State Pension Qualifying Years Q

[RogerL]

I think this all depends on whether you opted out of the SERPS. I received an enhanced company pension if I opted it of SERPS. As the company didn't have to pay as much NI contribusions.
Or something like that. But being young and not understanding pension stuff, what did I care. .
I still don't fully understand it all.
But I know I still pay tax on my pension and my savings if they are not ISA's.

Savings interest is tax-free up to £1,000 if you're a basic rate tax payer, £500 if you're higher rate and £0 if you're additional rate.

 

[Mr Plodd]

A lot of people were opted out of SERPS without any choice. But having said that if you were opted out the slight reduction on your state pension is more than compensated for in the increased value of the company pension.
Income tax is payable on any income that exceeds the personal allowance which is around £12k.

When doing their sums HMRC always put the state pension first, which is just a bit below the allowance figure, so any other income, such as private pension, or part time job, is likely to be fully taxed.

 

[RogerL]

A lot of people were opted out of SERPS without any choice. But having said that if you were opted out the slight reduction on your state pension is more than compensated for in the increased value of the company pension.
Income tax is payable on any income that exceeds the personal allowance which is around £12k.

When doing their sums HMRC always put the state pension first, which is just a bit below the allowance figure, so any other income, such as private pension, or part time job, is likely to be fully taxed.

And made more obvious by the fact that state pension is paid without tax being deducted even though it's taken into account.

Where people have multiple private pensions, most of them are taxed at basic rate, ie a straight 20%, with the main private pension having the remainder of their allowance.

 

[Gafferbill]

.....and even further complicated by the fact that pensioners with an income of just the basic state pension or less can qualify for Pension Credit.
Once you qualify for Pension Credit the door is opened to a host of other benefits.
Pension Credit can also make it not worthwhile paying missed National Insurance contributions depending on an individuals circumstances.
A complete minefield......I have found AgeUK have some very knowledgeable advisors to help with an individuals pension/benefits entitlement.

 

[otherclive]

.....and even further complicated by the fact that pensioners with an income of just the basic state pension or less can qualify for Pension Credit.
Once you qualify for Pension Credit the door is opened to a host of other benefits.
Pension Credit can also make it not worthwhile paying missed National Insurance contributions depending on an individuals circumstances.
A complete minefield......I have found AgeUK have some very knowledgeable advisors to help with an individuals pension/benefits entitlement.

I thought the new higher rate of State Pension was to obviate the need to claim means tested Pension Credit. If it isn’t then what was the basis for such a large increase that disadvantages those who have contributed through their working lives and receive substantially lower state pension.

 

[Gafferbill]

.....yes they may have been disadvantaged and received a lower State Pension but they can claim Pension Credit which unlocks other benefits with very little disadvantage if any in actual income over the new system.
Many entitled pensioners fail to claim Pension Credit so I presume the whole complicated system is being simplified.
My late mother had assets of £500k and qualified for Pension Credit and other benefits due to a low State Pension.
I claimed PC for her but never managed to convince her that the Government wouldn't come after her and claim it all back!!

 

[otherclive]

.....yes they may have been disadvantaged and received a lower State Pension but they can claim Pension Credit which unlocks other benefits with very little disadvantage if any in actual income over the new system.
Many entitled pensioners fail to claim Pension Credit so I presume the whole complicated system is being simplified.
My late mother had assets of £500k and qualified for Pension Credit and other benefits due to a low State Pension.
I claimed PC for her but never managed to convince her that the Government wouldn't come after her and claim it all back!!

Thanks for that I’ve read the HMG website and PC has changed considerably since I tried to claim it for my father. Then he would have been means tested. He had saved for his retirement and on every count he did not qualify. Even when in his 90s. So I got hi m Attendance Allowance which he squirrelled away refusing any support for his living.

 

[Caravanrevisited]

Thanks for that and I can confirm that SERPS doesnt apply in my case. To keep it simple, I assumed that as you officially only need to make 30 years NI contributions to receive a full state pension and as I had made 44 years of contributions I would clearly receive a full state pension even though I haven't made NI contributions since I've retired. I tried calling the helpline but gave up after many many attempts.
A vey financially switched on ex-work colleague once explained that it wasn't worth making up the gaps in your record after you'd made 30 full years contributions as most of it would go in tax and you wouldn't receive the full benefit.

Re your switched on ex-colleague - I think I may have met him in the pub!

But, seriously, I can guarantee that he maybe switched on, but not properly qualified to give advice - he cannot possibly know all your relevant circumstances, or changes in qualifying criteria and rules. Having said that, I cannot guarantee that he is wrong - but are you gong to risk your long term financial well being on it? The fact that you are here, asking more guys from the pub, suggests that you are not confident either.

You have already received the best possible advice - get on the Gateway and check all the numbers.

Good luck with the rest of your retirement, though.

 

[Banus]

Thanks and I'll do my best👍
To clarify matters, my 'switched on' ex- colleague simply commented that depending on your circumstances it’s not always advisable to make up (pay), the missing years in your NI record which is absolutely correct and the exact position taken on many financial web sites such as Money Matters etc.
I have acted on the advice given above and have contacted the Gov Gateway - see my post #19. I'll obviously pay the one years missing NI contribution of £437 which will enable me to receive the maximum state pension and net me an extra £2.57pw. Whoopee!! Shame that won't even buy me a cup of tea!

 

[ProfJohnL]

hi, I Medically retired from my company after 38 yrs 2wks, I was short of a full company pension by 4.5 years, my case was referred the pensions board along with my doctors and company doctors case notes, eventually after 3 months the pension board awarded me the shortfall to make me up to full pension (40yrs) with restrictions. So by the time I reach sp which will be 2025 I would have been medically retired 6yrs, me and the wife are going to investigate all this after Christmas, my question is because I'm on a full private pension does my sp reduce or does my private pension reduce once I'm eligible for sp

As with the OP's question the nitty gritty of personal finance can hold many traps for the unwary. You really need to ask yourself, "should I trust the advice from a complete stranger?" With things like pensions you should only rely on advice from a register pensions advisor who knows what questions to ask and how the systems work.