Contradictory State Pension Estimate?

SnowMan

The reason your estimate has gone up by £3.38pw appears to be because your first estimate was based on 2015/2016 amounts and the second on 2016/2017 amounts.

It looks like your starting amount at April 2016 is based on the existing (old) rules because that gives a higher figure than the new rules calculation. You've implied that you think the new rules calculation is higher, but I can't see anything in your posts to suggest that the new rules calculation is higher. Do your figures show an amount called COPE and if so what is shown?

Under the old rules you need 30 years to get a full basic state pension. So whether you have 31 years or 33 years your basic state pension amount won't change (but it will change because of uprating from 2015/2016 to 2016/2017)

Basic state pension went up from £115.95pw in 2015/2016 to £119.30pw in 2016/2017 (an increase of £3.35pw).

So that explains why your estimate has gone up by £3.38pw (ignoring 3p difference).

You have a small amount of additional state pension on top which is why your current estimate is £122.60 (presumably £119.30 + 3.30 additional).

Because you reach SPA in 2016/2017 you can't earn any state pension after 6th April 2016.

goodValue

Your argument could explain why I'm confused over these estimates.
However, that would mean the original letter was grossly misleading; it indicated the calculation was done with the NEW rules, but there was no indication about the OLD rules.
This suggested to me that both calculations had been done, but that they were only giving me information about the NEW rules calculation.
I suppose I can only be sure by contacting the DWP.
Does anyone know of the best method of contacting them for problems like this?


Do your figures show an amount called COPE and if so what is shown?

I noted down all figures from the online estimate, and there was nothing about COPE.
The only information was:

£122.60 is the most you can get
You cannot improve your estimate any more.
33 years of full contributions


I've just tried to get into the Experian system to double check this, but was unable to do so.

Because you reach SPA in 2016/2017 you can't earn any state pension after 6th April 2016.


Is this strictly correct?
If a voluntary contribution was made, would this not replace one of the contracted out years, and thus reduce the COD?

molerat

With 33 pre 2016 years any voluntary contributions would 99.9% probably be wasted unless you have a very small amount of contracted out time as adding the extra £4.45 per year would probably still not bring your NSP figure above the OSP figure. You cannot add 2016/17 as that is your retirement year. In your on line forecast is there not a link near the bottom "how contracting out has affected your state pension income" ?

Your pension will be the higher of 30/30 old SP + additional pension or
33/35 NSP - COPE

Mine for instance shows as currently £136.48
If I contribute until 2019 £151.59

Then on the contracted out page it shows
Your state pension forecast £151.59
Your COPE estimate £74.82
COPE added to your state pension £226.41

If I then deduct COPE from £151.59 it gives £76.77 which ties in with the "too complicated" forecast of £75.33 new and £129.91 old which I had in 2014.

If pre 2016 years were available to purchase I would need (to increase my NSP figure up to my OSP amount) 136.48 - 76.77 = 59.71 / 4.45 = 14 years costing in excess of £9000 to achieve no extra pension.

Using the (2015) £151.25 figure with 31 years would give you a NSP of £133.96. The £119.92 is therefore based on your OSP figure and suggests a COPE of in excess £14.04 (or maybe £31.33). Using £155.95 the NSP with 33 years would be £147.04. The £122.60 therefore gives a COPE in excess of £24.44(or maybe £33.35).

goodValue

Many thanks for putting these figures out, as they give me a greater understanding of the two different calculations.
When using the online forecast system, I looked over the screen to see if there were any buttons for further information, but didn't see any.
I could have missed something, and have been trying to get back into the Experian system to double check, but there seems to be a problem with logging in.
As regards whether my estimates are from NEW or OLD rules, is it not possible that the COD is only about £14, given that less than half my qualifying years were contracted out?

xylophone

Because you reach SPA in 2016/2017 you can't earn any state pension after 6th April 2016. Is this strictly correct?

As explained by NICO when you enquired - https://forums.moneysavingexpert.com/discussion/comment/69182490#Comment_69182490

You mention that you expect to receive three company pensions.

https://forums.moneysavingexpert.com/discussion/comment/68578726#Comment_68578726

- I will be getting a company pension, similar in value to the State Pension, for the work I did in the 1980's and the estimate for this has an element of GMP. I will be getting two other company pensions whose estimates were in the £100's. These last two estimates were about four or five years ago, and gave only a single figure so I don't know if there was any GMP.

In which years were you contracted out?

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf but bearing in mind that NSP is 155.65 a week.

Your state pension will be the higher of the old or new scheme rules calculation.

Under new scheme rules you would be entitled to 33/35 of £155.65 - the RDA (calculated as described in the above).

