State pension amount.

[Mottie]

I was talking to my mate yesterday who was saying that because of the recent increase to the state pension, when he starts getting his, next year, he will be getting just over £200 a week because it is £185 at the moment. Looking on my forecast on the government gateway, I’m already supposed to be getting £218 a week when I get mine, also next year, so that means mine, after the triple lock rise will be going up to around £240 a week. I can’t work out why my pension is already forecast to be £33 above the maximum. I’ve looked it up and all I can find is something about serps but that was only if you were born before 1951, which I obviously wasn’t. Any experts on here that can tell me why my forecast is higher than the maximum?

 

[ajohn]

It can depend on what you were contracted into. SERPS can change the amount you get. I was contacted out of that so just get the basic state pension. Rather late for me financial advisors were telling people to contract back in providing they had enough years left before they started drawing it.

People who had a private pension would generally contract out of the state system. That means a basic state pension at the state retirement age. People can take a private pension at any age they like however there may be penalties if under some certain age one way or another. In my case the company that ran the pension also had to agree that I could take it early. Normal age was 60 in my case.

SERPS also only pays out at the state retirement age. That has increased for some people. It depends on when people were born. 65 for me.

As I also have a private pension my state pension is taxed. They do that by knocking the amount off the allowance.

 

[Rodders53]

No one yet gets the New State Pension (NSP, Post 2016 rules, £185) in full.

All get a Pension based on the transitional rules and the amount can also depends on if one was Contracted Out or not and earnings related additional pension if not (SERPS). You'll be getting some 'Additional Pension'. https://www.gov.uk/new-state-pension/how-its-calculated to make your pension more than the NSP maximum.

In the future (2016+35) no-one will get more State Pension than the NSP maximum.

FWIW my State Pension is well below the £185 figure (as it's mostly Old State Pension amounts, and I get a small increase above the basic I earned as SERPs in the late 70s; but I also have a darned good Defined Benefit private pension as well that I paid lots into from 1980.

MSE Forums have people who really understand all the nuances if you want to know more https://forums.moneysavingexpert.com/discussion/6404493/pension-award-letter post 3 is an example of how it works.

 

[charliegolf]

I get £185/week.

 

[ajohn]

I currently get £592.04 per month. No weekly option. My wife was offered a choice.

So £136.62 per week but that is taxed.

 

[Ihavenojob]

When I looked into mine it was about £140 a week. That was because I was opted out for a few years and not paid enough. Forgot my password for the gateway so I haven't been able to see what I will get now.

 

[Harry Bloomfield]

I currently get £592.04 per month. No weekly option. My wife was offered a choice.

So £136.62 per week but that is taxed.

I get £199.49, and requested in paid weekly - it might as well be earning interest in my bank, than there's. A week or two back, I got a letter saying they are paying me £500 Winter Fuel Payment, but I don't think that has come through yet.

I think they said something about it going up by 10.1% in 2023.

 

[Justin Passing]

Reminder to anyone who isn't sure, who isn't getting pension yet, to make an inquiry with https://www.gov.uk/check-state-pension to see if you've made enough contributions within the state system to give you a full pension.
I was contracted out so what would have gone into Serps went into a private pension. When I made my inquiry , years ago, I was short of payment years into the state system, but by paying N.I. as a self employed person (peanuts) I could catch up within whatever it was at the time, 7 years or something. So I did.
You can back-pay if you have "missed" years. My wife missed a lot so just did that, she couldn't quite back-pay enough because they have limits. She paid 8k or so, which she'll get back in something like 8 years. Her family all seem to live to 100, so there's a fair chance she'll be better off.
You can wind up with some serps as well as private pensions, depending on dates.
Private pensions overwhelm the state ones if you made enough payments but it's still worth having what you can.

 

[ajohn]

I seem to have paid enough in and over enough years to get the basic state pension for my age group. I have only ever paid the basic NI for 39years of actual employment. There are 4 iffy years as I started as an apprentice. Odd set up. That involved joining a private company one without making any payments but did add to the eventual private pension when it was finally calculated but only at a rate of 2 for 1.

 

[Rodders53]

I currently get £592.04 per month. No weekly option. My wife was offered a choice.

So £136.62 per week but that is taxed.

per 4 weeks... not per calendar month. 13 payments per annum rather than 12. Paid in arrears. =£148.01 per week not £136.62. Check your last DWP letter wrt the sum paid. You'll be getting some additional state pension at that rate.

