Look, I’m one of the women who lost out when “pension age equalisation” turned out to mean levelling women’s retirement age upwards instead of men’s downwards, so I’m a bit sensitive about pensions, right? And I’m a tax maven, so when the personal tax account was introduced I signed up (at gov.uk here) and found I could also check my NI record. So, out of curiosity, I did, although I was pretty sure that, after working more than 40 years, I had enough years’ NI contributions to qualify for the full flat rate state pension that will be in place by the time I collect mine.
This was widely reported to be a flat rate of £155 a week and I confidently expected that to appear on my personal tax account.
It’s explained, fairly clearly, here, or at more length here, that it’s not just the number of years you’ve been paying NI contributions that count but also whether or not you’ve been contracted out. Put simply, I was “contracted out” for much of my career so my starting amount is less than the flat rate. If I want to get the full rate when I retire I have to pay contributions for a few more years. And, no, that’s not unfair – I’m already benefiting from those contracted out contributions as part of my occupational pension. But it IS surprising. Most of us get our news from the media, and I had heard “flat rate”, “35 years” and assumed I was OK.
So now occasionally I tweet that people in my position would be well advised to check their own personal tax account to see how many years’ NI contributions are recorded and what their state pension is likely to be. No more surprises!
I thought I would make this a blog post, though, because it’s a bit too much to explain in 140 characters or fewer, and I also wanted to put in the links. But also because every time the subject comes up there are a few pensions experts who turn up and tell me either that I’m wrong, I’m stupid, or I’m whining. This does not amuse me. Please stop it. If a reasonably well educated reasonably intelligent retired tax inspector can be confused by the pension rules, it’s a fair bet that there are other people in a similar position. I’m not saying the contracted out rule is unfair, I’m just saying it’s worth knowing it exists. So if I tweet this at you in future, please accept it in the spirit in which it’s intended: happy to help (if it’s helpful) and please stop telling me I’m a whining crybaby if it’s not. Sheesh! Pensions experts, eh? Tax mavens are MUCH nicer!