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    • Programmer
    • By Programmer 3rd Jul 17, 2:46 PM
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    Programmer
    State pension forcast: what does ‘full contribution year’ mean?
    • #1
    • 3rd Jul 17, 2:46 PM
    State pension forcast: what does ‘full contribution year’ mean? 3rd Jul 17 at 2:46 PM
    Last week I went into the government website and got my state pension forecast. I scratched my head over it for a long time but I am hopefully on the way to understanding it. What had been confusing me was the expression ‘years of full contributions’ on the statement. I think I’ve worked out what this means but I would appreciate confirmation. Some details first….

    I am 59 and will reach state retirement age in 2024. I got an early retirement in May 2008, and have not worked since, so have not been paying NI since 2008/2009. I worked in one place only, for just short of 30 years. This place had a (presumably contracted-out) final salary pension scheme which I belonged to throughout my time there.

    Here Is what the State Pension Summary says:

    The forecast pension, if I continue paying NI (or resume paying NI in my case) is £155.68 per week.
    The ‘estimate to 5th April 2016’ is £123.77 per week.

    The COPE estimate (which I’ve given up trying to understand) is £94.30

    The Qualifying Years summary says I have:
    - 32 years of full contributions
    - 7 years to contribute before April 2023
    - 10 years when I did not contribute enough.

    It’s that expression ‘years of full contributions’ that had me stumped. These years (or 31 of them) are designed ‘full years’ in the NI record which is appended to the forecast. I initially read ‘full year’ as ‘a year where you built up one year’s worth of state pension’ but I noticed the years relating to the start and end of my employment, in which I only worked a few months, are also marked ‘full year’. So I think ‘full year’ must mean ‘a year during which you have made at least some NI contributions, but which is now closed to further NI contributions’. I'm guessing they have counted 2016/2017 as a 'full year' on the (wrong) assumption that I paid NI in that year, hence their 32 instead of the correct 31. I’ve read elsewhere that even the years where I made 52 weekly payments do not buy 1/35 of a full state pension because of the contracting out effect.

    Looking at the rest of the figures in the forecast:

    The pension earned to April 2016 is £123.77. The theoretical full pension (2017/2018) is £159.55. £123.77 is a fraction over 27/35 of £159.55. This means (if I am understanding it right) I have earned just over 27 of the required 35 years for a full pension.

    If I expand individual years on the appended NI record it gives me the option of paying £733.20 to fill the year 2015-2016, and decreasing amounts to fill the years back to 2009-2010.

    Pulling all this together, here is my understanding of the situation.

    1. A ‘year of full contributions’, otherwise designated a ‘full year’ means no more than ‘a year in which you paid at least some NI but is now closed to NI contributions’.

    2. The number ‘years of full contributions’ on the forecast (32 in my case) has no relevance to calulations; those who get the full £159.55 pension will very likely have more than 35 ‘years of full contributions’ on their record.

    3. The April 2016 figure (£123.77 for me) is calculated by a mysterious process not known to mortals.

    4. However the secret priesthood has made this calculation, up to April 2016 I have earned approx 27 effective pension years out of the national maximum 35.

    5. If I am certain I am never going to work again (I am certain!) I could buy the seven missing years 2009/2010 to 2015/2016 (for about £5000 total); price is held until 5th April 2019. This would get me to with a year of a full pension.

    6. I could then buy one future year before 2024 to get the full £159.55

    Have I got that right? Your help is appreciated!

    I’m going to do something easier now, like Mandarin Chinese or physics of black holes.
Page 2
    • p00hsticks
    • By p00hsticks 9th Jul 17, 12:16 AM
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    p00hsticks
    (I understand you need 35 years for the new flat-rate pension).
    Originally posted by gilly56
    The 35 years is only for those starting their working life now. As you have spent many years working under the old rules (where the basic pension amount was lower) you may need more years to reach the new maximum if you have previously been contracted out - other who have been contracted in, and so paying a higher rate on NI in the past may need less.

    Hence the importance of everyone checking their own individual forecasts.
    • xylophone
    • By xylophone 9th Jul 17, 12:52 AM
    • 23,447 Posts
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    xylophone
    Can anyone help me understand my forecast please? I will be 66 in Sept 2021 (female). It shows forecast as £159.55 per week. It also states "Estimate based on your NI record up to 5/4/2016 £137.81 per week" and "Forecast if you contribute another 5 years before 5/4/2021 £159.55 per week".

    When I go to the 'Summary' page it clearly states that I have 38 years of full contributions. (I understand you need 35 years for the new flat-rate pension). My last 'Full year' NI record was 2012-13 after which I took early retirement and stopped paying NI. So can I assume my forecast is definitely the £159.55 figure and not the £137.81?
    Originally posted by gilly56
    No - if you make no more contributions, your pension at SPA will be your "starting amount" uprated by (presumably) triple link to SPA.

