State pension and serps

Iwanttobefree

We've just been looking at our state pensions on government gateway, both have the full amount of NI contributions.

I opted out of serps and have numerous private pensions.

As far as my wife can remember, she never ever had a private pension and never opted out, however according to her gov gateway, she opted out and has a COPE estimate of £4.19 a week.

She has been a hairdresser most of her life, there was a period from 89 - 91 years where she was temping,/worked full time,  she worked full time for less than a year at one company, and while temping at another, got offered a full time job until they finished closing that site down.  All of the rest of her time at work has been as a hairdresser, both in salons and self employed.  As far as she is aware, she didn't opt out of serps and has zero recollection of ever signing up for a private pension at the two places she worked.

Bit confused by how this works, if she hadn't opted out, does that mean she would be getting a higher state pension than the  £175.20 max it currently shows, or does it mean had she not opted out, she would still get the same £175.20  but would simply have reached her needed contributions earlier?

Thanks

molerat

A COPE amount of £4.19 would be from a short contracted out period so would not make any difference.  To get more than the current max she would have to already have accrued that before 2016 and is really only applicable to relatively high earners.

drumtochty

As hairdressers are not that well paid, it would suggest that she was doing contracted out employment for around two years.

Without looking at her NI record and her income over that time, it is not possible to advise if she would have had a higher state pension if she had not contracted out of the state pension, if she ever did.

Record keeping by previous employers and HMRC was poor over the years.

I know of a good few people who have got a higher state pension than they should have as the years contracted out in their cases acording to HMRC was less than the actual years contracted out from their own detailed record keeping.

In that case they got the higher state pension for some years than they should have.

Wh ydo you not get your good lady to contact the future pensions centre to find out the details of the notional contracted out employment and also the one year that you have a further issue with to obain the information required. It is possible that she has a small pension from these two possible contracted out years if the HMRC information is correct.

Marcon

Iwanttobefree said:

As far as my wife can remember, she never ever had a private pension and never opted out, however according to her gov gateway, she opted out and has a COPE estimate of £4.19 a week.

She has been a hairdresser most of her life, there was a period from 89 - 91 years where she was temping,/worked full time,  she worked full time for less than a year at one company, and while temping at another, got offered a full time job until they finished closing that site down.  

I think it's the 'far as she can remember' bit that's key. Opting out of SERPS by means of something called an Appropriate Personal Pension (APP) only became possible from 1988 and it's entirely possible she did so 'almost without noticing' sometime in the 89-91 period - very many people did on the basis of the free alarm clock or other 'free' gift. Payment to an APP could simply be the (then) DHS rebate of the part of the NI contribution already deducted from her pay, which was paid by the DHS to the pension provider. Sounds entirely possible - and she's far from alone if that is the answer!

dunstonh

Also worth noting that the years of self-employment only qualified her for the basic state pension.  Not Graduated, SERPSs or S2P.   Whereas she gets the full single state qualification for those years now.

You could not contract out of SERPS (not opt out as that means something else but its a common error) if you were self employed as you did not qualify for it.  So, those years can be eliminated.

Iwanttobefree

Thanks all, she will contact the future pensions centre to try and find out what this was.

Looking at her info again, it does as you say, say "Like most people, you were contracted out of part of the State Pension." rather than opted out.

When I say she has no recollection, I mean she has zero recollection of ever being part of any private pension scheme, never had any paperwork etc, never came home with details about her private pension etc. We've been together since she was 17 and I 19, I'm now 55. Over that time, her having a private pension has never ever been mentioned, whenever we talk about our retirement, it's always been me with the small private pensions (haven't been able to work for years due to health problems) and her with only the state pension.


I was looking at our NI payments on government gateway when I noticed my pension said I had a COPE of £30.11 and hers of £4.19, and I mentioned this to her and her exact response was "I've never had a private pension"

From reading the government site, 

The pension you get from your workplace or personal pension scheme for the periods you were contracted out, should include an amount that, in most cases, will be the equivalent of the additional State Pension you would have got if you had not been contracted out. This is your Contracted Out Pension Equivalent (COPE) amount.

it appears to be saying (I'm probably reading it wrong though) that if neither of us contracted out, my wifes state pension would have been £4.19 a week higher and mine would have been £30.11 a week higher?  There's something I'm not understanding properly  (sorry for being a bit thick here)

Her NI records from 1981 to 2019 show every year as being full except two. 

1991 - 1992 says  "Year is not full" and "You have contributions from Paid employment: £66"   1991 she left work when she had our first child. She didn't return to full time work until 2000 and went self employed in 2005.

2014 - 2015 also says "year is not full" and "We are checking this year to see if it counts towards your pension. We’ll update your record when this is finished, you do not need to do anything."   Don't know what that's about as she paid what the taxman told her she had to and doesn't owe any outstanding tax/ni                                 
  

xylophone

For both of you, two calculations were done at 6/4/16.
Old Rules
NI years/30 x £119.30 + ( Additional State Pension - deduction for contracting out). 

New Rules
(NI years/35 x £155.65) - COPE.  

Your starting amount was the higher of the two.

If the starting amount was equal to  or more than a full NSP,  then the forecast could not be improved - £155.65 would be increased under (at present) the "Triple Lock" and any excess by CPI.
See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf  The COPE is the "Rebate Derived Amount".

[Deleted User]

Write this letter and within a few weeks there will be a reply with the details of which employer contracted out.

To:

NISPI

National Insurance Contributions and Employers Office

HM Revenue and Customs

BX9 1BX

United Kingdom

Date

NI Number: xxxxxxx, DOB: xxxxx

I wonder whether you can assist me in providing details of when and from whom I was contracted out of SERPs and other additional State Pension Schemes.

Many thanks