Cope question

amstel2

Hello

After turning 55 I requested a state pension forecast which I have just recd. It states I have 38 qualifying years of NI contributions (all contracted out) that gives me a wkly pension figure above the basic rate. It then goes on about a COPE payment & seems to indicate this is paid as part of my workplace pension.

I have two final salary workplace pensions, nether being paid yet.
The 1st one is from a former employer & is deferred. I can get this with a reduction between 55-60 after that with no reduction. All the NI contributions with this employer where contracted out.

The 2nd pension is a Civil Service pension (my current employer) I can also take that with no reduction at 60. All NI contributions here were also contracted out until last month when I started paying full contributions.

Now neither of my recent statements with these pensions mentions COPE. Therefore which one does COPE apply to or is it divided between them.

Also am I right in thinking that from now on every year of making full NI contributions equates to approx. an extra £4.44pw plus inflation towards the flat rate pension. My state pension age is currently 67 therefore by my reckoning it will take me another 6 years of NI contributions to get their or am I paying the extra to get nothing.

I wasn’t even aware I was paying contracted out NI until a couple of years ago & didn’t even know what it was at first. No-one ever asked my permission to contract me out.

If HM government where a private pension provider they would be prosecuted for miss-selling.:mad:

Thanks

xylophone

The fact that you have enough years before SPA to bring your state pension up to the full amount means that having been contracted out works to your advantage. You have enough years before SPA to contribute enough to reach the full new state pension.

http://www.theguardian.com/money/2014/feb/10/poorer-state-pension-contracted-in (The figures are out because of the date of the article.

You paid a lower rate of NI in your contracted out years while you were building your defined benefit pensions - you will be entitled to a full new state pension and your deferred DB pensions which you will be able to draw without actuarial reduction at age 60.

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/512799/your-state-pension-statement-explained-dwp042.pdf

"If, any time before 6 April 1997, you were a member of a workplace
scheme(s) where the amount of pension you get is based on your
earnings (often called Defined Benefit, Final Salary or Career Average
Salary schemes) and you subsequently left the scheme(s) before 6
April 2016, your Contracted Out Pension Equivalent (COPE) amount
takes into account how your scheme(s) revalued your preserved
pension benefits (called the Guaranteed Minimum Pension or GMP)
each year until the new State Pension started on 6 April 2016. "

LXdaddy

Prior to April 2016, people who were contracted in earned graduated pension*, or SERPS or S2P (the name of it depending in the year). People who were contracted out paid a lower rate of national insurance and did not earn these additional pensions.

Because you were contracted out, you and your employer paid lower rates of NI and contributed to a private pension scheme which was intended to give you a pension worth more than the additional state pension that you would have got under Graduated or SERPS or S2P.

When you signed up to your company pension you agreed to contract out - the government of the day didn't miss-sell. I'm sure the documents would have contained something about no longer being eligible for the SERPS or S2P.

The state pension forecasts are certainly confusing suggesting that the COPE amount is what you will get from your workplace pension. All it really means is that you won't get as much state pension as someone who was contracted in. But you get your company pension which is almost certainly MORE than you would have got in additional pension had you been contracted in.

Further, unlike people who reach SPa in the near future, you have the opportunity to reach the full level of the Single Tier Pension as each year of contribution from now gains you an additional amount (probably the £4.44 per week)

* I can't remember the precise name but it certainly had "graduated" in the name,

zagfles

Ignore COPE completely. It's only there to stop people whinging "I've got 35 years, why aren't I getting the full state pension" etc.

It's not itemised as part of your workplace pension, it's not additional to it, so it's a totally meaningless figure. It's basically just an explaination as to why you get might get less state pension than you thought.

kidmugsy

amstel2 wrote: »

I wasn’t even aware I was paying contracted out NI until a couple of years ago & didn’t even know what it was at first. No-one ever asked my permission to contract me out.

Oh yes they did; you agreed to it when you joined the schemes.

amstel2 wrote: »

If HM government where a private pension provider they would be prosecuted for miss-selling.:mad:

Don't be silly; it's you who needs his bottom spanked for being too lazy to understand his pensions.

bigfreddiel

Kidmugsy is correct, you agreed to being contracted out when you signed up to your workplace pensions.

In fact it was a requirement of joining the civil service pension scheme to contract out. If you didn't want to contract out you couldn't join. It was all in the docs, which of course never get read and are stored away in your filing cabinet, only to see light of day a few months before you start thinking about taking your pension.

Anyway it also says if you are contracted in or out on your payslip. Again I don't know many people who actually read theirs. I worked with someone in the civil service and in four years I never saw him ever open his payslip!

fj

[Deleted User]

amstel2 wrote: »

I wasn’t even aware I was paying contracted out NI until a couple of years ago & didn’t even know what it was at first. No-one ever asked my permission to contract me out.

They did, you just can't remember.

You will get no compensation via that particular complaint route..

bigadaj

Maybe the OP should be offered the opportunity of paying the historic NI contributions, having the db pension reduced proportionately and given the uplift to the state pension instead. Bit pointless as they would still be gaining NI credits for the next few years to make up years, but hey it's what the want.

Well then wait for teh complaints in a few years when they realise what they've done is stupid and should have been told not to do it!

AnotherJoe

amstel2 wrote: »

Hello

After turning 55 I requested a state pension forecast which I have just recd. It states I have 38 qualifying years of NI contributions (all contracted out) that gives me a wkly pension figure above the basic rate. It then goes on about a COPE payment & seems to indicate this is paid as part of my workplace pension.

It only seems to. The COPE amount is theoretical. What you'll get is any other pensions you have including workplace. That might be more, less or (very unlikely), exactly the same as the COPE number. There wont be any itemised amount anywhere that says "this is your COPE payment.

Sipowicz

"There wont be any itemised amount anywhere that says "this is your COPE payment.""

Wont it be itemised as GMP?

zagfles

Sipowicz wrote: »

"There wont be any itemised amount anywhere that says "this is your COPE payment.""

Wont it be itemised as GMP?

No, GMP is just for pre-1997, COPE will include post 1997 contributions.