state and personal pension help?

tobywess

I just got a state pension forecast by post as well as checking online. It says I should get £120 a week.

Two years ago when I got a forecast that one said £110 pw and also mentioned a further £9 pw 'additional state pension' 'SERPS'.

On my latest forecast there was no mention of an 'additional state pension' or 'SERPS'. So I phoned the future pensions helpline and they told me that the records show I should get £120 pw state pension and an estimated £18 COPE contracted out pensions equivalent because they say for 20 years up until 2005 I paid into a private pension.
I am not sure what this private pension was. What I do remember is that about 20 years ago I was running my own business and at some point my accountant said there was an opportunity (or a deadline not to be missed) to pay some lump sums for pension planning. I made some payments into some funds but cannot remember any of the details, but I do know that a few years ago I withdrew all the money from wherever it was and put it into a SIPP.

In short, is this 'COPE' the same as what was called 'SERPS' on the previous state pension forecast? Is the COPE amount referring to the potential income drawdown generated from what is now in my SIPP based on what was put in the original fund by my business?

Thank you for reading.

dunstonh

On my latest forecast there was no mention of an 'additional state pension' or 'SERPS'.

The additional state pensions were abolished to form the new single state pension.

because they say for 20 years up until 2005 I paid into a private pension.

Contracting out via a personal pension is one of the things it could be. The other could be contracting out via a occupational pension.

What I do remember is that about 20 years ago I was running my own business and at some point my accountant said there was an opportunity (or a deadline not to be missed) to pay some lump sums for pension planning. I made some payments into some funds but cannot remember any of the details, but I do know that a few years ago I withdrew all the money from wherever it was and put it into a SIPP.

If it was a limited company then you could be contracted out but its unlikely an accountant would discuss this with you as its not within their remit and its not the sort of thing they normally cover. It may have been making sure you made a pension contribution within business year. A lot of directors leave it late in the business year and there can be a rush before cut off.

If you were self employed, then you did not qualify for SERPS and could not contract out in those years. So, your state pension would be lower automatically.

In short, is this 'COPE' the same as what was called 'SERPS' on the previous state pension forecast?

COPE is the effective state pension given up by being contracted out at some point.

s the COPE amount referring to the potential income drawdown generated from what is now in my SIPP based on what was put in the original fund by my business?

No. The potential income from being contracted out could be more or less and there is no way for them to know what your contracted out fund may or may not pay.

It will have nothing to do with any personal contributions you make. Anything you or the company pays into the pension went into non-protected rights (or ordinary rights if you go back further in time). Contracted out benefits when into protected rights.

Protected rights were abolished in 2012 and were reclassified as non-protected rights. Some providers still split the money in a pension as ordinary rights and former protected rights but modern plans consolidated them into one pot.

xylophone

How old are you now and when do you reach state pension age?

tobywess

dunstonh wrote: »

The additional state pensions were abolished to form the new single state pension.



Contracting out via a personal pension is one of the things it could be. The other could be contracting out via a occupational pension.



If it was a limited company then you could be contracted out but its unlikely an accountant would discuss this with you as its not within their remit and its not the sort of thing they normally cover. It may have been making sure you made a pension contribution within business year. A lot of directors leave it late in the business year and there can be a rush before cut off.

If you were self employed, then you did not qualify for SERPS and could not contract out in those years. So, your state pension would be lower automatically.



COPE is the effective state pension given up by being contracted out at some point.


No. The potential income from being contracted out could be more or less and there is no way for them to know what your contracted out fund may or may not pay.

It will have nothing to do with any personal contributions you make. Anything you or the company pays into the pension went into non-protected rights (or ordinary rights if you go back further in time). Contracted out benefits when into protected rights.

Protected rights were abolished in 2012 and were reclassified as non-protected rights. Some providers still split the money in a pension as ordinary rights and former protected rights but modern plans consolidated them into one pot.

xylophone wrote: »

How old are you now and when do you reach state pension age?

I am 49 and will get state pension at 67.