    To achieve a full NSP (£155.65 uprated by (presumably) triple link to SPA) you will need to make the five years' contributions as indicated in your forecast.

    https://www.theguardian.com/money/2016/nov/29/state-pension-to-rise-by-25-in-april-2017
    • sevenhills
    • By sevenhills 9th Jul 17, 2:07 AM
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    • 256 Thanks
    sevenhills
    "£159.55 is the most I can get" "I cannot improve my forecast any further, unless I choose to put off claiming."


    I opted out of serps, received £33,400 and still get the full pension, would I have got more if I had not opted out of serps?
    • bigadaj
    • By bigadaj 9th Jul 17, 7:55 AM
    • 10,708 Posts
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    bigadaj
    "£159.55 is the most I can get" "I cannot improve my forecast any further, unless I choose to put off claiming."


    I opted out of serps, received £33,400 and still get the full pension, would I have got more if I had not opted out of serps?
    Originally posted by sevenhills
    You're almost certainly better off having opted out.

    Depending on your age, income and income, profile then the old state pension would pay anywhere between £112 and £290 per week, and potentially less than £112 if the earnings record wasn't full.

    If you have been quoted a cope figure on your statement then that gives an indication of the earnings that would have been earnt in the opted out sums, however it's possible that you received this and then topped up enough in NI in any case, so the opted out sum could be in addition.
    • gilly56
    • By gilly56 9th Jul 17, 1:08 PM
    • 79 Posts
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    gilly56
    Many thanks to bigadaj, p00hsticks and xylophone for your replies. I'm still a bit confused as I only ever worked in same clerical job in the Civil Service and I wasn't aware they 'contracted-out' part of the scheme. It says my COPE estimate is £21.21 per week. I've uploaded some screenshots of what I see on the gov.gateway site at link below. I can't afford to make up any shortage in NI contributions so I guess the £137.81 will be my lot. :-(

    https://drive.google.com/open?id=0B1Y77dv7BxpcQmpfUnp2eGFaVVE
    • Silvertabby
    • By Silvertabby 9th Jul 17, 1:26 PM
    • 1,800 Posts
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    Silvertabby
    Many thanks to bigadaj, p00hsticks and xylophone for your replies. I'm still a bit confused as I only ever worked in same clerical job in the Civil Service and I wasn't aware they 'contracted-out' part of the scheme. It says my COPE estimate is £21.21 per week. I've uploaded some screenshots of what I see on the gov.gateway site at link below. I can't afford to make up any shortage in NI contributions so I guess the £137.81 will be my lot. :-( Posted by Gilly56
    £137.81 plus your civil service pension - which I'm betting is considerably more than £21.21 per week! I'm a similar age to you, and have always been contracted out ( Armed Forces and then Local Governent).

    My State pension estimate is on a par with yours (even though my COPE is over £60) and I only ever expected to receive the equivalent of the old basic pension of £120 per week. It looks like we've both benefitted from the 2002 SERPs/SP2 changes, which topped up our State pensions. I went part time in my LG job a couple of years after 2002, which classed me as 'low paid' and therefore eligible for the top up.
    Last edited by Silvertabby; 09-07-2017 at 1:36 PM.
    • gilly56
    • By gilly56 9th Jul 17, 1:41 PM
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    gilly56
    Reason I took early retirement was to care for elderly mother with Alzheimer's for 3-4 years. I did not get any Carer's Allowance during that period so I take it I would not be entitled to any NI credits for those years??
    • Silvertabby
    • By Silvertabby 9th Jul 17, 2:22 PM
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    Silvertabby
    Reason I took early retirement was to care for elderly mother with Alzheimer's for 3-4 years. I did not get any Carer's Allowance during that period so I take it I would not be entitled to any NI credits for those years??
    AFAIK, carer's allowance isn't means tested. Was someone else in the household getting it?
    • xylophone
    • By xylophone 9th Jul 17, 2:25 PM
    • 23,447 Posts
    • 13,633 Thanks
    xylophone
    Reason I took early retirement was to care for elderly mother with Alzheimer's for 3-4 years. I did not get any Carer's Allowance during that period so I take it I would not be entitled to any NI credits for those years??
    https://www.gov.uk/carers-allowance

    Are you sure that you cannot afford to pay for voluntary contributions?

    You might buy 2016/17 and then make regular payments?

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/604827/CA5603_12_16_V1_0.pdf
    • gilly56
    • By gilly56 9th Jul 17, 2:38 PM
    • 79 Posts
    • 40 Thanks
    gilly56
    I've been googling some more and have found that if the person being cared for was getting AA then the carer should be able to have NI contributions credited to them whether or not they were in receipt of a Carer's Allowance. My late mother was getting AA and I am on their records as her full-time carer so I think I should be due credits for the years I cared for her. I will likely need to apply for them. Would it be better to phone or write to the Pensions Centre to clear this up? I've found the following details online...

