Retiring

[squirtyflower]

Shit, I need to look into this then.

On the plus side if it is the lower rate then at least I am finding out at 52 and i have time to put things in place, i suspect there will be a lot of people who get to retirement age and get a nasty surprise.

Not necessarily mate.
if you retire at 67 then you will have put in at least 18 years of full contributions in.
I did some full contributions pre 1981 when I started my public sector job. Then 34 years at the lower rate followed by a further six at the higher rate.
So my NI contributions are for 46 years in total.
That is made up of 6 full years, then 34 part years and then another 6 full years.
State pension is based on the ‘best’ 35 years, therefore I have 12 years full and 23 years part which is estimated to give me £159 per week.

 

[squirtyflower]

Yes I certainly got a nasty surprise as I was expecting the full wack
If you decide to top your pension up really look into it as ,some have said on here they would have to live to 80 plus for it to be worthwhile.
I am no expert just stating what happened to me .Good Luck

Did you take your state pension before April 2016.

 

[AJ71]

My HMRC state pension forecast (online) says £175.20 per week £9141.69 per annum, which is the maximum and cannot be improved. I was contracted out and that estimates to be £21.67 per week. I assume this means my state pension will be reduced by £21.67 per week and I can't now do anything to increase that? The basis being that the £21.67 should be made up by the company pensions I was paying into at the time of being contracted out? I have 32 years NI contributions so will easily make the 35 years.

 

[hammocity]

Before packing in my former role (main job for thirty odd years) I kept a record of everything I spent in 12 months. I then deducted the things I wouldn’t be spending in retirement such as the £450 a month in petrol to drive to work, mortgage, kids at university etc
From that I could work out how much a month I would need to carry on in the same lifestyle as I didn’t want to give up on the things we were used to. Then factored the pension accordingly with some left over for emergencies.
We also downsized, although not as much as I wanted as the wife spent a fortune on doing the new house up!

Good idea to do the expense exercise, I think with mine and Mrs H state and small workplace pension we can have a decent if not extravagant lifestyle up to around mid 70's by drawing down the private pot plus the state pension. After that we will have the option of down sizing or taking equity release.

Made me laugh about the over budget on the new house, my best friend and his wife downsized late 2019, just got finished in summer and the budget went from 20 to 40k, he had been watching too many episodes of "Homes under the Hammer".

 

[abu13]

Not necessarily mate.
if you retire at 67 then you will have put in at least 18 years of full contributions in.
I did some full contributions pre 1981 when I started my public sector job. Then 34 years at the lower rate followed by a further six at the higher rate.
So my NI contributions are for 46 years in total.
That is made up of 6 full years, then 34 part years and then another 6 full years.
State pension is based on the ‘best’ 35 years, therefore I have 12 years full and 23 years part which is estimated to give me £159 per week.

This is where i need to check, I am 52 and have worked consistantly from 16 years old so that gives me 25 years, the first 3 or 4 years a was on low pay ( YTS & Apprentiship ) so i may not have paid full NI.

I opted out when I was about 22 and left the company a short time later, I have no idea how i sit with it now,

I'm not overly worried as my intention is to work to 65 as a minimum, 67 as a maximum. I have the house paid off and expect to have at least £220k in a company pension by 65. Wife has worked in a school for 25 years and has a pension through the council which should give her a decent boost. We don't have an extravagent life style and £25k a year in todays money would give us a good standard of living.

I should be ok, but admit that I am becoming a little obsessed with retirement planning at the moment,

 

[paulchapo]

Can anyone clarify, I am going to get the 35 years of NI contributions in easily, i only need another year and have another 15 years to go. i opted out of Serps many years ago. would i get the full £172 state pension, or would it reduce as i opted out?

No chance you will get the full state pension unfortunately. Opting out of Serps used to mean that the money you would have paid into Serps went into your private pension. In a way it was a swings and roundabouts agreement, you get less state pension but your private pension should prosper more. It was called contracting out but I think that it ceased being an option a few years ago but I may be wrong. The rules are so complex though and change from time to time. Until I delved into it I actually didn't even know my company pension had contracted out decades ago. I had no say in it at all. Like most people you just do your job and enjoy life, a pension is for old people until all of a sudden you realise that is you lol.

