My husband reaches state retirement age in 2017, so he will be eligible for the single-tier pension. But, he recently got a pension forecast and discovered that the years he spent in contracted out employment would reduce the single tier pension by nearly half.
If somebody was entitled to a higher pension under the old rules they will be given that amount. My husband comes into that category.
We had thought that he needed to pay five years Class 3 voluntary National Insurance contributions to bring his record up to 35 years, but there is no need: Since he already has the thirty years needed for the old style pension, there is nothing to be gained by buying more.
Que sera sera – the full single tier pension would have been more money, but we weren’t relying on getting it. I knew that there was going to be a reduction for contracting out, but I had no idea it was going to be so large.
I wonder if anyone who has spent a substantial part of their career in public service will get the single-tier pension. Or indeed, how many people will get it at all in the first few years of the scheme, since there is another category of people better off under the old system — people who were not in contracted out employment and paid substantial amounts of SERPS (or ‘second pension’) contributions.
I don’t know anyone who doesn’t think the new scheme is a good idea, but I do know a number of people who are very uncertain about their own level of entitlement. This is a more important issue for people on lower incomes. At the moment single-tier pension forecasts are only available for people born before 1955. The Pension Service website states that for everyone else, forecasts will only be available from April 2016. It would be helpful for people in their late fifties planning retirement, for that date to be brought forward.