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Davy51

Pensions & moving goalposts.....

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As most people are aware the state pension was increased to about £155/week from 6th April 2016 for qualifying pensioners. A friend of mine took redundancy about 5 years ago on the understanding that he had ,with 30 years NI contributions , enough to fund his eventual state pension that was paid to him last month. On learning that his eventual pension was only to be £124 per week ,he contacted the DWP  who told him that, during his period of early retirement, the NI contribution requirement had been raised to 35 years to qualify for the new state pension. Anyone coming up to pension be aware of the changes.

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Read a piece on Yahoo (whether you can believe it or not!), claiming that the UK now has the lowest State pension in the developed world.  Another piece claims that millennials (snowflakes), have given up on ever owning a house, and have quit saving, using what cash they have on expensive travel.   So perhaps being robbed of a future is self  inflicted ?   :ph34r:

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I know when i retired i had paid about 44 years of NI only to find out 30 years was all i needed. No doubt the other 14 years went towards  a worthy government project.

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49 minutes ago, Davy51 said:

As most people are aware the state pension was increased to about £155/week from 6th April 2016 for qualifying pensioners. A friend of mine took redundancy about 5 years ago on the understanding that he had ,with 30 years NI contributions , enough to fund his eventual state pension that was paid to him last month. On learning that his eventual pension was only to be £124 per week ,he contacted the DWP  who told him that, during his period of early retirement, the NI contribution requirement had been raised to 35 years to qualify for the new state pension. Anyone coming up to pension be aware of the changes.

I've just had a look at the Gov pensions website. The new State Pension is £159.55 pw, but this is taxed if your total earnings (i.e state plus private pension) take you over the £11500 tax free allowance. They tax the state pension first if this is the case, presumably because they can be sure of getting it! The State Pension can also be reduced if you have contracted out at any time. The new 35 year rule only applies to NI payments started after 6th April 2016. In your friend's case it would seem to be the Income Tax element that is reducing the weekly payment.

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Asp,

I do not think that is right. The State Pension is not taxed using PAYE at all. The Revenue are told by DWP that it is in payment and they tax any other income that you receive to recover the tax due on that and the State Pension, this is some times done with K codes. Formally the old pension is called the Retirement Pension and is handled in the same way. This is all described  in the HMRC manuals. The 35 year rule applies to all State Pensions where the State Pension Age falls after 5th April 2016.

Davy's friend can pay  Class 3 voluntary contributions to take his record up to the maximum by paying for the years he has not been working. The State Pension Statement should have made this clear. I believe the payments can be made after the state pension age has been reached thus increasing the pension after it has started but there is a limit to how far back you can go so the oldest gaps need to be paid first. The rates can be found here https://www.gov.uk/voluntary-national-insurance-contributions/rates. It does get much more complicated if one has been contracted out but the basic warning to be careful of the 35 year rule that Davy suggests still applies and act as soon as you is can what I would advise.

 

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Okay Confused, I will agree that the State Pension isn't taxed directly, however your Personal Allowance is directly reduced by the amount of State Pension you receive. So they give with one hand and take with the other.

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Yes, quite correct. That is how they implement taxing both incomes from one. I was just trying to also make the point that the Pension Statement doesn't take tax into account.

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True. I would have checked with my brother (a retired Inspector of Taxes) but he's just as confused as the rest of us :rolleyes:

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Well if you are all confused there's no hope for me. Is there any way of checking how many years you have already paid in to and are eligible for.
I remember when I left paid employment to raise our son HMRC/pensions bods said I was getting something called 'Homes Responsibility' (or similar wording) and I think that ran until he left school which basically ticked a box to make me  eligible for those years to count towards my pension.  I wonder if they really did though...I need to find out after reading this EEK !!

 

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If you haven't already retired Diz, I believe you can get a pensions forecast from the Pension Dept (Newcastle I think?),  or no doubt in your case, you could get them on line !    :D

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You have to register to gain access because otherwise anybody could find out all your private tax details just using your NI number.

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Dizzy, i believe the people to contact are in the Future Pensions Department & you can get the address off the direct.gov website.

My mate Phil though has visual impairment for which he receives, & has done for many years ,a benefit payment but that is not means tested so will not affect any taxable income. Where he has slipped up though is ,because of the information given to him when he took early retirement about having enough stamps on his card, he stopped paying NI which is what i did when i took early retirement. Phil would have been ok now if he had signed on at the job centre every fortnight & got his stamp paid  & finished up with his full new state pension but without the benefit of foresight he has been short changed. I think anybody who is finishing work early needs to check their contributions carefully & either keep signing on of try & get on some kind of benefit that pays your stamp.

 

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