Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • happyhero
    • By happyhero 16th Mar 17, 9:43 PM
    • 1,071Posts
    • 52Thanks
    happyhero
    State Pension for me - confused - help please
    • #1
    • 16th Mar 17, 9:43 PM
    State Pension for me - confused - help please 16th Mar 17 at 9:43 PM
    I'm struggling a bit with state pension info online to make it clear for my particular case.

    I'm 56 born 1961. I left work in 2005 to live off savings/investments. At that time I had 30 qualifying NI years which I'm sure I phoned up about and was told that would give me a full state pension but when I did a quick state pension forecast online last year it looked like that 30 years was not enough and I wouldn't get a full state pension.

    Have I got something wrong/mixed up?

    Will I get a full state pension?

    Should I and could I top my state pension up?

    If I could what would it likely cost me?

    Would the money be better directed to a SIPP as I am a keen investor?
Page 1
    • molerat
    • By molerat 16th Mar 17, 9:54 PM
    • 16,204 Posts
    • 10,340 Thanks
    molerat
    • #2
    • 16th Mar 17, 9:54 PM
    • #2
    • 16th Mar 17, 9:54 PM
    The rules changed in April 2016. Up until then you only needed 30 years contributions to get a full basic pension. Now it is 35 years to get the new higher pension. But there are transitional arrangements to ensure you are no worse off under the new system than you were under the old.

    At April 2016 you were given a starting amount which is the higher of your entitlement under the old or new systems. You need to get a new forecast to see how much you have to start with, how many years you have credited, find out if you were contracted out and if so how much the COPE amount is. From there you can calculate how much you need to make up to the new amount and whether to buy pre or post 2016 contributions which will cost in the region of £700 for each year purchased but will pay back in 3-4 years once retired, way better than anything else you can buy out there. No rush to do it as you have up until April 2019 to buy those old years, back as far as 2006, at old prices.

    Get a new forecast, come back with the numbers and you will get some help.
    Last edited by molerat; 16-03-2017 at 10:19 PM.
    www.helpforheroes.org.uk/donations.html
    • p00hsticks
    • By p00hsticks 16th Mar 17, 11:34 PM
    • 5,327 Posts
    • 4,806 Thanks
    p00hsticks
    • #3
    • 16th Mar 17, 11:34 PM
    • #3
    • 16th Mar 17, 11:34 PM
    Get a new forecast, come back with the numbers and you will get some help.
    Originally posted by molerat
    Link to get a forecast is here;
    https://www.gov.uk/check-state-pension
    • robber2
    • By robber2 17th Mar 17, 1:30 AM
    • 217 Posts
    • 162 Thanks
    robber2
    • #4
    • 17th Mar 17, 1:30 AM
    • #4
    • 17th Mar 17, 1:30 AM
    Trust the website not the muppets on the other end of the phone.

    Rob
    • Magnolia
    • By Magnolia 17th Mar 17, 7:36 AM
    • 1,114 Posts
    • 1,901 Thanks
    Magnolia
    • #5
    • 17th Mar 17, 7:36 AM
    • #5
    • 17th Mar 17, 7:36 AM
    It was the 'muppets' on the end of the phone that helped me to understand what would happen when I retired. They were brilliant and so helpful!
    Mags - who loves shopping
    • molerat
    • By molerat 17th Mar 17, 8:33 AM
    • 16,204 Posts
    • 10,340 Thanks
    molerat
    • #6
    • 17th Mar 17, 8:33 AM
    • #6
    • 17th Mar 17, 8:33 AM
    The problem we hear many times is that the helpline staff simply do not understand that buying missing pre 2016 years will often have no effect on increasing your pension.
    www.helpforheroes.org.uk/donations.html
    • woolly_wombat
    • By woolly_wombat 17th Mar 17, 8:47 AM
    • 453 Posts
    • 264 Thanks
    woolly_wombat
    • #7
    • 17th Mar 17, 8:47 AM
    • #7
    • 17th Mar 17, 8:47 AM
    The problem we hear many times is that the helpline staff simply do not understand that buying missing pre 2016 years will often have no effect on increasing your pension.
    Originally posted by molerat
    Indeed.

    There have also reportedly been some problems with the online state pension forecast system in some instances, so you might like to consider getting a forecast the old-fashioned way i.e. completing form BR19 (also on gov website).
    • Silvertabby
    • By Silvertabby 17th Mar 17, 9:30 AM
    • 1,006 Posts
    • 1,111 Thanks
    Silvertabby
    • #8
    • 17th Mar 17, 9:30 AM
    • #8
    • 17th Mar 17, 9:30 AM
    “ The problem we hear many times is that the helpline staff simply do not understand that buying missing pre 2016 years will often have no effect on increasing your pension.
    Originally posted by molerat
    Indeed.

