SP Forecast Not adding Up

Simple_Soul

I don't think it is really an error. It is just more exact.

At any rate, if this is the reason for your discrepancy, it should completely resolve itself as soon as the new maximum SP comes into play, probably in a few days time.

Let us know whether or not it does.

DairyQueen

Will do, and thanks again.

missile

When I asked for a forecast, DWP suggested if I make X contribution I would get £159.55.
I couldn't reconcile their figures and decided not to.
Turned out I was right and got the full NSP after all.

DairyQueen

The records they originally held for me were a real dogs-dinner. I've been through them with a fine tooth-comb and wrote a letter providing chapter-and-verse of my employment, contracted-in/out status, name of pension scheme, type of pension scheme, employment dates, blah de blah. Thank goodness I am so anal that I hoarded decades of payslips.

For example, on two occasions I had left employment after reasonably short periods of service and had my pension contributions refunded. The organisations in question did not subsequently pay the additional NI then due to HMRC. I was still recorded by HMRC as contracted-out for those periods when I should have been contracted-in. I had to contact both pension scheme administrators to ask them to set the record straight with HMRC.

Another company i worked for was taken over during my period of service. I was already a member of the subject company's DC scheme. The new umbrella company then replaced the DC with its corporate DB scheme but I was ineligible for entry to the latter because I was under entry age. Despite this, from that point forward, HMRC had me recorded as a member of both schemes at the same time. I had never been a member of the latter scheme.

I could carry on but I don't want to bore the forum. Suffice to say that the issues are still not resolved. My nSP starting figure was changed at some point but I don't know why as HMRC have yet to communicate with me.

I would definitely recommend that everyone checks their history of employment and contracting in/out held by HMRC. In my case there were five errors.

Simple_Soul

The new maximum SP(State Pension) is now showing on my online SP forecast, namely: £164.35.

I did a quick calculation using your figures and I think I may have been wrong about your discrepancy resolving itself when the new maximum SP came into play.

I think that your figures will now be showing that you need another 4 years to get the maximum, instead of the 3 years that you think should be the case.

However, the reason for the discrepancy is the same. The following is copied from online gov.UK on how the SP is calculated:

" Each qualifying year on your NI record after 5 April 2016 will add ABOUT £4.70 a week to your new SP. [But] the EXACT amount you get is calculated by dividing £164.35 by 35 & then multiplying by the number of qualifying years after 5th April 2016."
(Capitalisation is mine.)

£164.35÷35 years = £4.6957

DairyQueen

Thanks for the update; much appreciated.

It would seem that a rounding error may be depriving me of a year on my record. This appears to be confirmed by the discrepancy between the summary (5 years needed from Apr 2017) and the NI record (number of full years accrued displayed as 31 and the detail reconciles to this figure). The 31 excludes the recently ended tax year, plus there is one year 'under investigation'.

(Sigh)

Looks like I need to call HMRC again and query this. I think I have paper records somewhere but I doubt I will be able to reconcile those to either a) my current projection or b) HMRC's current record of my employment and NI history.

It's like drawing teeth.

I would love to know the algorithm used to calculate the COPE amount. This seems to be a closely guarded secret. Wonder why?

zolablue25

DairyQueen wrote: »

I would love to know the algorithm used to calculate the COPE amount. This seems to be a closely guarded secret. Wonder why?

Xylophone posted this link in another thread on COPE https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

It may help.

DairyQueen

Excellent! Thank you. I am rushing straight there

Simple_Soul

DairyQueen wrote: »

It would seem that a rounding error may be depriving me of a year on my record. This appears to be confirmed by the discrepancy between the summary (5 years needed from Apr 2017) and the NI record (number of full years accrued displayed as 31 and the detail reconciles to this figure). The 31 excludes the recently ended tax year, plus there is one year 'under investigation'.

Looks like I need to call HMRC again and query this. I think I have paper records somewhere but I doubt I will be able to reconcile those to either a) my current projection or b) HMRC's current record of my employment and NI history.

Sorry, but as I said before, your original discrepancy (if caused by calculating using £4.5585 rather than £4.56) IS NOT A ROUNDING ERROR.

There is NO error. If anything, it is more correct. They are doing exactly what they said they would do on the tin (please re-read the quote I copied-out in my last post: #16)

I think you are getting confused because you are trying to tackle too many issues at once. I am not talking about your multitude of discrepancies with your employment history, I am only addressing your original query at the start of this thread.

It was very straightforward. You and I both calculated that you should have had to pay 4 more years for a full SP (State Pension) if £4.56 was used in the calculation. But, your SPF (State Pension Forecast) said that you needed 5 more years.

That was a few days ago, & we are now in a new financial year. To be clear, please confirm that your new SPF now says that you need 4 more years for the maximum SP, but if calculated using £4.70, it works out at 3 years.

In your post (copied & pasted immediately above) you still seem to be quoting last year's financial figures ("5 years needed from Apr 2017"). Is that because your SPF has not yet updated itself to include the new maximum SP? (Mine has.)

Let's start by getting and using the new figures, because you appear to be bringing too many different issues into the mix, and getting into a muddle.

Even if your original discrepancy is still there (I.e. on your SPF showing the new financial year's figures), I do not believe that it is an error. You have NOT been deprived of a year. All it means is that, instead of getting the full NSP (New State Pension), you will get 1p less. That is not a big deal.

You can, of course, pay £700 odd, for the final year, and get the full NSP, but it would not be cost effective. It would, in effect, be paying over £700 for an extra 1p a week, or 52p a year. Even if you lived for another 50 years, you would only have received, in today's money, £26 extra.

If I have got any of the above wrong, I am sure someone will correct me. You should also, of course, keep thrashing it out with HMRC just to be sure I have not got it all wrong (I am far from being an expert).

molerat

From other people's postings here a year that is under investigation seems to throw a spanner in the cogs of the DWP/HMRC calculator.