Do you have statements on leaving the three schemes showing any GMP?

Have you been contacted by the administrators of your occupational schemes?

goodValue

Because you reach SPA in 2016/2017 you can't earn any state pension after 6th April 2016. Is this strictly correct?
As explained by NICO when you enquired - https://forums.moneysavingexpert.com/discussion/comment/69182490#Comment_69182490


This doesn't preclude making voluntary contributions for previous years.


In which years were you contracted out?


I will be getting details of this, and will post them when I have them.

Do you have statements on leaving the three schemes showing any GMP?
Have you been contacted by the administrators of your occupational schemes?


I have had much correspondence with the scheme providing the bulk of my occupational pension.
They have provided detailed statements.
As for the others, I had brief statements (not showing GMP) a few years ago.
I wrote to them in April, but have had no reply yet.

xylophone

GMP relates to pension accrued between 1978 and 1997.

This doesn't preclude making voluntary contributions for previous years.

No, but making voluntary contributions for previous years is not the same as making them for the year that you reach SPA. Once you have reached SPA you no longer pay NI and you cannot make voluntary payments to make that part year a qualifying year.

You already have the thirty years required under the old scheme for the full basic state pension under the old scheme. You cannot make voluntary contributions to add additional pension.

Let's suppose you could make voluntary contributions for one or two previous years. This would not alter the amount you could get under the old scheme which is already set in stone because you cannot buy additional pension. This amount seems to be £119.30 plus around £3.30 Additional Pension.

Your New State Pension Calculation would be 34/35 of £155.60 minus the RDA calculated as set out in my previous link or 35/35 of £155.60 minus the RDA.

If your RDA ( which is now set in stone) is equal to or greater than £33 a week, there would be no point in buying previous years.

One of your schemes has advised you how much of your annual pension is GMP? Like this at post 33 https://forums.moneysavingexpert.com/discussion/4532605

Remember that the RDA will be the GMP (COD) plus

"A new notional deduction in respect of being contracted-out between
1997/98 and 2001/02 - this amount will be the amount of SERPS the
person would have had if they had been contracted-in;

3. The deduction made from gross S2P in respect of being contracted-out
from 2002/03 to 2015/16." (from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf)


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/514293/your-state-pension-explained-apr-2016.pdf

goodValue

Your New State Pension Calculation would be 34/35 of £155.60 minus the RDA calculated as set out in my previous link or 35/35 of £155.60 minus the RDA.
If your RDA ( which is now set in stone) is equal to or greater than £33 a week, there would be no point in buying previous years.
I think this gets to the heart of what I wanted to find out.
I really wanted to know if making a voluntary contribution for the year 2011-2012 would improve my pension.
My first forecast suggested that it would, whereas the second definitively said it wouldn't. (This was the difference between using NEW and OLD rules respectively).
I'm afraid I don't have the background to fully understand the complexities of RDA, COD, and COPE.
However, I have now managed to get into the Experian system again, which might shed some light on whether NEW or OLD rules are being used.
It starts off with:
Your estimate
•is based on your latest National Insurance record (5 April 2016)
•does not include any increase due to inflation
Do this call into question the suggestion that the increase between my two forecasts is due to the difference between 2015/2016 and 2016/2017 amounts, rather than the extra qualifying years?
The information on COPE was:
Your State Pension forecast £122.60
Your COPE estimate £45.96
COPE added to your State Pension forecast £168.56
Is it possible to work out from this if NEW or OLD rules are being used?

molerat

Yes.

You have a "new" pension 34/35 of £155.60 = £151.15 - £45.96 = £105.19 so your actual amount must be your "old" pension of £122.60 as it is larger. Buying an additional pre 2016 year would make no difference to the "old" pension as you already have 30/30 but the "new" calculation would be £155.60 - £45.96 = £109.64, still lower than the "old" pension.

RDA, COD and COPE are different ways of describing the same amount. HMG/DWP/HMRC have done a wonderful job of changing the names of things as they go and confusing the hell out of everyone along the way. As I posted earlier my old COD from 2014 is very similar to my current COPE, numbers which are recalculated annually.

goodValue

RDA, COD and COPE are different ways of describing the same amount.


I thought that, though related, the RDA, COD and COPE entities would be different values?


Also, I have found an old estimate from 1995, when I started claiming invalidity benefit, that had a COD of about £15.
I believe that this would be for about 10 years contracted out.
Since then, I would have had 3 or 4 at most contracted out years, so it's difficult to see how these extra years would take the COD from about £15 to £45.
Can it be that one contracted out year gives a very different deduction to another contracted out year?