Pension forecast

CathA

I got a pension forecast under the old scheme, which IIRC said I qualified for the full basic state pension plus £12.50 additional state pension, about £125.60.

I applied for a pension forecast under the new scheme and the figure is £138.94, with a Contracted Out Pension Equivalent (COPE) of £16.71 per week.

I was contracted out for 10 years from when I was 17 and worked full time for a bank. I was contracted out for 12 years when I worked part-time for the Civil Service (I left in 2012).

I have 36 qualifying years so far, but am unlikely to get any more years of paid NI contributions as I only work very part time at the moment.

After reading this web site and with the valuable information I've picked up from here, I understand the difference in the old and new system. However, there's a couple of questions I would like to ask please?

I was under the impression that contracting out, particularly for 2/3 of my working life, would make a significant difference under the NSP but only £16.71 is mentioned. Is this because I wasn't earning large amounts when working in the bank (junior staff member, not management)? Also, although I worked for the Civil service for 12 years, again I was at the lowest level and only part-time at that.

On a separate matter I can, from next year, qualify for Specified Adult Childcare Credits as I'll be looking after my grandson when my daughter starts her teaching job. Can she agree to sign the declaration to give me her entire years credits in relation to her claiming child benefit, as I'll still be having him in the school holidays for a few days? (Obviously this is as long as she has a years NI in her own right from employment) Would that help getting my pension up to the full £155.65? If not, I can buy part year contributions to make up a full year for me? I'm pretty sure I can but just want to check.

Thanks in advance.

molerat

The specified adult childcare can be applied for in whole years or other periods and you will get 1 week credit for every part week claimed. You will then be able to buy any missing weeks to make up to whole years. We have just applied for the past 4 years of school term time and are waiting for them to get back to see how it works. Worked out it will save £3K in class 3s over the 6 years MrsM can claim.

jamesd

COPE is in this case the amount that you'll eventually assumed to be getting as part of the work pensions.

For each year from now that is a qualifying year until you reach your state pension age your state pension entitlement will increase by 1/35th of the flat rate until you get to that level. Credits like those for specified adult childcare count towards this.

Given that you're still below the flat rate cap it's quite likely that arranging to have the current and future years counting will be a good deal.

It's possible that you have not got a correct COPE. For your contracted out record it seems low and I'd normally expect so many years contracted out to give you a current entitlement of just about the basic state pension level. Worth asking them to explain the number and verify that it seems correct.

CathA

jamesd wrote: »

COPE is in this case the amount that you'll eventually assumed to be getting as part of the work pensions.

For each year from now that is a qualifying year until you reach your state pension age your state pension entitlement will increase by 1/35th of the flat rate until you get to that level. Credits like those for specified adult childcare count towards this.

Given that you're still below the flat rate cap it's quite likely that arranging to have the current and future years counting will be a good deal.

It's possible that you have not got a correct COPE. For your contracted out record it seems low and I'd normally expect so many years contracted out to give you a current entitlement of just about the basic state pension level. Worth asking them to explain the number and verify that it seems correct.

Thank you. I did think I was right about the NI credits. My daughter is quite happy to sign the necessary forms next year.

I must admit I was surprised about the COPE, did seem rather low. I'll ring them and ask and let you know. The only thing I can think is that my wages weren't particularly high, do you think that might be it? Thank you.

jamesd

Yes, it's possible that your wages were so low that the earnings-related part that you were contracted out was also very low. Even with the COPE you're down to very close to just the basic state pension level so there wasn't a lot lower to go, the COPE being unable to take you below the basic state pension level.

What it might be is time working under S2P. Even a person on a low wage accumulated some additional state pension while contracted out in that system.

Topper1900

Both me & my colleague at work have got Pension Forecasts recently which seem to understate the contracted out part of our pensions, I'm concerned these figures are only rough estimates and nearer our retirement somebody will check our histories in detail and then work out the true picture?

As far as calling them, given the error, if there is one, seems to be in the OP's favour I really wonder if it's worthwhile alerting them to their potential mistake, just in case they never realise?

atush

yes, it is worth it for plannign going forwards.

As they WILL eventually find out, and want to claw back the overpayments.

CathA

jamesd wrote: »

Yes, it's possible that your wages were so low that the earnings-related part that you were contracted out was also very low. Even with the COPE you're down to very close to just the basic state pension level so there wasn't a lot lower to go, the COPE being unable to take you below the basic state pension level.

What it might be is time working under S2P. Even a person on a low wage accumulated some additional state pension while contracted out in that system.

Yes I've got £12.50 under S2P, according to the forecast under the old system. IIRC, and this is stretching my memory somewhat, I was earning about £7000 ish (full time) when I left the bank. Not fabulous money but not bad for the time. I worked 10 years full time and the last 2 years I only worked part time over the summer months. I finally left there in 1991? Blimey that's a long time ago!

Surprisingly I can remember roughly how much I was paid then but can't remember how much I was paid at the civil service, and I only left 4 years ago! Getting old, methinks! I think that was about £7500 ish for part time. Perhaps a bit more, I'll have to have a look.
Thanks again everyone.

CathA

atush wrote: »

yes, it is worth it for plannign going forwards.

As they WILL eventually find out, and want to claw back the overpayments.

Yes I must admit I thought that. The last thing I want is to be claiming for some time and get walloped for an overpayment! I've got plenty of time yet, got another 12 years so far until I'm eligible for my state pension but best to get it sorted now. Thanks again.

CathA

Topper1900 wrote: »

Both me & my colleague at work have got Pension Forecasts recently which seem to understate the contracted out part of our pensions, I'm concerned these figures are only rough estimates and nearer our retirement somebody will check our histories in detail and then work out the true picture?

As far as calling them, given the error, if there is one, seems to be in the OP's favour I really wonder if it's worthwhile alerting them to their potential mistake, just in case they never realise?

I rang DWP today and was given the number of the Contracted out deductions department. 0300 200 3507.

I spoke to a very helpful lady who looked at my NI record and confirmed the dates that I was in a contracted out scheme, which were correct. She is sending me a factsheet that explains how the COPE is worked out as a general rule; she couldn't send me a personalised one for my own set of figures. She also said that as I was at the lower end of the pay scale in both jobs, that would probably explain why my COPE is low.

Hope this helps other people.