Millions of people missing out on the full state pension due to ‘confusing’ system
Millions of workers voluntarily paid a lower rate national insurance in exchange for a lower state pension as part of a "contracting out" scheme
MILLIONS of pensioners have been left in "total confusion" about why they are not receiving the full state pension.
Some workers voluntarily paid a lower rate national insurance in exchange for a lower state pension as part of a "contracting out" scheme.
The i reports that many now claim this happened without their knowledge - leaving them with less cash for their future than they had originally planned for.
Reforms in April last year fixed the state pension at £159.55 a week - but Government rules state the actual amount people will receive depends on their national insurance record.
Those who were "contracted out" will receive a lower full state pension to reflect the period they paid lower levels of National Insurance.
But this has come as a surprise to some savers who were under the impression they would receive the flat state pension rate - with some unaware they were "contracted out" in the first place.
According to The i, 90,000 people were denied the full state pension in the first five months of the new scheme due to this.
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One NHS employee, Gillian Swain, confused by the state of her pension told the newspaper: "I have been a state registered nurse for 42 years and have only recently found out that I will not be getting the flat rate state pension because I was contracted out.
"I was not aware that this had occurred and did not find out until I got my state pension forecast."
The contracting-out system was in place from 1978 until April last year.
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Your state pension age is the earliest you can start recieving the state pension. It may be different to the age you can get your workplace or personal pension.
It is worked out based on your gender and date of birth. You can check your
During this period, the pension system involved a two-tier arrangement that saw savers work towards a basic state pension and an additional state pension.
Those whose pension was "contracted out" were offered a 1.4 per cent rebate by the Government if they put savings destined for the second state pension in a separate pot - either a company or private pension plan.
HOW TO CHECK IF YOU'll GET THE FULL STATE PENSION
Contact the Future Pension Centre on 0345 3000168, which will let you know how many qualifying years you have and your entitlement.
Or register for the personal tax account at www.gov.uk/personal-tax-account, where you can view your national insurance record and see all your qualifying years.
If you are approaching state pension age, consider delaying retirement in order to receive a higher income.
However, when "contracting out" was axed and replaced by the April 2016 pension reforms, the National Insurance rebates stopped.
The Department for Work and Pensions said despite the confusion no one would be losing out.
A spokesman said people being paid less from their basic state pension should get the shortfall from their occupational pension - into which their national insurance relief from the period they had been contracted out would have been paid.
He added: "Private or occupational schemes will, inmost cases, provide a pension at least equivalent to the additional state pension foregone."
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