Was I Contracted Out??

andrewandyandrew

Back in 1989 when I started my career proper when 20 I was encouraged by a Financial Advisor to “contract out”. Or at least that is what I think it was. 

I never gave it or pensions another thought, moved round the world for a
couple of years, changed employers a few times, the first time being 92/93 and in my late 30s started saving properly in a employer backed DC scheme which I consider my main pension fund. All fine. From time to time Sun Life then another company that took it over and so on statements relating to this funny little thing I sighed up to as a youth might catch up with me as I moved about but I rarely looked at them. Obviously now possibly in my last decade of full time work I was curious so I took a look. 75k apparently - okay. I then pondered that this must impact my state pension so I checked my NI record which appears complete from age 19 when I did a paid internship. Even for time overseas albeit thinking about it I ended up being on a U.K. payroll for at least a month in any given year. Do I really have a full contributions record even though as I recall it I contracted out to a sun life dc scheme at least for the first few years of my employed life or does the DWP make mistakes? 

The topic of being contracted never came up with the hr dept of any subsequent employer.

Dazed_and_C0nfused

What does your State Pension forecast actually say.  Read past the likely headline of £175.20 to see what you have accrued so far, probably to 5 April 2020 at the moment.

That is the key thing coupled with your age and to a lesser degree your expected future work plans.

NottinghamKnight

You are very likely to be better off from having been contracted out, check on the government website and see what your projected pension is. The transitional arrangements mean that two calculations were done under the old and new system, and you qualified for the better one; however you can still accrue pension under the new system until you reach the maximum. This means that your pension will not have suffered from being contracted out and you will have the pot separately. 
If you want people to undertake bespoke independent advice for you then you'll have to pay them but in all likelihood you are a beneficiary (I'm a little older than you but have never been contracted out as didn't have the opportunity but will likely get the same state pension for example).

p00hsticks

'Contracting out' by itself wasn't usually a choice for the employee - the choice would be whether or not you wished to enroll in your employers pension scheme.  If you were enrolled in the scheme then you were contracted out of the Additonal State Pension (SERPS (State Earnings Related Pension Scheme) or later S2P (State Secondary Pension) ) and in return you paid a lower rate of National Insurance.

https://www.gov.uk/contracted-out

Note that (as far as I understand it) in DWP terms a 'full' NI year is one in which you made the required number of weekly /  monthly contributions - it doesn't distinguish between you having been contracted in or out. 

If you ever have been contracted out then you should be able to see a 'COPE ' (contracted out pension equivalent) amount showing on your State Pension Forecast. This would have been used in April 2016 in calculating your 'starting amount' at the introduction of the new State Pension, but has no further significance (in particular, it would NOT be deducted from your headline forecast amount ,which is what many visitors to this forum ask). 

I'm not sure what you mean by your statement of '£75k apparently  - okay' ?  

DaveMcG

Being "contracted out" by a personal pension wouldn't have affected your entitlement to the basic state pension, only serps/second state pension.

Some of your comments about working abroad and still having a record for that year do seem odd though - perhaps you should go to the section of the record that details individual years.

However, given your age, it would seem very unlikely that you wouldn't have enough years, by state pension age, to get the full pension at the new level.

Incidentally, you might want to raise a glass to the person who got you to contract out, as there is every chance that, had he not done so, your position regarding state pension at retirement would be little changed. So your personal pension fund is more or less a windfall.

Langtang

andrewandyandrew said:

Back in 1989 when I started my career proper when 20 I was encouraged by a Financial Advisor to “contract out”. Or at least that is what I think it was.....

.....I then pondered that this must impact my state pension so I checked my NI record which appears complete.... ....Do I really have a full contributions record even though as I recall it I contracted out.....

Interesting post. I, too, contracted out in 88/89. In 99, I was informed that my pension had been mis-sold to me and was given options on what to do - I chose to keep the pension running (it still is running, and I pay into it monthly). Looking at the gov't website, I see that I also have "full" state pension. I also have a COPE amount of c£25 something.

Could it be correct that I get full state pension and the private one, with no alterations due to contracting out (or in, depending on who you speak to)?

Dazed_and_C0nfused

Langtang said:

andrewandyandrew said:

Back in 1989 when I started my career proper when 20 I was encouraged by a Financial Advisor to “contract out”. Or at least that is what I think it was.....

.....I then pondered that this must impact my state pension so I checked my NI record which appears complete.... ....Do I really have a full contributions record even though as I recall it I contracted out.....

Interesting post. I, too, contracted out in 88/89. In 99, I was informed that my pension had been mis-sold to me and was given options on what to do - I chose to keep the pension running (it still is running, and I pay into it monthly). Looking at the gov't website, I see that I also have "full" state pension. I also have a COPE amount of c£25 something.

Could it be correct that I get full state pension and the private one, with no alterations due to contracting out (or in, depending on who you speak to)?

Whatt exactly does your State Pension forecast say?

It is important you read past the headline of £175.20 to see what you had accrued by 5 April 2020 - what is that amount?

Langtang

Dazed_and_C0nfused said:

Langtang said:

Could it be correct that I get full state pension and the private one, with no alterations due to contracting out (or in, depending on who you speak to)?

Whatt exactly does your State Pension forecast say?
It is important you read past the headline of £175.20 to see what you had accrued by 5 April 2020 - what is that amount?

OK, I am at work at the moment and don't have my log-in info, but when I get home I will log in and get that info. When you say accrued, how/where do I look for that info? Is it just a tally of all the years payments?
I have scrolled through the years of payments, and nothing seems drastically amiss there (although I'm not really sure how much "less" it would have been by opting out)

Dazed_and_C0nfused

It is immediately after the headline amount.

You don't need to tally anything up there is just an amount that are already entitled to.

For example it might be say £148.50 and another 6 years would take you to £175.20

Langtang

Dazed_and_C0nfused said:

It is immediately after the headline amount.

You don't need to tally anything up there is just an amount that are already entitled to.

For example it might be say £148.50 and another 6 years would take you to £175.20

Nope, nothing that I can see, just the weekly/monthly/yearly totals, although it does say that this is based on my NI record up to April 2020 - is that what you were referring to?. There is a £22.12 COPE amount on another page.

Might it be worth asking them for an actual forecast, or is it possible to just accept this as gospel?

molerat

That is your actual forecast and shows that at April 2016 you were already over the maximum new pension and the calculation was made under the old system rules. Anything you did from then on would have no effect on the amount you receive. The only time to query it would be if no COPE was shown and you had been contracted out.