It was a small limited company and I was director - the accountant pointed out the opportunity / deadline and an IFA he knew did the paperwork and explained it at the time. This was around 15-20 years ago and I remember for 3 years the company paid £25,000 a year to maximise what could be put in before some rule change that was due to happen. I think this money went into some pension related scheme. About 10 years ago I started a SIPP and put in a single lump sum of about £90,000 into it - not an amount I would have myself so I am sure this must have been the amount that was in whatever scheme I or my company paid the £75,000 into.

So this £18 pw COPE which the future pension centre tell me exists on my record is not projected income based on some estimated investment returns and % drawdown thereon on the £75,000 later transferred into a SIPP? If so what is this COPE and is there a lump sum sitting somewhere being invested by the state or by an investment company, can I take control of it and invest it myself like the SIPP? What is it exactly?

molerat

COPE is a theoretical figure that the reduced amount of NI contributions you made whilst contracted out has reduced your SP by and that corresponding amount could be paid from where you invested that saved amount. It is used in the calculation of the "new" state pension starting amount. It was up to you or your contracted out pension provider where that money went.

xylophone

Your "starting amount" for NSP is £120? You were "contracted out" for a period.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

If you are only 49, you have plenty of time to increase your state pension.

https://www.gov.uk/new-state-pension/eligibility

tobywess

xylophone wrote: »

Your "starting amount" for NSP is £120? You were "contracted out" for a period.

If you are only 49, you have plenty of time to increase your state pension.

Yes I have plenty of time to add more NI contributing years to the state pension. But what I am trying to understand is whether the £18 pw COPE is really going to be an additional income on top of what I expect to be able to drawdown annually from my SIPP - or whether this £18 COPE is in fact their number crunching estimate of the value of my SIPP and the income it should generate based on the lump sums my I or my company paid into the scheme all those years ago I referred to in the opening post.

I read dunstonh's answer as saying it would not refer to that. But if it is not that, and it really is another amount sitting elsewhere, where is it, and how will I access it, and how can I get a more precise valuation?

I don't want to double count potential income if the COPE amount is in fact my SIPP.

AnotherJoe

tobywess wrote: »

Yes I have plenty of time to add more NI contributing years to the state pension. But what I am trying to understand is whether the £18 pw COPE is really going to be an additional income on top of what I expect to be able to drawdown annually from my SIPP - or whether this £18 COPE is in fact their number crunching estimate of the value of my SIPP and the income it should generate based on the lump sums my I or my company paid into the scheme all those years ago I referred to in the opening post.

I read dunstonh's answer as saying it would not refer to that. But if it is not that, and it really is another amount sitting elsewhere, where is it, and how will I access it, and how can I get a more precise valuation?

I don't want to double count potential income if the COPE amount is in fact my SIPP.

From what you've said I think you are spot on, the COPE is their estimate of what the pension you contributed to in place of SERPS and is now in your SIPP along with other additional money, will provide as a monthly figure.

Nothing else to come from some mysterious place though

IMO the whole COPE thing is wholly misleading, many people think as a result of getting these estimates that the state will be paying them the COPE amount as well.

GunJack

AnotherJoe wrote: »

IMO the whole COPE thing is wholly misleading, many people think as a result of getting these estimates that the state will be paying them the COPE amount as well.

Agreed, would have been better off not mentioning COPE anywhere and just left it as giving the Starting Amount as at the end of 15-16.

molerat

Whatever they do there will always be complaints from the "don't understand's". I had one of the "old and new" calculations pension forecasts. Even though it had the "what you will get" figure prominent on the front people complained it was confusing as it then went on to give both calculations even though they were very clearly explained. They have now gone to the dumbed down version which is causing more confusion.

tobywess

Thank you for confirming that, AnotherJoe, also JackGun and molerat I agree it confuses things the way it is presented.

Obvoiusly the answer is for the Future Pensions Service to add a link to MSE forum on all notices with the explanation that whatever fog is introduced on their methods can be clearered by knowledgable and helpful MSE members.

Thank you all again!