alan

alan0707

I am in the process of claiming my state pension and in the info provided the Contracted out Deduction (COD) amounted to a weekly sum of £100.65 this split between my private pensions of
£15.46 and £85.19 weekly.How do I know if I am getting this COD amount in my private pension there is no indication in yearly statements.Must mention took private pension early and defered state pension.

mania112

Hi Alan,

If you took private pension early how do you not know what you're getting from it?

alan0707

I get a total of £6863 from my two private pensions the State Pension people have told me that I was contracted out of additional state pension which has been calculated as a weekly sum of £100.65.This sum of £100 should be include in private pension but is it ,I took private pension early and delayed claiming state pension.I have written to private pension companies asking same question but have received no reply.

LHW99

How long ago did you ask, and how?
If its less than a couple of weeks, give them time.
If its more than a month chivvy them by phone
If its more than three months send a recorded delivery letter, giving them a further 2 weeks to answer, or explain why they can't.
After that make a formal complaint to the company (in writing)

xylophone

It seems that between 1978 and 1997, you were working for two companies which had contracted out pension schemes.

This means that you built up a Guaranteed Minimum Pension.

Now that you are about to draw your state pension, the pension administrators should provide a statement showing your pre 88 GMP, post 88 GMP and the excess.

See post 33 https://forums.moneysavingexpert.com/discussion/4532605

alan0707

I sent copies of the State Pension info to both of my private pension supplier which had to be signed for.This was only couple weeks ago so need to give them time to reply just trying to get my head around these numbers because if the COD amount of £4800 a year are included in my private pension that am getting now just go to show what a waste of money private pension was.Also know that the COD amount could be a lot lower because it was put into private pension.Anyway thanks for info will wait for reply from pension companies..

greenglide

just go to show what a waste of money private pension was.

When you were in a contracted out pension scheme you paid less national insurance and your employer did as well. Because of this you entitlement to SERPS / S2P was effectively given up in exchange for this. The Contracted Out Deduction is effectively how this is done.

The scheme you were in is expected to pay you a minimum level of pension (for certain periods effectively the GMP).

You swapped one for another and there was a time when joining employer pension schemes was mandatory but they were the days of proper DB schemes which would have paid out far more than SERPS would ever have given. Since then all pensions schemes have been optional - you chose to be a member so you chose to be contracted out.

GunJack

the contracted out deduction is not an amount as such that's "built-in" or in addition to your private pensions, and the fact that your private pensions are paying more than £100 a week prove that they have served you better than had you been contracted into the State additional pension...HTH

xylophone

You were in two occupational pension schemes.

In 1978, a State Earnings Related Pension Scheme was introduced to give people the opportunity to build up an additional pension on top of the basic state pension.

This was to be paid for by additional NI contributions by employers and employees.

However, if an employer promised a pension that was at least as great as the employee could have obtained from SERPS, the employer could contract out of the additional NI contributions so that he and the employee paid lower contributions.

This meant that the employee had a Guaranteed Minimum Pension from his employer - in fact, the occupational pension was usually far more generous than this basic minimum.

Originally the Govt guaranteed that when the State Pension came into payment, inflation linked increases on that part of the occupational pension that represented the GMP would be paid by the state with the state pension.

This changed in 1988 to the government would pay such increases on the whole of the pre 88 GMP but would only fund increases above 3% on the post 88 GMP, the balance being met by the occupational pension scheme.

The GMP arrangement ended in 1997.

Up until now, your occupational schemes have paid the whole of the increases on your scheme pensions.

However, you are now beyond the age at which the GMP should be paid (65 for a man) and are about to draw your state pension.

Your Pension Schemes are now not obliged to fund increases on your pre 88 GMP or anything above 3% on your post 88 GMP, the balance being increased by Scheme rules.

A notional pre 97 ASP will have been calculated by HMRC and from this is deducted your actual GMP in the form of the COD.

You should be aware that if the resulting figure is negative, you will receive no increase on your pre 88 GMP or anything above 3% on your post 88 GMP until the figure for pre 97 ASP balances or exceeds the COD.

xylophone

You should be aware that if the resulting figure is negative, you will receive no increase on your pre 88 GMP or anything above 3% on your post 88 GMP until the figure for pre 97 ASP balances or exceeds the COD.

For more about the above, read the thread referenced in my previous post.

GunJack

xylophone wrote: »

For more about the above, read the thread referenced in my previous post.

nice explaination (especially for those of us just learning about some aspects of this stuff) but think you may have missed the thread reference out?