Army/State pension

Discussion in 'Armed Forces Pension Scheme' started by Dogdrool, Jun 18, 2009.

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  1. Is there anyone out there who could answer this for me please.
    Are the Army and State pensions in way related or linked to each other.
    For example if you recieve a full army pension do you take a cut in state pension or vise versa.
    Many thanks in anticipation of sensible replies and look forward to the drivel too.
     
  2. No they are separate entities, however the Army pension will be taken into consideration for some means tested benefits.
     
  3. Hi,

    If you register with these Chaps: The Pension Service you can get a State Pension prediction for free. But if you haven't made the required 30 years of National Insurance Contributions that are required it'll only tell you that you're entitled to a minimum scales pension.
     
  4. I started my Army pension this year, during the run up to getting it I was informed by the State Pension people that I was deficient of a couple of years towards my State Pension and would I like to make it up. I decided not to as with all my pensions combined I would be hit for tax, did not see any sence paying money for a higher pension for it to be taken in tax. But the answer is the pensions are not connected but are taxed as income.

    Jim
     
  5. I am very surprised that you reached that conclusion as, in general, the return that you make from topping up your State pension to the permitted maximum is much, much higher than you will make elsewhere. There have been a lot of articles in the financial press about this, mainly for women who tend to have a patchier record of contributions than do men.

    Litotes
     
  6. As other posters have already told you, the Army's pension and the Old Age Pension are not related. However, there is another pension called SERPS (the State Earnings Related Pension Scheme) to which we are not entitled because we are "contracted out" of it.

    But there is a nasty little catch that might affect some people.

    If you retired from the Army at 40, grabbed your Army pension and went to live in, say, Cyprus, you will no longer be contributing to the National Insurance scheme that pays your Old Age Pension. You could then reach the age of 65 with only 22 years of NI contributions, which is about half the required total.

    When you claimed your Old Age Pension, you would then receive a rude shock!

    The website that another poster has described will give you the detail.

    Litotes
     
  7. [quote="Litotes
    I am very surprised that you reached that conclusion as, in general, the return that you make from topping up your State pension to the permitted maximum is much, much higher than you will make elsewhere. There have been a lot of articles in the financial press about this, mainly for women who tend to have a patchier record of contributions than do men.

    Litotes[/quote]

    Litotes, at the moment I am being taxed to hell on my pensions, even when I reach 65 I will still be taxed and add on my state pension. more tax. I don't see the sence of making up a couple ofyears to just pour it down the drain in more tax later. As it is am happy with the situation :)

    Jim
     
  8. Litotes, at the moment I am being taxed to hell on my pensions, even when I reach 65 I will still be taxed and add on my state pension. more tax. I don't see the sence of making up a couple ofyears to just pour it down the drain in more tax later. As it is am happy with the situation :)

    Jim[/quote]

    Unless you are not in the UK, you will be taxed at 20% on your income up to roughly £40k, at the moment. This is about as low as it has been in the UK in recent times, apart from the short-lived and constrained 10% band.

    The payback period (the return) for paying your outstanding NI contributions has been described as very short - less than 5 years, which implies a return of 15-20% pa compound. I would grab that even if I had to pay 40% tax on it!

    Of course, if your other nickname is Fred the Shred, I am not certain that I can sympathise with your tax problems! :D

    Litotes