State Pension Forecast, Confusing?

GSP

Don't know if its me but finding this hard to understand.
I am aware I was contracted out and need to add contributions to gain full state pension.
Here are my details from the gov.uk system if anyone can fathom out.

"Your state pension is forecast £159.55 in 2029.
You need to continue to contribute national insurance to reach your forecast.
Estimate based on NI record up to April 2016 £138.13.
Forecast if contribute 5 years before 2029 £159.55".

Viewing my national insurance record, it says I have 37 full years. Year 2015-16 12 weeks and 16-17 not available yet.
Again I assume I was contracted out, although it does not state which years on the website.

Then in the COPE link, my estimate is £73.73 a week. Then goes on to say.
"This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.

In most cases the private pension scheme you were contracted out to:

will include an amount equal to the COPE amount
may not individually identify the COPE amount
The total amount of pension paid by your workplace or personal pension schemes will depend on the scheme and on any investment choices".

Totally confused.
I am 55, retired and transferred out of db pension into flexible access drawdown recently and taking the pension.

If anyone can throw any light on what my position is, how much I need to pay still, is it worth my while, what I have to do. Anything to try understand another part of the pension minefield.

Thanks

Sarastro

https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

Not sure if that helps or not. As I understand it the COPE element replaced SERPS and is now up to the employment or other scheme it was contracted out too. So, I think question one is; "is it worth paying the additional NI contributions to gain the full state pension?" I'm sure some clever soul will know how to work that out but feels like a yes to me.

The COPE estimate is a bit misleading in a way. It's only telling you what the contracted out part should be doing to give you same pension as if you'd not been contracted out. And it goes on to say that the scheme it went to may not identify the COPE amount separately (i.e.they just threw it all in with your contributions and everything else) so comparing how well your scheme has done vis-a-vis the COPE estimate is impossible. I think you just need to decide if you have got the right private pension for you.

k6chris

The specific question I have around this topic is, putting aside issues of what my other pensions may or may not pay me sue to COPE, which is the line on the state pension forecast that says "if I stopped contributing right now, this is how much my state pension will pay into your bank account, each week, in today's money, at NRA"??

antrobus

k6chris wrote: »

The specific question I have around this topic is, putting aside issues of what my other pensions may or may not pay me sue to COPE, which is the line on the state pension forecast that says "if I stopped contributing right now, this is how much my state pension will pay into your bank account, each week, in today's money, at NRA"??

Estimate based on NI record up to April 2016 £138.13.

Mnd

Ignore the COPE amount, it's saying you need 5 more years to get to full state pension.you can buy these if necessary I think

p00hsticks

GSP wrote: »

"Your state pension is forecast £159.55 in 2029.
You need to continue to contribute national insurance to reach your forecast.
Estimate based on NI record up to April 2016 £138.13.
Forecast if contribute 5 years before 2029 £159.55".

If you no longer made any NI contributions you would get £138.13 in todays terms (whixh will be increased annually - currently by the "triple lock") when you reach State Pension Age.

If you accumulate a further 5 years NI between April 2016 and 2029 you can get the maximum £155.55- each year adds 1/35th of the maximum amount to your £138.13. You can get NI years by working, being creditted with them (e.g by looking after grandchildren) or by paying voluntary Class 3 contributions. It's generally seen as good value for money if you have average life expectancy - around £700 buys you around £4.35 a week for life. See here for details.https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

All the paragraph about COPE is saying is that you also probably have a private pension which will give you something somewhen (as you were contracted out) but the Pension Service don;t know much about it.

GSP

Thanks for the replies so far.
Bottom line if I make these 5 years worth of contributions to bring me up to the full pension. How much will this cost a week, or in total.
Thanks

antrobus

GSP wrote: »

Thanks for the replies so far.
Bottom line if I make these 5 years worth of contributions to bring me up to the full pension. How much will this cost a week, or in total.
Thanks

Currently 14.25 per week or 741 a year for 2017/18.

https://www.pensionsadvisoryservice.org.uk/about-pensions/the-state-pension/voluntary-ni-contributions

Or you can find a job that pays just over the LEL and get a credit for free.

badmemory

As many of these are future years we cannot be precise but £750 for each year for 5 years is £3750, buys you an extra £21 per week (approx) for life. This means that you will break even in less than 4 years of taking your state pension. That would seem to me to be an extremely good deal.

marlot

badmemory wrote: »

As many of these are future years we cannot be precise but £750 for each year for 5 years is £3750, buys you an extra £21 per week (approx) for life. This means that you will break even in less than 4 years of taking your state pension. That would seem to me to be an extremely good deal.

Note that the state pension is taxable, so the payback may take a little longer if you have other pensions or earnings.

p00hsticks

Note that the forecast you quoted only appears to be taking account of your NI record up to April 2016. If you have only recently left employment and retired, you may find that you already have an additional year for 2016-17 to add and so will only require four more years.

If you were still working in tax year 2016-17, then it will be worth checking your forecast again in the near future to see what the position is when your record up to 2017 is considered.