SERPS used to be eligible for enhanced benefits which could be substantial whereas the low paid and Self Employed just got the minimum.

Now it’s a level playing field - a long overdue improvement IMO.

Useful thread.
I took my Electricity Pension at 50 as part of a generous voluntary scheme, post privatisation.
So now I need to pull all the paperwork again and read exactly what I might be entitled to.
I have just opened a can of worms, haven’t I, thought this would be fairly straightforward !
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Old 23rd September 2019, 20:17   #9
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Originally Posted by Dawn View Post
The thing that REALLY annoys me, is that by the time I retire I will have OVER my full 35 years contributions not counting the SERPS time, so how can they justify taking money off me.
Think of it like an insurance policy Dawn. You pay your premium each year but if you don't make a claim you get no benefit. You'll be claiming when you retire and your pension will be partly funded by other people's contributions.

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Old 23rd September 2019, 20:18   #10
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Originally Posted by jackatesme View Post
I retired 12yrs ago,at 62.Worked continually for 47 yrs.I receive about £860 every 4 weeks.If i remember right when i had my 1st pension statement,it stated it was extra because i contracted out for 5yrs. Which i can't remember anything about that. I just hope they have not made a mistake,and will want some money back in the future. I've spent it.
That will be the old SERPS/S2P plus the basic OAP. It would NOT have been EXTRA because you contracted out - it would have been decreased a bit and your Contracted Out contributions would have accrued in a Private Pension or the Contracted out element of your employers pension.

So I suspect - the Pension you receive from your employer has benefits from the main scheme AND benefits termed “Protected Rights”.
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