Reducing impact of COPE through extra qualifying years?

Daniel54

ratechaser wrote: »

I should have known that my leaving the pence off would get noticed. Yes it was £168.60 to be precise and if I'm misinterpreting the COPE reference then that's the answer I needed, it just suggested - in my interpretation - that the COPE amount was the amount that should theoretically come from an occupational scheme rather than from the state pension.

Incidentally, my own forecast is for £172.68, which is more than I thought the maximum could be. Not a complaint, just an observation

The old system was basic state pension plus earnings related additional state pension ( SERPS/S2P)

It was perfectly possible under this system to have a state pension considerably higher than the new state pension.

You are correct contracted out occupational pensions paid a lower amount of national insurance and in return undertook that the occupational pension would pay at least the same amount of additional earnings related pension as the state scheme

From April 2010 the number of qualifying years for the basic state pension was reduced to 30

When the NSP was introduced in 2016 ( requiring 35 years of non contracted out contributions) everyone had a starting amount which was the higher of their entitlement under the old and new systems.This is why your SP is higher than the new state pension.

Your wife will need NI payments/credits from 2016 onwards to bridge the gap between her starting amount as at April 2016 and qualifying for the full NSP.But her occupational pension should ensure that she will not be worse off than if she had been contracted in.

As at April 2016 I had 43 years NI ,including 10 years contracted in,but I still needed the next three years to reach the full NSP

It is worth mentioning that buying extra post 2016 years if not working can be brilliant value - see the Royal London report

https://www.royallondon.com/media/good-with-your-money-guides/topping-up-your-state-pension/

Dazed_and_confused

it just suggested - in my interpretation - that the COPE amount was the amount that should theoretically come from an occupational scheme rather than from the state pension.

It is the amount that should theoretically come from an occupational pension. The bit you have read into it which doesn't exist is that it makes any difference to the State Pension forecast of £168.60.

Triumph13

Daniel54 wrote: »

If she has 34 yearswith a substantial number of those years contracted out ,then her current SP entitlement is most probably the £124 quoted.She is certainly a long way short of the full NSP.

No, she could quite easily have the full SP even with time contracted out - and it would appear from her forecast that she does.

At April 2016 her pension would have been the higher of a)New calculation less COPE for when contracted out, or b) Old SP calculation plus any S2P / SERPS accrued while contracted in. Here it looks as though she had periods contracted in that accrued enough additional pension that the years since 2016 have already gotten her up to the new maximum - whereas OP was already over the new maximum.

Snakey

This thread got me thinking. I have a 2016 amount and I need qualifying NI years up to 2022/23 in order to reach the full SP entitlement. It's adding on, as I'm sure everyone reading this already knows, a set amount of money (i.e. it's not being expressed in terms of a number of years of contributions) for each year of contributions and (I assume) will eventually tell me that I have reached full entitlement and cannot increase it any more.

Suppose I were to give up work in 2022/23, having made enough contributions to ensure that was a qualifying year, but then (let's say in 2030 or something, when I'm still below SP age) a future Government decides that it isn't going to be 35 years any more but 40.

Could they then go back and recalculate the addition for each of those post-2016 years at a lower number, so as to suddenly give me a shortfall such that I'd then have to contribute for another five years? Or would I be OK on the grounds that I already had enough under the "new old rules" (iyswim), and only those who had not yet reached their maximum would be affected?

Apologies in advance if I'm asking a question with an unknowable answer. I just wondered whether anybody had already given this some thought or if there'd ever been any official comment, given that "oh, they could easily change it from 35 to 40 or even 45" comes up quite a lot as a throwaway comment when pensions are discussed.

molerat

Who knows what they may do, the last change keeping the same pension amount was in 2010 and was a reduction in years to 30. The 2016 change gave an increase in basic pension along with an increase in years to 35 but they did a calculation to give you the better of the old or new systems in £s at the start date. I suspect that they would likely do the same if it were to change, it would be unlikely they took away what you already had.

ratechaser

So I think I've got it now... the easy part to put to bed is that the COPE amount is just a notional figure added on to the state pension forecast amount, to give a total showing what your state pension might have been if no contracting out had ever happened - in Mrs RCs case that would be around £212/week.

The bit I'm still unsure of is how many qualifying years are needed to achieve the forecasted amount. However having just logged in again to check my own forecast, I can see that it states it's based on contributions up to 5 April 2019, and that the forecast amount is the most I can get, and that I cannot improve that forecast.

Which is interesting seeing as I only have 29 years of contributions - if I read it correctly, I could never work again (or more specifically, never pay another penny in NI contributions) and still get the full forecasted amount - is that correct? Mrs RC has the same statement on her forecast (I.e she can't improve it) with her 34 years...

xylophone

Which is interesting seeing as I only have 29 years of contributions

You may well have a high SERPS/S2P component.

The calculation at 6/4/16

NI/30 x Basic SP + (SERPS/S2P - any deduction for contracting out)

(NI/35 x New SP) - Contracted Out Pension Equivalent (if applicable).

The starting amount was the higher of the two.

If the SA was less than a full new SP, there was the possibility pf improving it up to new SP with further contributions/credits.

If it was equal to NSP then even with further contributions or credits, you could not improve it.

If it was greater than NSP you couldn't improve it. Post 20

https://forums.moneysavingexpert.com/discussion/6097935/please-could-someone-check-my-figures-db-tax-free-plus-more

If greater than NSP, then the amount was split as to full NSP/protected payment.

https://www.gov.uk/new-state-pension/how-its-calculated

The NSP increases under "triple lock", the PP under CPI.

LHW99

xylophone wrote: »

The calculation at 6/4/16

NI/30 x Basic SP + (SERPS/S2P - any deduction for contracting out)

(NI/35 x New SP) - Contracted Out Pension Equivalent (if applicable).

The starting amount was the higher of the two.

Triumph13 wrote: »

At April 2016 her pension would have been the higher of a) New calculation less COPE for when contracted out, or b) Old SP calculation plus any S2P / SERPS accrued while contracted in..

Am I reading these right - they seem contradictory?

xylophone

At April 2016 her pension would have been the higher of a) New calculation less COPE for when contracted out, or b) Old SP calculation plus any S2P / SERPS accrued while contracted in..

New Calculation

(NI/35 x NSP) - COPE (if applicable)

Old Calculation

NI/30 x Basic SP + (SERPS/S2P - Deduction for contracting out (if any) ).

Starting amount the higher of the two.

So what I said and what Triumph said agree.