Pension Reform

I support the pension reform proposals in principle, but far from simplifying our retirement plans, they make them much more complicated.

  • My husband and I both have a little over 30 years contributions.  That was enough for a full pension under the old scheme, so there was no reason to make additional voluntary contributions after our move to Canada in ’06. In order to receive the single tier pension we will have to pay extra contributions to make up the missing years to 35.
  • However, we were both in contracted out schemes for part of our careers in the UK, so there will be a shortfall there as well.  It’s not clear to me from the wording of the Single Tier Pension document (paragraph 24) how much we will lose or how much we would need to contribute in order to receive a full single tier pension.
  • We were both born in 1952 and reach 65 in 2017.  However, as a woman there is an additional complication that I’m entitled to claim my state pension on 6th March 2015. Under the old rules, if I deferred my pension for two years to 2017  I would receive an extra 20.8%.  At current rates that would be an extra £22 a week. However, under the new rules, if I defer for two years and pay the additional contributions for the missing years and contracting out, then I’ll be £35 better off a week. Either way my rough calculation suggests that if I wait until 2017 for my state pension,  it would be at least six years before I was better off than if I’d claimed my pension in March 2015.

Frankly, I could have done without this.  Our retirement plans were already complex due to to living in two different countries and varied careers.  As it is our retirement income will be in two different currencies, and a dozen different sources. I’ve been very homesick in Canada and as a result my husband has agreed to retire at the earliest date that is financially viable, so any change in our pension entitlement makes a big impact on our plans. I’d be grateful if individual calculations are made available as quickly as possible, to help people in similar situations to myself.

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1 Comment »

  1. Mira said

    Obviously I misunderstood the arrangements for people who have been in contracted out schemes. All the newspapers are saying we won’t have to make additional payments. I can’t say that is obvious to me from the wording, but I accept I must be wrong.

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