SP Forecast Not adding Up

DairyQueen

Simple_Soul wrote: »

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).

I think my cogs are well-and-truly spannered.

Thank you for helping. You are correct that I am trying to resolve multiple NI discrepancies and this is definitely causing confusion.

I appreciate that the figures you mention are accurate to the penny. I think my confusion arose from the previous discrepancy between the number of years (five) stated as required on the projection versus the number stated as accrued (31) on my NI record.

I have just checked the figures and, yes, it has now been updated.

Summary reads:
Forecast: 164.35
Estimate based on NI record up to Apr 17 = 145.57 per week
Forecast if you contribute another four years = 164.35

Viewing my NI record:
31 years of full contributions
1 year being checked
17/18 not yet available

So, you are correct. Sorry to test your patience but this reconciliation has been a long and time-consuming process and I have yet to to see a resolution.

I therefore believe that, once credited with the year 'being checked' and 17/18, I will be short 2 years of contributions from Apr 2018.

Hopefully, I haven't completely lost the plot.

Thanks to all those who posted.

Simple_Soul

DairyQueen wrote: »

I have just checked the figures and, yes, it has now been updated.

Summary reads:
Forecast: 164.35
Estimate based on NI record up to Apr 17 = 145.57 per week
Forecast if you contribute another four years = 164.35

Viewing my NI record:
31 years of full contributions
1 year being checked
17/18 not yet available

I therefore believe that, once credited with the year 'being checked' and 17/18, I will be short 2 years of contributions from Apr 2018.

Your discrepancy (as described in your first post) has resolved itself, because the amount of SP you have already earned up to 5/4/2017, has now been enhanced by 3% (for inflation) and, as a result, there is no longer a significant disparity created when using the quotient (of max SP ÷35 years) to 2 decimal places, compared with using it to 3 or 4 decimal places.

So you can now forget about that discrepancy.

You are correct in saying that, when the figures for 2017/18 are uploaded, and if you get credited for the investigated year (& it counts as a qualifying year) you will then have just 2 more years to go to get the max SP.
Furthermore, your updated SPF will actually say as much (as opposed to saying that you will need one year more than that, to reach the max).

However, if the discrepancy arises again in future years, you will know the cause. And know that there is nothing to worry about, because all it will mean is that you will get 1p less than the max SP, if you contribute for one year less than they suggest that you need to.
It will not be that they have made a mistake, it is just that their algorithm uses more precise figures (i.e calculated to more than 2 decimal places).

I think I probably contributed to your confusion, by first saying the discrepancy would resolve itself when the new max SP came into play, but later second-guessed myself and said that it might not.
Sorry about that.

DairyQueen

I think that the confusion was all mine.

Thank you for taking so much time to clarify. I appreciate it.

Simple_Soul

DairyQueen wrote: »

I think my confusion arose from the previous discrepancy between the number of years (five) stated as required on the projection versus the number stated as accrued (31) on my NI record.

The figures did not join-up for reasons already given (instead of £4.56 being used in the calculation, £4.558 was used.)

The number of years accrued on your NI record is not used to calculate your SP for the years after April 2016.

I quote:

"The exact amount you get is calculated by dividing [the maximum SP] by 35 and then multiplying by the number of qualifying years after 5th April 2016."

So, your 31 years are not relevant for post-2016 years. They are only relevant for calculating your Starting Amount.

99% of people will never experience the discrepancy. You were unlucky last year because your numbers added-up to exactly the maximum SP.

£141.31 + (£4.56 x 4) = £159.55
Max SP = £159.55

This meant that a drop of 1p, caused by using £4.558 instead of £4.56 took you below the max SP, & meant that you didn't achieve the max until the following year (year 5, instead of year 4).

In the current financial year, you have narrowly escaped the same thing happening again, because your numbers exceed the max SP by just 2p:

£145.57 + (£4.70 x 4) = £164.37
Max SP = £164.35

(N.B. The £145.57 includes the latest inflation increase, but excludes 2017/18, which had not yet been updated when you supplied the figure).

But, the drop of 2p, that results from using £4.696 instead of £4.70, does not take you below the maximum SP.

