COPE reduction issue from SP

eastcorkram

xylophone said:

They can't both be right. 

Yes, they can.

In my post I said

I am  guessing that pre 6/4/2016,  although you did not have 30 years NI, you had been contracted in for much of your career and so had accrued a fair amount of SERPS/S2P.

You said in a later post in that same thread

I was working out of UK from 1990 to 2006 ish, Was never contracted out,

 Presumably you returned to UK in 2006 and started a job here. Contracting Out was possible up to 2012 for DC Schemes and up to  2016 for DB Schemes.

When you were with RTZ, you were unable to join the scheme for your first two years.

Were you contracted in then?

You then joined the RTZ DB Scheme - was it a contracted out scheme?

If it was (and I'd be astonished if it  wasn't since the RTZ documentation you have received   refers to those who have a GMP)  then you were contracted out - see WTW note on this point.

 You appear to have worked for employers other than RTZ which  were contracted in.

Remember that at 6/4/16 (introduction of NSP), your whole NI history (contracted in/out)  for all the years up to that point were taken into account in calculating your "starting amount" for NSP. 

It is perfectly possible for a person to have been contracted in for some periods of their working life and contracted out for other periods.

When you reach SPA and claim your SP, it is likely that your NI history will be reviewed and any mistake come to light.

I would have thought it would be better for you to clarify your situation now.

And incidentally, if you were actually contracted out in the RTZ scheme, then  this affects the way that your pension increases in deferment ( see your post here) are calculated

https://forums.moneysavingexpert.com/discussion/comment/78508302/#Comment_78508302

See  https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/

concerning revaluation of GMP/Excess for early leavers.

In addition to this, if you were contracted out, then once your RTZ pension comes into payment, after you have reached age 65 (GMP age which used to align with SPA but no longer does), then the scheme has no obligation to pay any increases on the part of your pension that relates to the GMP.

In your position,  I would be clarifying the situation.

Clearly, I can have been contracted in and out at various stages . That isn't what I'm disputing.

I've only ever had two workplace pensions. The RTZ one , where I worked from 79 to 90, and my current one which is DC. No other employers had a scheme.

If I had to wait two years to join, which from memory is right, then I can't imagine why I'd have been contracted out for those two years, even if was for the following nine.

I will ask WTW again. Though I might just wait a few days and see if the incoming post says anything.

As you point out , the paperwork refers to those who have GMP. That infers to me that some do, and some don't.

xylophone

If I had to wait two years to join, which from memory is right, then I can't imagine why I'd have been contracted out for those two years, even if was for the following nine.

No, as I said above

When you were with RTZ, you were unable to join the scheme for your first two years.
Were you contracted in then?

You then joined the RTZ DB Scheme - was it a contracted out scheme?

As you couldn't join the scheme when you started employment in 1979, the likelihood is that you were contracted in.

You joined the scheme in  1981 and were a member until you left in 1990.

If the scheme was contracted out, then you were contracted out - to repeat what WTW have stated

For a defined benefit occupational pension scheme, it was not possible to contract out on a member-by-member basis. Schemes either needed to have all members contracted out or have all members “contracted in” – i.e. all members received the additional state pension as well as scheme benefits.

With regard to some scheme members having GMP and others not, if a person became a member after 1997, then he would not have a GMP because Contracted Out Occupational Schemes changed over to what was called the reference scheme test.

However, this would not have prevented the calculation of a COPE in 2016 because the  Contracted Out Deduction (GMP from 1988- 1997)  was only part of the calculation - see here

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

1. Contracted-out Deduction from1978-97;

2. A new notional deduction in respect of being contracted out between1997

   and 2002 - this value will be the amount of SERPS the person would have

   had if they had been contracted in;

3. The deduction made from gross S2P in respect of being contracted out from

   2002 to 2016.

xylophone

Really, the bottom line is that you need to check with WTW whether or not the RTZ Scheme was contracted out back in 1981-1990.

If it was, then you need to ask whether the record they have for you reflects this fact and if not why not.

As I said above, it does affect the way that your pension is revaluing in deferment.

It also affects your NSP calculation.

Mistakes can happen and have happened as explained in the article I reference -

https://www.which.co.uk/news/2018/07/tens-of-thousands-could-see-cuts-to-their-state-pension/ 

Frey_Bentos

Right, I have just received war and peace from the HMRC after following the link and obtaining my full record.
Actually, it was worth getting it because it shows a lot more than just NI contributions.
On checking my record, things seem to have changed. Firstly, it shows that I was contracted out between 1983 and 1995.
I will discuss this later.
Then the record shows that I paid Category A NI for the entire rest of my career - which is a big change from my original record. 
On the NI record it details that in lots of my employment where it originally showed as contracted out, it has 
"The method of preservation associated with this scheme is CANCELLATION OF PP_PR"
It appears to have come up with a new contracted out COPE amount of £6.67 which is down from the +£21 a week originally stated.
If this is correct I am very happy with that, as it appears that just by asking for my record, it has been mostly corrected.