    Telephone: 0345 3000 168
    Newcastle Pension Centre, Futures Group
    The Pension Service 9
    Mail Handling Site A
    Wolverhampton
    WV98 1LU

    Thanks again for all he help! I will get a look at your links later xylophone...
    Last edited by gilly56; 09-07-2017 at 2:41 PM.
    • vvvvvvvvvvvvvvvv
    • By vvvvvvvvvvvvvvvv 9th Jul 17, 4:47 PM
    • 910 Posts
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    vvvvvvvvvvvvvvvv
    Can i ask what counts as year of contracting out of serps/sp2 therfore making up your COPE amount? If you joined a contracted out company pension scheme from lets say June 1982 to October 1991 then how many years are you contracted out? are you classed as contracted out for tax year 1982-83 and tax year 1991-92? as in those tax years you was not a member of the scheme for a full tax year.
    • gilly56
    • By gilly56 9th Jul 17, 5:16 PM
    • 79 Posts
    • 40 Thanks
    gilly56
    Sorry I don't understand anything about serps/contracting out/COPE, it's all too complicated for me to get my head around! I'll phone them tomorrow to discuss my forecast as I think it's wrong. I recall now when they came to the house to sort out my mother's AA claim, they took my details and NI number and got me to sign forms showing I was her only and full time carer. I think this could have been connected with giving me carers' credits so that's why I think the forecast could be incorrect. I'll post back later on this.
    • molerat
    • By molerat 9th Jul 17, 10:59 PM
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    molerat
    https://www.gov.uk/national-insurance-credits/eligibility
    https://www.gov.uk/carers-credit/how-to-claim

    If you do not get carer's allowance but care for someone you need to claim for class 3 credits, the form is in the link.
    www.helpforheroes.org.uk/donations.html
    • gilly56
    • By gilly56 10th Jul 17, 12:24 PM
    • 79 Posts
    • 40 Thanks
    gilly56
    Well! That took some sorting out, after spending ages listening to phone music and automated robot-speak I thought I was being given the runaround by being referred to one department after another but eventually I got a human being to talk to at the DWP. They apologised for their error and agreed I am indeed due full years NI credits for years 2013-14 to 2016-17 and will amend my records and advise the Pensions people in Newcastle. They said to check online again in a couple of days for my revised forecast. Happy days! I'll wait and see how this affects the forecast and then decide if I want to make any more voluntary contributions for current tax year onward. Just goes to show everyone really does need to check their forecast. Many thanks again for all you contributors and this great website. :-))
    Last edited by gilly56; 10-07-2017 at 5:43 PM.
    • Silvertabby
    • By Silvertabby 10th Jul 17, 12:32 PM
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    Silvertabby
    Result! By my reckoning, that will take your State pension up to just over £150 per week, so you will have scope to buy 2 further years yourself.

    I'd wait until your NI record has been updated with your 'credits' first - just in case!
    • vvvvvvvvvvvvvvvv
    • By vvvvvvvvvvvvvvvv 10th Jul 17, 12:37 PM
    • 910 Posts
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    vvvvvvvvvvvvvvvv
    Silvertabby

    Do you know the answer to my query post 31?
    • Silvertabby
    • By Silvertabby 10th Jul 17, 1:01 PM
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    Silvertabby
    Silvertabby

    Do you know the answer to my query post 31?
    Sorry, I don't - just that a full NI year in DWP-speak is April to April.

    Have you had a look at your State pension forecast on line? The NI listings don't show if you were contracted in or out - even the full financial years - but your foundation amount, COPE, and number of years left to work/contribute will indicate if you are likely to get the full single tier pension or a (better) pension under the old rules.
    • p00hsticks
    • By p00hsticks 10th Jul 17, 1:13 PM
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    p00hsticks
    Can i ask what counts as year of contracting out of serps/sp2 therfore making up your COPE amount? If you joined a contracted out company pension scheme from lets say June 1982 to October 1991 then how many years are you contracted out? are you classed as contracted out for tax year 1982-83 and tax year 1991-92? as in those tax years you was not a member of the scheme for a full tax year.
    Originally posted by vvvvvvvvvvvvvvvv

    I'm not sure that there are such things as 'contracted in' and 'contracted out' years - as far as I'm aware all years during which you have paid enough NI will count as 'full years' when it comes to calculating State Pension entitlement, regardless of whether you were contracted in or out.

    But the calculation of the COPE deduction amount for periods where you were contracted out (and so paying a lower NI percentage) are a mystery to me.

    Are you trying to query what your actual COPE amount is ? It will only have potentially come into play in the calculation of your 'starting amount' when the new State Pension was introduced in April 2016.
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