Q. I am 55 years old and am confused about the new state pension. On the one hand it appears that everyone is going to get approximately £155 per week but I requested a state pension forecast and I am only forecasted to get £136 per week. I have a full NI record since the age of 16 so am really confused as to how I am not entitled to the full £155?
A. Under the new rules, assuming you have 35 qualifying years, you are initially eligible to receive the full rate of the new Single Tier State Pension. However, there is a deduction made to reflect any years you have been contracted out of the State Second Pension (S2P or SERPS as it was originally known). The most logical reason for you not being on target for the full Single Tier State Pension is you have most likely been contracted out of the State Second Pension. This could have been via a final salary pension scheme, or rebates of National Insurance contributions into a personal pension plan. The deduction applied to the Single Tier Pension is because you have probably built up benefits elsewhere to compensate for this deduction. The good news however is, if you make further national insurance contributions post April 2016, you will, receive extra credits at the rate of 1/35th of the Single Tier State Pension for each additional complete year, which means assuming you continue to accrue qualifying years you will make up the difference between your current forecasted pension and the full rate Single Tier State Pension by the time you reach your state pension age.
Q. My husband died in June and I have advised the companies which paid his pensions. They are both proposing to pay me a widow’s pension, which will be in addition to my own Teacher’s Pension, on which I pay tax. One company says that the widow’s pension is taxable, but the other says it is not. Which one is correct?
A. Firstly, I am sorry to hear about your loss. Since April, if someone dies before the age of 75, any dependent’s pension paid under a personal pension annuity is free from tax. The same luxury is not afforded to scheme pensions paid from occupational pension schemes. It seems likely, therefore, that one of your widow’s pensions arises under a “scheme pension” from an occupational pension scheme, but the other is from a personal pension annuity, even if the original annuity dates back to before the change in the rules. They could both be correct, therefore. If your husband had been over the age of 75 when he died, both pensions would have been taxable.
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