If your "year under investigation" becomes a qualifying year, you will probably join the 99% of the population & never have to experience the discrepancy again. If it does not become a qualifying year, then you may continue to experience it in future years.

If you do get it again, just do what Missile did (see #14) and ignore it. It will either right itself in future years, or you will get 1 or 2p less than the maximum SP.

By the way, what is your COPE estimate? (It can be found on your online SP Forecast, by clicking on the link towards the bottom of the page.)

And your 31 years, is that 30 years pre-2016/17, plus one for 2016/17?

And was your Starting Amount based on the Old or the New SP? Do you know?

DairyQueen

At April 2016 I was credited with 30 years (excluding the year under investigation). I have since accrued a further two post-Apr 2016 years.

My starting amount was based on the old system.

There is no COPE link. This has never been available on my online forecast.

I appear to be on the 'exceptions' pathway. Ho hum.

Simple_Soul

DairyQueen wrote: »

I last communicated with DWP and HMRC about my NI contribution record over a year ago. There are several inconsistencies between their records and my record of employment and contracting-out. Most of these inconsistencies won't affect my SP. The year 97/98 will have an impact. It has now been 'under investigation' for two years.

1. Why do you you think that most of your inconsistencies won't affect your SP?

2. Why do you think that the year 97/98 will have an impact?

3. Do you you know what your COPE estimate is? You seemed to imply that you did, as in one of your posts you said you would love to know the algorithm used to work it out.

4. Are you sure that there is no link to your COPE estimate on your SP Forecast?
Towards the bottom of the page, it should say in bold "You've been in a contracted-out pension scheme" and the link says "Like most people, you were contracted out of part of the State Pension."

As I am sure you already know, at the start of the New SP (6th April 2016) a SA (Starting Amount) was worked out for every individual based on the old system and the new system, and whichever gave the individual the higher SA was used for them.

5. How do you know that yours is based on the old system?

If yours is based on the old system, the maximum number of qualifying years you can have prior to 6th April 2016, is 30. This is because the Basic Old SP only required 30 years to get the maximum amount.

As you already have 30 qualifying years prior to 6th April 2016, the year under investigation (97/98) cannot become a qualifying year unless it causes you to be flipped over from a SA based on the OSP, to one based on the NSP.

If that does happen, the maximum number of qualifying years prior to April 2016, would be 35.
Which is why I asked you about your other inconsistencies. If you can make them count as qualifying years, you will achieve the max SP sooner.

You also say that your SA changed at some point. This is quite possible if corrections were made to your pre-April 2016 record, after April 2016. In fact, it would be odd if your SA didn't change as a result.

DairyQueen

Simple_Soul wrote: »

1. Why do you you think that most of your inconsistencies won't affect your SP?

In some of the tax years in which there are inconsistencies, the periods of employment in question (and incorrect HMRC recording of the membership of the associated pension schemes) were short. I have been credited with a qualifying year for each of the tax years in question as I was employed continuously (or with only a short break between employers) throughout each of those tax years.

Any differences for those years may affect my COPE amount but not my qualifying years. If my COPE amount is affected then it will be marginal as HMRC has correctly recorded my NI record for each organisation with whom I was mainly employed throughout each of those tax years. For example, one tax year I was a member of a contracted-out DB scheme for approx 6 weeks from mid-April thru early June (entire period of service with that employer). I joined a new company in September and became a member of their contracted-out DC scheme for the remainder of that tax year. The short-term employer refunded my pension contributions when I left and should have paid additional NI to HMRC for that period (and I should have been recorded as contracted-in for those 6 weeks). The employer failed to pay the NI and HMRC still has me contracted-out for those 6 weeks although I receive zero benefit from that pension scheme.

Simple_Soul wrote: »

2. Why do you think that the year 97/98 will have an impact?

I was employed from April until late May by one employer and then left service. I joined a new employer in October and worked continuously for them through the remainder of that tax year. I paid full Class 1 NIC throughout both periods of employment (I believe, at the highest rate for employer no.2 as I was a higher rate taxpayer and over the threshold throughout service with them). I was a member of employer no. 1's contracted-out DB scheme for the six weeks (pension contributions refunded on leaving as period of service was under two years). I joined employer no, 2 's contracted-out DC scheme in October of that year.

