/ Money

The new state pension – I’m still left with questions

State pension

In April this year the state pension system is changing. It’s designed to be clearer and fairer, yet it has provoked some confusion. Do you know how the new state pension will affect you?

The full new state pension will be £155.65 per week (replacing the current combination of basic state pension and additional state pension) but, in reality, very few people will receive this amount.

The Government has guaranteed that nobody will get less for contributions they’ve already made than they would have done under the old rules. If you retire after 6 April 2016, and your entitlement is more than the new state pension, you’ll still get the higher amount. If you’ve been contracted out at any time during your working life, your pension entitlement will be reduced however, in some cases quite considerably.

If you’ve yet to retire, you can request a pension statement from the Department of Work and Pensions (DWP) to find out how much you’ve built up so far. This shows how much has been deducted for contracting out, but gives few further details.

In 2016 the DWP will launch a new online service which shows your contributions to date, an estimate of what you can expect at state pension age if you continue to contribute, and personalised information about what you can do to boost your state pension.

My state pension

I applied for my state pension statement last summer, but have to admit it left me with more questions than answers…

I’ve worked for three different companies – Macmillian Publishers for seven years from 1979, the books department of Express Newspapers for 12 years and Which? for nearly 14 years. I’ve also had spells of freelancing.

I was always in final salary pension schemes at work, and was contracted out for some of the time at the Express, but I don’t know exactly when. My statement told me I had 38 qualifying years and gave me an estimate of £144.12 a week. This is less than the full rate of the new state pension but, as the statement said, a deduction had been made because I’d been contracted out at some point.

Reaching state pension age

It’s hard to know what sort of impact contracting in and out across the years will have on my eventual state pension. My statement didn’t tell me the period for which I was contracted out, or how the deduction was calculated. I’ve already clocked up 35 qualifying years but I don’t reach state pension age until I’m 66 (in 2023), so I could be working for seven years under the new system. I honestly don’t know whether my accrued benefits under the old system are higher than under the new one.

Has anyone else requested a statement to see what they might end up with? Will the new system make much difference in the long run, or are the changes less of a big deal than they first appear?

If you’ve already retired, do you feel you’ve missed out? Might you be tempted to pay in extra national insurance (Class 3A) now in order to get more? Does additional state pension give you more than the new pension anyway?

Useful links:

How much will I get under the new state pension?
Use our state pension age calculator

Comments
Guest

Is anybody else furious at having to work longer than age 60? I know I am.

Guest

It’ll be 68 for me -I guess it’s a good job I enjoy what I do for a living 🙂

Guest

I think part of the problem, and the cause of much confusion, has been that the new pension scheme has been overlaid on changes that were in hand, as an Equalities policy, to harmonise the qualifying age for a state retirement pension for men and women .

I think this Conversation is most welcome as a lot of existing pensioners also do not know why they will not be getting the new full state pension of £155.65 a week. I just hope the new DWP on-line information service launches – without glitches – in time for the changeover.

Guest
Mike says:
9 January 2016

Will women stop moaning! As a man born in 1949 I didn’t get my state pension until I was 65 .

Guest

Women have had to face a more sudden increase in pension age than men, which is not good for planning. Pensions for men and women should have been brought in line over a longer period.

Guest

Many women may also lose out because under the old scheme a spouse or civil partner with an insufficient contribution record could use their partner’s contribution record to claim the state pension. Under the new scheme this will be stopped and eligibility is decided by one’s own contribution record. For wife or widow who has not worked full time it could mean no pension!! The gov’t estimate it will affect over 5% of women. I tried i 2015 to raise this as an issue with Which, the Labour party, the Guardian and the BBC , but no one seems interested. Discrimination or what.

Guest

grumbler, I believe the state pension that could be claimed was limited as follows :
“If you’re not eligible for a basic State Pension or not getting the full amount, you might be able to qualify or ‘top up’ to £69.50 per week through your spouse’s or civil partner’s National Insurance contributions if:

– you’ve both reached State Pension age
– your spouse or civil partner qualifies for some basic State Pension (even if they haven’t claimed it)
– your spouse or civil partner was born on or after 6 April 1950 (this rule doesn’t apply to you if you’re a woman married to a man, or a woman married to a woman who legally changed their gender after your marriage began)”

Guest

Malcolm and your point is?
As far as I understand the top up will not be available in future. My impression is that by doing away with it the gov’t can make out the new pension scheme costs less, whereas people who are not eligible for the top up will have to try to claim benefits a different budget.