A better company/private pension is probably wise though. It is the only chance you have of retiring early. If you have to wait for the state pension you are looking at at least 67 now I think depending on your age. I would look at your private pension and savings providing the luxuries in life and your state one covering the basics, such as utility bills and food. With a mortgage paid off most people should cope okay unless they have very expensive hobbies or addictions.

I was fed up with working long shifts, travel and the stress of working. One day I sat down and worked out what I was working for aside from the basics. Two holidays a year, going to the match and odd nights out. I realised if I took early retirement I could stil do this so finishing work was a no brainer. Yes it meant dipping into my savings for the holidays and any other luxuries but this was only until my state pension kicks in, then I have that added. My decision was swayed by seeing around ten people in the company die before the age of sixty. All these were working towards this utopia of a relaxed enjoyable retirement but never reached it. If this covid situation has taught us anything it's nothing is guaranteed in life. Now even those nights in the pub, holidays abroad and going to the match are gone, so you could be earning 100 grand a year but there is nothing to spend it on. Live it now and live it fast. While it's sensible to have one eye on the future don't make that at the expense of enjoying the moment.

 

[cyberblue]

Did you take your state pension before April 2016.

No it was 2019 when I was 65 & 6 months

 

[squirtyflower]

No it was 2019 when I was 65 & 6 months

A young man.

 

[squirtyflower]

Good idea to do the expense exercise, I think with mine and Mrs H state and small workplace pension we can have a decent if not extravagant lifestyle up to around mid 70's by drawing down the private pot plus the state pension. After that we will have the option of down sizing or taking equity release.

Made me laugh about the over budget on the new house, my best friend and his wife downsized late 2019, just got finished in summer and the budget went from 20 to 40k, he had been watching too many episodes of "Homes under the Hammer".

It’s personal I know, but downsizing earlier releases your equity when you are young enough to go out and spend it, especially if you want to travel abroad.

Your best friend was very lucky. We have spent £170k and she still hasn’t finished!

 

[flook]

My HMRC state pension forecast (online) says £175.20 per week £9141.69 per annum, which is the maximum and cannot be improved. I was contracted out and that estimates to be £21.67 per week. I assume this means my state pension will be reduced by £21.67 per week and I can't now do anything to increase that? The basis being that the £21.67 should be made up by the company pensions I was paying into at the time of being contracted out? I have 32 years NI contributions so will easily make the 35 years.

thats pretty much my situation, and your understanding of the impact is the same as mine too.

On the plus side, I tracked down my private pension via the pension tracker on the HMG website (I think) and having found it, discovered it will pay me around 4 times what I lose from the state pension, and starting 2 years earlier too. I was only contracted out for about 2 years about 30 years ago, so the compounded growth on my contributions as a youngster must be significant

 

[ganganvince]

thats pretty much my situation, and your understanding of the impact is the same as mine too.

On the plus side, I tracked down my private pension via the pension tracker on the HMG website (I think) and having found it, discovered it will pay me around 4 times what I lose from the state pension, and starting 2 years earlier too. I was only contracted out for about 2 years about 30 years ago, so the compounded growth on my contributions as a youngster must bee significant

Had always just checked the number online said I will get full pension 175 a week just double checked seems I will loose £51 a week

 

[hammocity]

It’s personal I know, but downsizing earlier releases your equity when you are young enough to go out and spend it, especially if you want to travel abroad.

Your best friend was very lucky. We have spent £170k and she still hasn’t finished!

I'm only going to release abut 80k at today's rates, point taken but: 170k :-) blimey!!

 

[hammocity]

Had always just checked the number online said I will get full pension 175 a week just double checked seems I will loose £51 a week

Someone more informed than myself will no doubt put you right but I doubt you will lose £51 a week if you have not yet taken your pension.