However, HMRC has recorded only £30.78 in Class 1 NIC for the entire tax year. That year states 'Too late to pay', and is currently excluded as a qualifying year, on the paper NI 'schedule' of contributions they sent me in, I believe, in 2015 (the sheet is undated). I paid much, MUCH more NI than £30.78 in tax year 97/98.

It looks like NIC deducted by employer number 2 is not on the schedule for 97/98 and that lack is the reason I have not been credited a qualifying year.

HMRC advised me of my 'contracted-out' periods during a telephone conversation last year. They have me contracted out into employer no.1's scheme for the entire tax year and have no record of my contracted-out period of employment with employer number 2. I should have been contracted back in for the six weeks of employment with company no.1. and contracted-out from Oct 97 to Apr 98 (employer number 2).

I therefore believe that this tax year will impact both my qualifying years and my COPE as I was earning much more with employer 2 than with employer 1.

Simple_Soul wrote: »

3. Do you you know what your COPE estimate is?

The paper projection sent to me in June 2016 gave the following info:

Estimated SP = £133.46 per week. 'Based on current NIC record which shows 30 qualifying years up to tax year 2015/16'.

'We estimate that your COPE amount is £33.54 a week'.

That is the only time I have ever been advised of the COPE amount. There has never been a link to COPE, or any COPE mentioned, on my online record.

Simple_Soul wrote: »

4. Are you sure that there is no link to your COPE estimate on your SP Forecast?

Positive. I only knew about this link from this forum. I have never seen any reference to COPE on my online estimate. No link, no amount, no mention.

Simple_Soul wrote: »

5. How do you know that yours is based on the old system?

See figures above (provided in 2016). I qualified for the max SP under the old system (30 years even without 97/98 tax year). The difference between the then max. basic (£119.30?) and my estimate (£133.46) must have been the amount calculated as S2P for periods of contracting-in under the old scheme.

Simple_Soul wrote: »

As you already have 30 qualifying years prior to 6th April 2016, the year under investigation (97/98) cannot become a qualifying year unless it causes you to be flipped over from a SA based on the OSP, to one based on the NSP.

If that does happen, the maximum number of qualifying years prior to April 2016, would be 35.
Which is why I asked you about your other inconsistencies. If you can make them count as qualifying years, you will achieve the max SP sooner.

My current NI record is identical to that provided in 2015 (except for the tax years since added). I have no idea what my current COPE amount is so can't work-out what has happened (if anything) to my record. I have no idea how many of the NI/COPE errors HMRC has resolved. They haven't replied to me with respect to the letter I wrote in July 2017 (9 months ago so not quite the year I previously stated). I last spoke to them around August last year and they assured me that 'a letter is on its way'. Since then I have heard nothing but have been checking my SP estimate online.

I also paid the balance o/s on three years to qualify for the max 30. Those payments were made prior to 2015, and before I was provided with the information that 97/98 had a question mark against it. That only came to light in 2015. I may therefore have paid to top-up one year, in order to qualify for the max 30, when I didn't need to. (I understand what you mean about 30 versus 31 years depending on whether the starting amount was based on nSP or oSP).

Right now, as far as I can tell, my qualifying years up to Apr 2016 remain untouched by HMRC.

Another example: There is a period of pensionable service (Aug 04 through May 05) which is incorrectly recorded by HMRC. This is another example of refunded pension contributions (from a DB scheme). The employer confirmed that they paid the NI subsequently due to HMRC in December of 05 but HMRC still has me contracted out for that period when I should have been contracted back in.

Sorry for such a long post but the detail was required in order to answer your questions.

Any light you can shed on this convoluted situation is very helpful. I appreciate you taking the time to explain the possible consequences.

Simple_Soul

I would be inclined to write to HMRC every 3 months, and include a copy of your original letter, plus a covering letter saying something like: I wrote to you on (date): copy of letter attached. I received no reply. I phoned on (date), and was assured that a reply would be sent within 6 weeks. Nothing has been received. I wrote again on (date), and again on (date). Still nothing.

You get the idea. Harass them.

