Understanding the State Pension part four a: How contracting-out can affect your total State Pension

The request was partially successful.

Dear Department for Work and Pensions,

I would be very grateful if DWP could kindly explain the following information that i have recently found on the DWP Web site.

Baroness Altmann, Minister for Pensions, 15 October 2015— New State Pension

DWP Pensions Latest— 05/02/2016 (cut & paste for ease of reference).

"As an example, if you have 30 years of NI contributions and have always been contracted-out, you would get a Starting Amount of £119.30 a week in April 2016. This is because the higher calculation figure is based on the old rules and you would get the equivalent of the full amount of basic State Pension. In otherwords, based on 2016/17 rates, no more than £36.35 a week will be deducted (£155.65 - £119.30 = £36.35) from the full rate of new State Pension if you have at least a 30 year NI record, even though the value of private pension you built whilst contracted-out could be higher than this. If you work for a further 9 years, you will reach the full amount of new State Pension (the equivalent of £155.65 a week in 2016/17) because you will have added 9 years’worth of 1/35th of the full amount to your Starting Amount".

The above DWP Pensions Latest example Dated 05/02/2016 confirms that anyone with 30 years of NI contributions who have always been contracted out will get a starting amount of £119.30 per week in April 2016 and will have a deduction adjustment of £36.35 per week.

I have a 41 year record of NI contributions and have always been contracted out. My recent State Pension Statement confirms that my starting amount will be “lower” at £118.68 per week in April 2016 and that I will have a “higher” deduction adjustment of £57.60 per week.

I am struggling to understand why my starting amount will be lower and why my adjustment will be higher than the DWP example.

Please provide the policy information concerning the above two deduction adjustments and why they will differ by £21.25 per week from April 2016.

Please provide the policy information concerning why I have a lower starting amount.

Yours faithfully

Trevor Hird

DWP freedom-of-information-requests, Department for Work and Pensions

This is an automated confirmation that your request for information has
been accepted by the DWP FoI mailbox.
 
By the next working day your request will be forwarded to the relevant
information owner within the Department who will respond to you direct. 
 
If your email is a Freedom of Information request you can normally
expect a response within 20 working days.
 
Should you have any further queries in connection with this request do
please contact us.
 
For further information on the Freedom of Information Act within DWP
please click on the link below.
 
[1]http://www.dwp.gov.uk/freedom-of-informa...
 

show quoted sections

References

Visible links
1. http://www.dwp.gov.uk/freedom-of-informa...

DWP Strategy Freedom of Information, Department for Work and Pensions

Thank you for your Freedom of Information request.

You can expect a reply by 30 March 2016 unless I need to come back to you to clarify your request or the balance of the public interest test needs to be considered.

If you have any queries about this letter please contact me quoting the reference number above.

Yours sincerely

DWP Strategy FoI Team

------------------------------------------------------------------------------------------------------
Your right to complain under the Freedom of Information Act

If you are not happy with this response you may request an internal review by e-mailing [DWP request email] or by writing to DWP, Central FoI Team,
Caxton House, Tothill Street, SW1H 9NA. Any review request should be submitted within two months of the date of this letter. Please remember to quote the reference number above in any future communications.

If you are not content with the outcome of the internal review you may apply directly to the Information Commissioner’s Office for a decision. Generally the Commissioner cannot make a decision unless you have exhausted our own complaints procedure. The Information Commissioner can be contacted at: The Information Commissioner’s Office, Wycliffe House, Water Lane, Wilmslow Cheshire SK9 5AF
www.ico.org.uk/Global/contact_us or telephone 0303 123 1113 or 01625 545745

show quoted sections

DWP Strategy Freedom of Information, Department for Work and Pensions

1 Attachment

Please see the attached reply to your Freedom of Information request

Yours sincerely

DWP Strategy FoI team

show quoted sections