    There have also reportedly been some problems with the online state pension forecast system in some instances, so you might like to consider getting a forecast the old-fashioned way i.e. completing form BR19 (also on gov website).
    We did both. It took about 6 weeks for the paper estimates to get back to us, but it was re-assuring to see that they were virtually the same as our on-line estimates.

    I suppose our records were fairly straightforward, though - both with over 40 years NI conts, and both contracted out from 1978.
    • johndough
    • By johndough 17th Mar 17, 10:30 AM
    • 588 Posts
    • 226 Thanks
    johndough
    • #9
    • 17th Mar 17, 10:30 AM
    • #9
    • 17th Mar 17, 10:30 AM
    Hi

    Via Gov Gateway temporarily unavailable, please try later.

    I getting old how much later? I aint got long y'know.
    • xylophone
    • By xylophone 17th Mar 17, 11:13 AM
    • 21,280 Posts
    • 12,218 Thanks
    xylophone
    You need to get a new forecast to see how much you have to start with, how many years you have credited, find out if you were contracted out and if so how much the COPE amount is.
    It would appear from earlier posts that the OP worked for BT for 25 years and expects to draw his deferred DB/Final Salary pension in 2021.



    He says that he gave up work in 2005 and checked that he had 30 years NI paid or credited.


    His NSP statement should show a starting amount which is the greater of his entitlement under the old/new rules.

    http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0587

    The likelihood is that his "starting amount" will be well under NSP so that he will be able to increase it to full NSP with voluntary contributions.
    • happyhero
    • By happyhero 17th Mar 17, 11:19 AM
    • 1,071 Posts
    • 52 Thanks
    happyhero
    Hi guys thanks for all the inputs, here is what it says for me on the pension website

    Your State Pension
    You can get your State Pension on 22 November 2027. Your forecast is
    £155.65 a week
    £676.80 a month, £8,121.59 a year
    Your forecast
    • is not a guarantee and is based on the current law
    • does not include any increase due to inflation
    You need to continue to contribute National Insurance to reach your forecast
    Estimate based on your National Insurance record up to 5 April 2016
    • £119.30 a week
    Forecast if you contribute another 9 years before 5 April 2027
    • £155.65 a week
    £155.65 is the most you can get
    You cannot improve your forecast any further, unless you choose to put off claiming.
    If youíre working you may still need to pay National Insurance contributions until 22 November 2027 as they fund other state benefits and the NHS.
    View your National Insurance record
    How contracting out affects your pension income
    Like most people, you were contracted out of part of the State Pension.
    More about how contracting out has affected your pension income.
    Putting off claiming
    When you are 66, you can put off claiming your State Pension. Doing this may mean you get extra State Pension when you do come to claim it. The extra amount, along with your State Pension, forms part of your taxable income.



    Clicking on the link "How contracting out effects your pension, I get this page


    You were contracted out
    In the past youíve been part of one or more contracted out pension schemes, such as workplace or personal pension schemes.
    When you were contracted out:
    • you and your employers paid lower rate National Insurance contributions; or
    • some of your National Insurance contributions were paid into your private pension schemes instead
    Contracted Out Pension Equivalent (COPE)
    Your workplace or personal pension scheme should include an amount of pension which will, in most cases, be equal to the additional State Pension you would have been paid. We call this amount your Contracted Out Pension Equivalent (COPE). Your COPE estimate is shown below.


    The COPE amount is paid as part of your other pension schemes, not by the government. The total amount of pension paid by your workplace or personal pension scheme will depend on the scheme and on any investment choices.


    Your COPE estimate is £85.27 a week.

    • happyhero
    • By happyhero 17th Mar 17, 11:29 AM
    • 1,071 Posts
    • 52 Thanks
    happyhero
    So I have questions?

    Is the COPE of £85.27 to be paid to me as well. (At the time I had the BT pension that was the only pension I was paying into). I'm confused it mentions being contracted out means that some of my National Insurance contributions were paid into my private pension scheme instead, what private pension is that, I didn't have any private pension, only the BT pension that I started when I was 16?

    Also I am confused about why when I rang up in 2005 that I was told I had 30 years and that is enough for a full pension, yet now it seems you need 35 so it looks like I am short?

    It mentions contributing another 9 years but why if I have 30 and you need 35?

    How much would 9 years likely cost me?

    Sort of repeating my earlier questions but so is buying the 9 years better than doing anything like a Sipp instead with the money where I can grow the pot with investments?