I would also print-out your SPF & NICs record every 3 months, date them & file them. Keep all the copies, even if they are identical. You will then have a solid history to refer back on, and use as evidence if needed. Once all the issues have been resolved to your satisfaction, you can reduce the frequency to once a year.

In addition, I would ring the Future Pensions Centre and ask for a Pension Statement to be sent to you by post. This should include your COPE. In fact, do this once a year as well.

It is a bit of a 'belt and braces' job but, with your luck, I think you need both.

The bad news is that I don't think that 97/98, even if ratified as a full year, will ever count as a qualifying year.

If you have, at the most, 31 full years pre-April 2016, then your SA, worked out using the nSP, would be:
£4.45 x 31 = £137.95 - £33.54 (Cope) = £104.41

Your SA based on the oSP was £133.46.

Therefore, your SA is higher when based on the oSP, so that is what it will be based on.

That means that, pre-April 2016, the maximum number of qualifying years is 30, which you already have. Adding another year will not make any difference to your SP.

But don't take my word for this, I could be wrong. Get your records set straight and see what happens.

DairyQueen

Thanks for all the advice and clarification. I have been remiss in not hassling them sooner. Last year I spent weeks (phone/email/letters) trying to sort these issues. Having raised the alarm with pension administrators and HMRC, and following-up with letters, I guess I assumed that action would be taken to remedy the mistakes made by previous employers and/or HMRC. NB: One of those employers was a member of the LGPS so the public sector isn't immune either.

Seems my assumptions were misplaced. It's a real dog's dinner.

I would advise everyone to check their NI record, then check it again, and then check it for a third time. Do not rely on employers and and HMRC to correctly record your NIC. It seems they often make mistakes and people are left in the impossible position of trying to resolve their decades-old errors.

Simple_Soul

DairyQueen wrote: »

Any differences for those years may affect my COPE amount but not my qualifying years. If my COPE amount is affected then it will be marginal as HMRC has correctly recorded my NI record for each organisation with whom I was mainly employed throughout each of those tax years.

The paper projection sent to me in June 2016 gave the following info:

Estimated SP = £133.46 per week. 'Based on current NIC record which shows 30 qualifying years up to tax year 2015/16'.

I qualified for the max SP under the old system (30 years even without 97/98 tax year).

I also paid the balance o/s on three years to qualify for the max 30. Those payments were made prior to 2015, and before I was provided with the information that 97/98 had a question mark against it. That only came to light in 2015. I may therefore have paid to top-up one year, in order to qualify for the max 30, when I didn't need to.
.

OK, so your only issue with HMRC is the year 97/98, which you think will have an impact on your COPE (decreasing it), and which you think should be a full year & currently isn't.

All the other years that you think are wrong have already been credited to you as qualifying years, and their impact on your COPE would be marginal.

My guess is that the reason HMRC has not replied to your last letter is because it would be a waste of their time to investigate and correct 97/98, because it would not affect your SP anyway.

This is because your SA (Starting Amount) is clearly based on the oSP, and you already have the maximum 30 qualifying years pre-April 2016.

Even if they spent time investigating, and confirmed that 97/98 was indeed a full year, it could still not be a qualifying year, because you already have the maximum number of qualifying years possible.

N.B. A qualifying year is a full year that counts towards your SP.
A full year does not necessarily count towards your SP.
For instance, I have 33 full years prior to April 2016, but because my SA is based on the oSP, only 30 of them are qualifying years.

Regarding the 3 years that you bought: were they bought as Voluntary NICs (class 3)? If so, you may be able to get a refund on the last one. NICs are technically non-refundable, but this is such a common mistake that, if you ask them nicely, and provide a full written explanation of the circumstances, and grovel a bit, I would be very surprised if they did not refund you.

When chasing the 97/98 issue, make sure you tell them that you intend to apply for a refund for whichever was the last year you paid Voluntary NICs for.
(N.B. I am only talking about pre-2016 NICs, not post-2016, which are entirely different, and treated and calculated in an completely different way).

It would then be worthwhile for HMRC to investigate 97/98, because you would then have just 29 qualifying years pre-2016, and 97/98 would be the 30th.