National Insurance on Pension and commutation

Be advised - when you are in receipt of a State Pension - YOU WILL START to get a NI related deduction from your Army Pension.
 
It's an amount that's calculated when you first get a state pension - then it remains at this fixed amount for the rest of your natural. .

Why am I still paying National Insurance on my army pension? | This is Money
Does anyone have a rule of thumb about how much NI, or other amounts, would be deducted under this scheme?

I was kind of banking on my mil pension, the pension from my current job and the state pension making me quite well off as a crusty. Anybody have any example calculations?
 
Really? That's a new one to me.

Is the amount of state pension received in any way affected by the service pension, or vice versa?
JJ is correct, as I found out when I started receiving my State Pension 2 years ago. The reduction was only a small amount, but it's still money that I no longer receive, there was a short letter explaining why this happens but I've since binned it, so I cannot give any more gen on the reasons.
 

GrandadsMOB

War Hero
Does anyone have a rule of thumb about how much NI, or other amounts, would be deducted under this scheme?

I was kind of banking on my mil pension, the pension from my current job and the state pension making me quite well off as a crusty. Anybody have any example calculations?
From a letter I received from Equiniti Paymaster in July 2014 following a phone query from me regarding the deduction on reaching my 65th birthday (which did, indeed, happen):

"When you retired from the Armed Forces you should have been told (and I was - hence the phone call) that your annual rate of pension would be reduced from the date you reached State Pensionable age (65 for men and 60 for women - these have obviously now changed for some people). Under the NI Modification rules (NI MOD), [a] service man enlisting after 30 June 1949 and before 1 April 1980 shall, when he reaches the age of 65 years, have his service pension abated at the rate of £0.8708p a year for each complete year of reckonable service that accrues before 1 April 1980. (my emphasis)

The reduction occurs because, under the National Insurance Regulations (Modification of the Superannuation Acts) 1949, Paymaster is required to abate your pension to take account of the fact that you may also receive a State Pension. The reduction is, however, made regardless of whether you are actually claiming a State Pension."
 

GrandadsMOB

War Hero
£15.47 a month for me. And mine a disability pension :skull: Thieving barstewards :threaten:

Hang on a minute. That means I served for 213 years? Something ain't right :?
 

GrandadsMOB

War Hero
Sorry mate - posts crossed. As I said on the edited version - something ain't right. Better get back to the drawing board :(
 
Hope it all works out in your favour, whilst £15.47 a month does not seem a lot I just don't like the bastards taking any more than they should, actually I don't like them taking anything and the £15.47 could make all the difference depending on circumstances.
 

GrandadsMOB

War Hero
Just phoned Equinity and asked why did it seem like I'd served for 213 years?

"I'm no mathematician." was the reply. "I'll pass it on to someone who will get back to you!"

It didn't need a degree in difficult sums to understand the problem - but it seems like it does!
 

simbo

LE
Last paragraph of the link:

The good news is once these deductions have been applied, they will remain at the same level each year. So as your pension increases, they will take away an ever smaller proportion."

Not if you live in over 100 countries- you are not entitled to annual increase after the start date of your state pension.
I know the Guardianista link will not be all the best but its all I can find at short notice. The Ambassador here tried to address it a while back but was told to keep his nose out.

Is this the start of a thaw for frozen state pensions?
 

GrandadsMOB

War Hero
The plot thickens!

I've just discovered a letter dated 1975 (i.e. just as I was leaving the Army) saying that I had apparently paid £102.44 in respect of the Graduated Pension Scheme (wasn't this/didn't this become Superannuation?)

"Consequently your service pension will be further abated by £0.35 a week at age 65 in addition to the abatement under the National Insurances Act 1946 the amount of which will be notified to you nearer the date of your 65th birthday." (no it wasn't)

My tax code (thank you gov.uk!) is 649T which means I can earn £6490 a year before tax (and allowance has been made for my old age pension to arrive at that figure). The army pension isn't close to that (nor was it before the deductions) so it's not income tax!

Watch this space. I'll update it when/if I get any more info.

Good job I'm a magpie when it comes to old letters!
 
From a letter I received from Equiniti Paymaster in July 2014 following a phone query from me regarding the deduction on reaching my 65th birthday (which did, indeed, happen):

"When you retired from the Armed Forces you should have been told (and I was - hence the phone call) that your annual rate of pension would be reduced from the date you reached State Pensionable age (65 for men and 60 for women - these have obviously now changed for some people). Under the NI Modification rules (NI MOD), [a] service man enlisting after 30 June 1949 and before 1 April 1980 shall, when he reaches the age of 65 years, have his service pension abated at the rate of £0.8708p a year for each complete year of reckonable service that accrues before 1 April 1980. (my emphasis)

The reduction occurs because, under the National Insurance Regulations (Modification of the Superannuation Acts) 1949, Paymaster is required to abate your pension to take account of the fact that you may also receive a State Pension. The reduction is, however, made regardless of whether you are actually claiming a State Pension."
Does 'Reckonable' mean over the age of 18? Or does it mean over the age of 21 as I became LE and that is how my pension was calculated?

I joined in May 78 and was 18 in 79. That means that I shall either lose 87.08p per year or nothing when I get to 65. Robbing barstewards!
 

Forces Pension Society

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Your pension as an officer counts from age 21.
This could be one for some advice from the AFPS as they almost certainly will have come across it before
@Forces Pension Society any comment?
The National Insurance Adjustment and the Guaranteed Minimum Pension issue is quite a complex affair, and everybody is different. Members of the Forces Pension Society are able to have their personal position explained to them because that is one of the benefits of the annual subscription they pay. The tax conundrum is probably as a result of one of the biggest misconceptions in the pensions world – the state pension is taxable..!! However, no tax is ever deducted, instead the personal allowance you are awarded by HMRC is reduced by the amount of annual state pension you receive. In effect, therefore, you pay the tax due on your state pension via your Armed Forces pension.



For those with just a state pension in terms of taxable income, you might wonder how their tax is deducted – well, funny old thing - the state pension does not exceed the basic zero threshold of £11,500 so there is no tax to be deducted anyway.
 
Thanks for that, just confirms the old adage about one of the certainties in life, however it should not affect me too much as I only served for two years in the bracket and I will not be getting a full state pension.

Greenbaggyskin I think you will find that you will not feel the fingers of the robbing bastards picking your pocket for another year, you like me will not receive our state pensions until we are 66:eek:.
 

GrandadsMOB

War Hero
For those with just a state pension in terms of taxable income, you might wonder how their tax is deducted – well, funny old thing - the state pension does not exceed the basic zero threshold of £11,500 so there is no tax to be deducted anyway.
That's how mine was calculated. For 2016-17 (reached 65 in June 2016)

Tax free allowances: £12100 **
State Pension (Old age pension): -£5610 (Based on info provided by the Department for Work and Pensions.)
Tax free allowance: £6490

If my army pension exceeded this amount (which it doesn't) then I'd pay tax on the excess amount.

** Another wheeze I discovered: Since her indoors only has a partial UK Pension (we moved from the UK in 1987) she doesn't qualify for the full basic personal allowance of £11000. She can transfer some of her basic allowance to her spoue (GMOB!). This year this amounted to £1100 so my basic allowance is £11000 + £1100 = £12100. Hers goes down to £11000 - £1100 = £9900.

It's called the Marriage Transfer Allowance.
 

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