    Help
    • p00hsticks
    • By p00hsticks 17th Mar 17, 11:54 AM
    • 5,327 Posts
    • 4,806 Thanks
    p00hsticks
    Is the COPE of £85.27 to be paid to me as well. (At the time I had the BT pension that was the only pension I was paying into). I'm confused it mentions being contracted out means that some of my National Insurance contributions were paid into my private pension scheme instead, what private pension is that, I didn't have any private pension, only the BT pension that I started when I was 16?
    Originally posted by happyhero
    Your private pension IS your BT pension. You paid a lower rate of NI because you had a BT pension than you would have otherwise. If you hadn't had been 'contracted out' because of your BT pension then you would have paid a higher rate of NI, which woudl have gone to an additonal pension (SERPS or S2P (State Second Pension)). The COPE figure is an estimate by the Pension Service of what you might expect to get from your BT pension as a result of this - it's no guarantee that you will, you may get less or more.

    Also I am confused about why when I rang up in 2005 that I was told I had 30 years and that is enough for a full pension, yet now it seems you need 35 so it looks like I am short?
    Originally posted by happyhero
    Under the old rules, you needed 30 NI years to get a full 'basic' pension of £119.30. In April 2016 this figure was raised to £155.65 but the number of years required to get this amount was increased to 35.

    As molerat has said above, there were transitional rules to work out your 'starting amount' as at the cut over date of 6/4/16, which is the higher of the two amounts worked out under the old rules. You therefore haven't lost out, as your starting amount of £119.30 is exactly what you would have got if the new rules hadn't been introduced. In fact you stand to win, as you now have an opportuntiy to increase that amount for relatively little cost.

    It mentions contributing another 9 years but why if I have 30 and you need 35?
    Originally posted by happyhero
    Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30 =) £36.35, which at the rate of
    £4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)

    Originally posted by happyhero
    If you aren't getting NI credits (e.g by claiming certain benefits, looking after grandchildren or working) you can buy voluntary class 3 contributinons for around £730 a year.

    Sort of repeating my earlier questions but so is buying the 9 years better than doing anything like a Sipp instead with the money where I can grow the pot with investments?
    Originally posted by happyhero
    It's a very good return - a one off payment of around £730 gives you additional £4.45 a week for life.

    Read this guide for more info

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf
    • AlanP
    • By AlanP 17th Mar 17, 12:04 PM
    • 734 Posts
    • 495 Thanks
    AlanP
    Quote from above:

    Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30 =) £36.35, which at the rate of
    £4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)


    Slight typo so to avoid any confusion that should read as £155.65 - £119.30
    • molerat
    • By molerat 17th Mar 17, 12:42 PM
    • 16,204 Posts
    • 10,340 Thanks
    molerat
    If the system remained unchanged you would have got £119.30 in 2027. Because of the changes you now have the opportunity to increase that amount to £154.90 by adding another 8 years through employment, credits or voluntary contributions. Purchasing any missing pre 2016 years will not add to your pension. A year currently costs £733.20, increasing with inflation, so for £5866 you will get £1830 taxable per year, increasing by currently 2.5% minimum, for the rest of your life. Your money back in 3 yrs 3 mths.
    www.helpforheroes.org.uk/donations.html
    • happyhero
    • By happyhero 17th Mar 17, 1:04 PM
    • 1,071 Posts
    • 52 Thanks
    happyhero
    Your private pension IS your BT pension. You paid a lower rate of NI because you had a BT pension than you would have otherwise. If you hadn't had been 'contracted out' because of your BT pension then you would have paid a higher rate of NI, which woudl have gone to an additonal pension (SERPS or S2P (State Second Pension)). The COPE figure is an estimate by the Pension Service of what you might expect to get from your BT pension as a result of this - it's no guarantee that you will, you may get less or more.
    Originally posted by p00hsticks
    Ok brilliant, thanks for all this p00hsticks and molerat and everybody else.


    So do you think I would see the COPE figures as an extra item in my BT statement or will it just be grouped in my BT figures (I have had some figures from BT, a statement but didnít notice anything about this COPE figure mentioned in it)?


    How do you insure BT would do the right thing with these contributions and not short change me on their potential, I mean how do I check I am getting the right amount at the end?



    Under the old rules, you needed 30 NI years to get a full 'basic' pension of £119.30. In April 2016 this figure was raised to £155.65 but the number of years required to get this amount was increased to 35.

    As molerat has said above, there were transitional rules to work out your 'starting amount' as at the cut over date of 6/4/16, which is the higher of the two amounts worked out under the old rules. You therefore haven't lost out, as your starting amount of £119.30 is exactly what you would have got if the new rules hadn't been introduced. In fact you stand to win, as you now have an opportuntiy to increase that amount for relatively little cost.



    Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30 =) £36.35, which at the rate of
    £4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)
    Originally posted by p00hsticks
    So should I buy the 9 years or less bearing in mind the 75p business you mention?