The State Pension is NOT taxed... but is taxable, so reduces the nil rate tax allowance you have on other income.

You can ask the DWP to be paid weekly, I believe.

 

[Harry Bloomfield]

I have only ever paid the basic NI for 39years of actual employment. There are 4 iffy years as I started as an apprentice.

As I understand it -There is minimum number of years, for which you needed to have worked and contributed - 30 or maybe 35 years. Do more than that minimum and you get no more when you retire, for the extra years.

What seems the daft part, is that if you don't have enough of a pension, then the make up for it with Pension Credit, with all of the many extra financial advantages of being eligeable for PC.

 

[ajohn]

per 4 weeks... not per calendar month. 13 payments per annum rather than 12.

I just looked at 2 calender months statements so must not have noticed 2 payments in one calender month.

The State Pension is NOT taxed... but is taxable, so reduces the nil rate tax allowance you have on other income.

One way or another it is taxed just as extra income would be. I never suggested that some one who does just get a state pension is taxed.

One of my thoughts on that area is due to knowing of lots of people shed from the company I worked for via early retirement on a rather small pension. Also others who left and will be taking a deferred pension based on their income when they left. I just wonder how they end up as the state one can be effectively taxed irrespective of the level of their income from their private pension.

 

[Justin Passing]

I seem to have paid enough in and over enough years to get the basic state pension for my age group. I have only ever paid the basic NI for 39years of actual employment. There are 4 iffy years as I started as an apprentice. Odd set up. That involved joining a private company one without making any payments but did add to the eventual private pension when it was finally calculated but only at a rate of 2 for 1.

You only need 35 years of payments in the state scheme, for the £185.

If you have kids, urge them to pay whatever they can into private one. It has been a good period to have had money invested, which may not be the case for a while, but there will still be the tax advantage for money paid into pensions.
You do have to keep an eye on what it's invested in, though. No idea what this person's pension was invested in, but it has collapsed in the last year or so https://www.thisismoney.co.uk/money...fund-plummeted-just-reach-retirement-age.html.

His £35K or £24k, isn't much though, it also shows you have to start early and when/if your mortgage becomes easily affordable or ends, pay the same into a pension.
Our payments in were "quite noticeable" but never hurt. Each early payment of, say £1k is now worth a large multiple of that , c/o the stock market. As these annuity rates show, you need to have well into 6 figs in your pot. To be comfortable, a few times that. Message is, that experience has shown it's surprising how the pot can build up as long as you put some in over a period.

 

[fillyboy]

I was talking to my mate yesterday who was saying that because of the recent increase to the state pension, when he starts getting his, next year, he will be getting just over £200 a week because it is £185 at the moment. Looking on my forecast on the government gateway, I’m already supposed to be getting £218 a week when I get mine, also next year, so that means mine, after the triple lock rise will be going up to around £240 a week. I can’t work out why my pension is already forecast to be £33 above the maximum. I’ve looked it up and all I can find is something about serps but that was only if you were born before 1951, which I obviously wasn’t. Any experts on here that can tell me why my forecast is higher than the maximum?

I'm getting about £202 per week, a lot of folk I know get a little less, some a lot less, don't know why. Anyway, next year use the old free bus pass down to Cornwall and we'll celebrate down the pub.

 

[Rodders53]

One of my thoughts on that area is due to knowing of lots of people shed from the company I worked for via early retirement on a rather small pension. Also others who left and will be taking a deferred pension based on their income when they left. I just wonder how they end up as the state one can be effectively taxed irrespective of the level of their income from their private pension.

No. The State Pension is not taxed. Only any income in excess of the Personal Allowance will be taxed.

PAYE tax codes are adjusted to make the SP amount paid 'taxable'. If annual income (State Pension plus private pensions plus savings interest, when applicable) is below the threshold of £12,570 (£241-odd per week) no tax is payable by the person concerned at all.
So, £12,570 would be reduced by 52*£185.15 = £ 9,627.80 for the full New State Pension. Leaving the next £2,942.20 of income also free of tax. *

* Actually there's slightly more annual income from SP as 52 weeks is only 364 days. Also HMRC tax codes are in multiples of £10, so actual numbers need a bit of rounding.

SP is always paid on the same day of the week (unless there's a Bank Holiday on that date when it is paid early). My payments are on Tuesdays and 4 weekly so rarely (if ever) get affected. Exact day of the week is dependent on your NI number's last two digits.