 

[hammocity]

thats pretty much my situation, and your understanding of the impact is the same as mine too.

On the plus side, I tracked down my private pension via the pension tracker on the HMG website (I think) and having found it, discovered it will pay me around 4 times what I lose from the state pension, and starting 2 years earlier too. I was only contracted out for about 2 years about 30 years ago, so the compounded growth on my contributions as a youngster must be significant

If you haven't taken your state pension yet my understanding is you can fulfil the 35 years criteria without losing anything, if you have missed two years from reading in here it appears you will lose about a tenner a week, you can catch up or top up your contributions for about £800 per annum according to those that have a full grasp.

 

[ganganvince]

Someone more informed than myself will no doubt put you right but I doubt you will lose £51 a week if you have not yet taken your pension.

So is that £51 an extra on top of the £175 I would have got rather than a deduction?

 

[paul1963]

I have just checked the state pension calculator.It says i have 41 years contributions and will receive £175 a week pension,But i definitely opted out of serps for a few years,maybe 5.It says i have a cope of £42 a week.

I checked my ni contributions and it said i had 41 years full contributions.So i would hope i would get a full state pension.I am 57 and hope to retire at 65 and claim the state pension at 67. But not sure if i will get full state pension

 

[squirtyflower]

I have just checked the state pension calculator.It says i have 41 years contributions and will receive £175 a week pension,But i definitely opted out of serps for a few years,maybe 5.It says i have a cope of £42 a week.

I checked my ni contributions and it said i had 41 years full contributions.So i would hope i would get a full state pension.I am 57 and hope to retire at 65 and claim the state pension at 67. But not sure if i will get full state pension

You can ask them for a proper forecast if you wish.

 

[abu13]

My HMRC state pension forecast (online) says £175.20 per week £9141.69 per annum, which is the maximum and cannot be improved. I was contracted out and that estimates to be £21.67 per week. I assume this means my state pension will be reduced by £21.67 per week and I can't now do anything to increase that? The basis being that the £21.67 should be made up by the company pensions I was paying into at the time of being contracted out? I have 32 years NI contributions so will easily make the 35 years.

How does this work though if you change jobs, my company opted out but i then moved on about 12 months later. No idea if any of the companies I worked for since had opted out or not.

 

[flook]

it's not very clear on the government website, but it's my understanding that the COPE figure is the expected contribution your personal pension will make to your retirement income, and this figure is deducted from your state pension on the basis that whilst you were contracted out, you paid reduced NI contributions for that period.

However, if my understanding is correct, then maximum state pension is due after 35 years of full contributions.

The conflict here is that if you have (say) 40 years contributions, and were only contracted out for 5 years, you should then get full state pension on top of your personal pension.

I may be wrong, but I don't believe that to be the case.

From the pensions forecast page (my bold):

Your forecast

• is not a guarantee and is based on the current law
• is based on your National Insurance record up to 5 April 2020
• does not include any increase due to inflation

£175.20 is the most you can get​

You were contracted out​

In the past you’ve been ‘contracted out’ of the additional State Pension.

When you were contracted out:

• you and your employers paid lower rate National Insurance contributions, or
• some of your National Insurance contributions were paid into another pension scheme, such as a personal or stakeholder pension

The amount of additional State Pension you would have been paid if you had not been contracted out is known as the Contracted Out Pension Equivalent (COPE).

Contracted Out Pension Equivalent (COPE)​

Your COPE estimate is£18.32 a week.

This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.

In most cases the private pension scheme you were contracted out to:

• will include an amount equal to the COPE amount
• may not individually identify the COPE amount

So to me this is contradictory.

First it tells me the most I can get (presumably on the basis of 35 years contributions)
Then it tells me I won't be getting £18.32 of the government, but I will get this amount from my personal pension
Then it tells me it won't affect my State pension forecast.....but surely it already has done??

clear as mud then

 

[denislawsbackheel]

You are correct.
The COPE figure is deducted from your state pension and paid via your private pension.