Basic State Pension & COPE

Curious_Moose

I think this is now clarified! Many thanks to all who responded.

[Deleted User]

p00hsticks wrote: »

Yes.

But forget about the 35 years figure - the transitional rules for those well into their working lives means this doesn't have the same significance as it will do for those starting now.

Also ignore the COPE figure.

All you need to know is your starting amount as at 6/4/16 from your pension forecast (this may be the '£155.65 - COPE' figure you mention, but could be your entitlement under the old rules if higher).

Any NI years earned or bought going forward will add £4.45 to that starting amount until you reach either the £155.65 maximum or State Pension Age, whichever comes first.

Have amended the figure shown above

Curious_Moose

p00hsticks wrote: »

Yes.

But forget about the 35 years figure - the transitional rules for those well into their working lives means this doesn't have the same significance as it will do for those starting now.

Also ignore the COPE figure.

All you need to know is your starting amount as at 6/4/16 from your pension forecast (this may be the '£155.65 - COPE' figure you mention, but could be your entitlement under the old rules if higher).

Any NI years earned or bought going forward will add £4.45 to that starting amount until you reach either the £55.65 maximum or State Pension Age, whichever comes first.

Well based on my NI record of 32 years to 06/04/2016, it says £142.71 (which looks like 32/35 x 155.65). It also says I have a COPE of £34. So does that mean I reach £155.65 in 3 years (with no reduction), or will the COPE still be used as a reduction in 3 years when I've done 35 years NI?

Silvertabby

Well based on my NI record of 32 years to 06/04/2016, it says £142.71 (which looks like 32/35 x 155.65). It also says I have a COPE of £34. So does that mean I reach £155.65 in 3 years (with no reduction), or will the COPE still be used as a reduction in 3 years when I've done 35 years NI?

£142.71 sounds like your foundation amount. This is the higher of your entitlement under either the old or new rules, so your absolute minimum foundation amount would be the equivalent of the old basic State pension of £119 per week. As I said before, contracting out ended in April this year, so another 3 years of NI contributions/payments will take you to £142.71 + 3 x £4.45 = £156.06 (but capped at £155.65). If you continue to work beyond 3 years your State pension won't increase beyond the single tier rate.

How many years were you contracted out? Am I right in thinking that you are on a low to moderate pay scale? That could explain the low COPE, and the higher than £119 per week State pension - you have some post SP2 top ups.

molerat

You currently have £142.71. That will not change (apart from inflation uprating)

Your old style pension calculation is 30/30 of £119.30 + £23.41 of additional pension = £142.71.
Your new style pension calculation is 32/35 of £155.65 - £30 COPE = £112.31

Your current amount is therefore based on the higher of the 2, the old figure.

Going forward you need another £155.65 - £142.71 / £4.45 = (2.97) 3 years of contributions to reach the full amount.

Curious_Moose

Silvertabby wrote: »

£142.71 sounds like your foundation amount. This is the higher of your entitlement under either the old or new rules, so your absolute minimum foundation amount would be the equivalent of the old basic State pension of £119 per week. As I said before, contracting out ended in April this year, so another 3 years of NI contributions/payments will take you to £142.71 + 3 x £4.45 = £156.06 (but capped at £155.65). If you continue to work beyond 3 years your State pension won't increase beyond the single tier rate.

How many years were you contracted out? Am I right in thinking that you are on a low to moderate pay scale? That could explain the low COPE, and the higher than £119 per week State pension - you have some post SP2 top ups.

Thanks. I'm not sure how many years I was contracted out (I didn't pay too much attention in my younger years!), but it was probably quite a few years. I had a few jobs with under 2 years service so may have been bought back into SERPS (as it was) on a few occasions. I was never a higher rate taxpayer, but I think it has always been above whatever the average salary was.


Anyway, if I'm getting £155.65 in another 3 years after 35 years NI and I don't need to concern myself with the COPE figure, then at least that clarifies things. If the COPE can be disregarded, then I don't know why they gave it so much prominence on their website. They certainly implied it would be used as a reduction.

Curious_Moose

molerat wrote: »

You currently have £142.71. That will not change (apart from inflation uprating)

Your old style pension calculation is 30/30 of £119.30 + £23.41 of additional pension = £142.71.
Your new style pension calculation is 32/35 of £155.65 - £30 COPE = £112.31

Your current amount is therefore based on the higher of the 2, the old figure.

Going forward you need another £155.65 - £142.71 / £4.45 = (2.97) 3 years of contributions to reach the full amount.

Many thanks for the reply!

Curious_Moose

So if I'm reaching the maximum of £155.65 in 3 years time with 35 years NI, it looks like I'm not being penalised for having contracted out and having a COPE!? If that is the case, what's the point of mentioning the COPE on the government website?

Silvertabby

So if I'm reaching the maximum of £155.65 in 3 years time with 35 years NI, it looks like I'm not being penalised for having contracted out and having a COPE!? If that is the case, what's the point of mentioning the COPE on the government website?

Not everyone will reach the full £155.65 per week.

Curious_Moose

Another question! I'm looking at the government website and my account shows: "Estimate based on your National Insurance record up to 5 April 2016 £142.71". "Forecast if you contribute another 3 years = £155.65 per week". Is £142.71 the foundation amount? I.e. my starting point and it can't go any lower and it has been calculated after the COPE of £30 has been deducted?


I'm slightly concerned that this has been calculated as 32/35 x £155.65 = £142.31 which is pretty close to £142.71 and they will still be deducting the COPE of £30.