    If you aren't getting NI credits (e.g by claiming certain benefits, looking after grandchildren or working) you can buy voluntary class 3 contributinons for around £730 a year.
    Originally posted by p00hsticks
    From this am I right in saying the maths for buying 9 years is simply £730 x 9 =£6,570, so it will cost me £6,570 to get me up to maximum?

    Do you always buy full years or can they take part years payments to only pay the right amount for the 75p? Maybe a petty question but just curious to understand it all.


    It's a very good return - a one off payment of around £730 gives you additional £4.45 a week for life.

    Read this guide for more info

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf
    Originally posted by p00hsticks

    How do some people get more than £155 per week, not 100% sure but I think my stepfather is getting £177 per week from last time we looked at if my memory serves me right.

    Also another question I have just thought of, I am a non tax payer and have contributed my maximum of £2880 this financial year, is there a problem here with buying more state pension or does the payment for more state pension not come into me contributing to a SIPP and my allowance for that (you see what I am getting at they would both be contributions to pension schemes)?
    • molerat
    • By molerat 17th Mar 17, 1:12 PM
    • 16,204 Posts
    • 10,340 Thanks
    molerat
    The old state pension was made up of 2 parts, the basic pension and the second state pension. Your BT pension contracted you out of the second pension which is why you paid reduced NI. Your relative would have been contracted in so receives extra above the basic, in fact you can receive around £280 state pension - £119 basic plus £160 S2P. Your BT pension will not mention COPE as it was simply all bundled up in the benefit, you paid less NI and they paid less NI. The only time you usually see it is if you had a separate pension fund made up of this money.

    You cannot buy part years so buying the 9th year is not worth it, put the £115 the 70p would cost somewhere else - you will get better value.

    Your SIPP contributions and NI voluntary contributions have no bearing on each other.
    Last edited by molerat; 17-03-2017 at 1:22 PM.
    www.helpforheroes.org.uk/donations.html
    • happyhero
    • By happyhero 17th Mar 17, 1:20 PM
    • 1,071 Posts
    • 52 Thanks
    happyhero
    The state pension was made up of 2 parts, the basic pension and the second state pension. Your BT pension contracted you out of the second pension which is why you paid reduced NI. Your relative would have been contracted in so receives extra above the basic, in fact you can receive around £280 state pension - £119 basic plus £160 S2P. Your BT pension will not mention COPE as it was simply all bundled up in the benefit, you paid less NI and they paid less NI. The only time you usually see it is if you had a separate pension fund made up of this money.

    Your SIPP contributions and NI voluntary contributions have no bearing on each other.
    Originally posted by molerat
    Thank you molerat this is so helpful, can you comment on my maths above, if correct etc and whether you think it is a good idea to buy the full 9 years please?

    Also up till when could I buy these years please?
    Last edited by happyhero; 17-03-2017 at 1:27 PM.
    • molerat
    • By molerat 17th Mar 17, 1:50 PM
    • 16,204 Posts
    • 10,340 Thanks
    molerat
    I edited my post re 9th year whilst you were posting.

    Years can be purchased at the in year price up to 2 years after the end of the year so 2016-17 needs to be purchased by 5 April 2019 to maintain the current price. After then they increase to the price of the year when purchased and are available until the end of 6 years so 5 April 2023 for 16-17. You cannot buy in advance so will have to buy as you go along. 16-17 is £733.20, 17-18 will be £741, each year increasing roughly with CPI.
    Last edited by molerat; 17-03-2017 at 1:53 PM.
    www.helpforheroes.org.uk/donations.html
    • xylophone
    • By xylophone 17th Mar 17, 3:19 PM
    • 21,280 Posts
    • 12,218 Thanks
    xylophone
    it just be grouped in my BT figures (I have had some figures from BT, a statement but didn’t notice anything about this COPE figure mentioned in it)?
    https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

    When you left BT, were you not given a Statement of Deferred Benefits

    showing a pre 88 GMP, post 88 GMP and excess?

    In the BT Scheme, the GMP increases in deferment by S148 orders and the excess by Scheme rules.

    http://www.btpensions.net/148/section-b-member-booklet

    Please note we are currently updating the member booklets to reflect various changes that came into effect on 6 April 2016, and the updated booklets will be uploaded shortly.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,396Posts Today

8,965Users online

Martin's Twitter
  • The strange thing with a 4yr old is having to play & smile while inside feeling sick for those in trauma in my birth town #Manchester

  • Just a quick ta-ta for now. I'm taking the week off for family time with mini and Mrs MSE. So I won't be here much. Back after the bank hol

  • Ugh another one trying it! Beware https://t.co/Ab9fCRA76F

  • Follow Martin