State pension warning: Starting amounts may be lowered if you have these private schemes

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State pension payments can be as high as £175.20 per week for people who have at least 35 years of National Insurance contributions under their belt. To receive any amount, at least 10 years will be needed.

However, starting amounts could be lowered for some people who were in certain private schemes during their working life.

A starting amount for a state pension may include a deduction if the claimant was in certain:

  • earnings-related pension schemes at work (such as a final salary or career average pension) before April 6 2016
  • workplace, personal or stakeholder pensions before April 6 2012

The reason for this is because a person may have paid lower National Insurance contributions and paid into one of these pensions instead.

This is officially known as being “contracted out” of the additional state pension and the government detail that it will affect most people who were working during this period.

To find out if this deduction will be made, pensioners can check with their private pension providers to see if they’ve been contracted out in the past.

There is a pension tracing service provided by the state which may be able to help retirees hunt down the contact details for their pension scheme holders.

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Additionally, payslips can be checked to see if a person was contracted out.

If a person was contracted out, their National Insurance contributions line will have the letter D or N next to it.

If they weren’t contracted out, there will be a letter A next to it.

The government detail that if a person has worked in certain sectors, they’re more likely to have contracted out during their working life.

According to the government, people are more likely to have been contracted out if they worked in the following public sector industries:

  • the NHS
  • local councils
  • fire services
  • the civil service
  • teaching
  • police forces
  • the armed forces

It should be noted that a state pension will not be received automatically even when a person reaches their state pension age.

State pensions will need to be claimed and this can be done up to four months ahead of reaching the appropriate age.

The quickest way to apply is by going online but it can also be done by post or over the phone.

If a person does not need or want their state pension yet, they can choose to defer payments which may end up boosting the amounts down the line.

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