Back to the contracted out bit.
First off, to the person who asked if I was sure I would have agreed to take less money when i was in my 20s and that I understood what SERPS etc is all about, I had good advice from my dad and followed it, Im the type of person who paid their mortgage off super early and invests. I also have a superb memory, though it appears Im needing a bit of extra RAM post menopause but earlier memory is still pretty succinct. 
In 1983 I joined the NHS and at age 18 superannuation kicked in. I stayed with the NHS until 1995.
During that time, i was taken into a room with the financial manager and ASKED if I wanted to contract out of serps. I absolutely 100% said NO, I want to stay in. I signed the form, handed it over and that was that. I was fully aware my pay would be lower and as far as i know, it was.
My NI record shows the entire time as contracted out.

I didnt dream this up, I absolutely KNOW i said no to contracting out.
Unfortunately I think I threw my payslips from the 1980's away in my last house move, they had been with me for decades!!
I may have one or two, I think I did find one a few years ago.

kaMelo

Frey_Bentos said:

Right, I have just received war and peace from the HMRC after following the link and obtaining my full record.
Actually, it was worth getting it because it shows a lot more than just NI contributions.
On checking my record, things seem to have changed. Firstly, it shows that I was contracted out between 1983 and 1995.
I will discuss this later.
Then the record shows that I paid Category A NI for the entire rest of my career - which is a big change from my original record. 
On the NI record it details that in lots of my employment where it originally showed as contracted out, it has 
"The method of preservation associated with this scheme is CANCELLATION OF PP_PR"
It appears to have come up with a new contracted out COPE amount of £6.67 which is down from the +£21 a week originally stated.
If this is correct I am very happy with that, as it appears that just by asking for my record, it has been mostly corrected.

Back to the contracted out bit.
First off, to the person who asked if I was sure I would have agreed to take less money when i was in my 20s and that I understood what SERPS etc is all about, I had good advice from my dad and followed it, Im the type of person who paid their mortgage off super early and invests. I also have a superb memory, though it appears Im needing a bit of extra RAM post menopause but earlier memory is still pretty succinct. 
In 1983 I joined the NHS and at age 18 superannuation kicked in. I stayed with the NHS until 1995.
During that time, i was taken into a room with the financial manager and ASKED if I wanted to contract out of serps. I absolutely 100% said NO, I want to stay in. I signed the form, handed it over and that was that. I was fully aware my pay would be lower and as far as i know, it was.
My NI record shows the entire time as contracted out.

I didnt dream this up, I absolutely KNOW i said no to contracting out.
Unfortunately I think I threw my payslips from the 1980's away in my last house move, they had been with me for decades!!
I may have one or two, I think I did find one a few years ago.

That's just not possible.
The NHS superannuation scheme has always been contracted out and you didn't get a choice in the matter.

xylophone

If you were a member of the NHS Pension Scheme between 1983 and 1995 then you were definitely contracted out.

Were you given a statement of deferred benefits when leaving the scheme?

What has happened to your NHS pension?

hyubh

Frey_Bentos said:

In 1983 I joined the NHS and at age 18 superannuation kicked in. I stayed with the NHS until 1995.
During that time, i was taken into a room with the financial manager and ASKED if I wanted to contract out of serps. I absolutely 100% said NO, I want to stay in. I signed the form, handed it over and that was that. I was fully aware my pay would be lower and as far as i know, it was.
My NI record shows the entire time as contracted out.

I didnt dream this up, I absolutely KNOW i said no to contracting out.
Unfortunately I think I threw my payslips from the 1980's away in my last house move, they had been with me for decades!!
I may have one or two, I think I did find one a few years ago.

NHS...? As others have said, contracting in would have meant opting out of the NHS scheme. And pay being higher, not lower, given the NHS was contributory with a rate higher than the difference between A and D rate NICs

I wonder whether the financial manager episode was in 1988...? In that year two things in particular happened, membership of an occupational scheme could no longer be made compulsory by employers, and personal pensions with the ability to contract out and invest the NI fraction in them were introduced. I'm not familiar with NHS scheme literature of the time, but LGPS literature then presented things as a three-way choice between continuing LGPS membership, taking out one of the new-fangled personal pensions and contracting out that way, or 'opting in' to SERPS (well, wording might vary, but it would be easy to get that impression). Members would complete option forms stating their choice, so there was the simulacrum of positively choosing SERPS (when in reality it was opting out of the LGPS).

eastcorkram

xylophone said:

Really, the bottom line is that you need to check with WTW whether or not the RTZ Scheme was contracted out back in 1981-1990.

If it was, then you need to ask whether the record they have for you reflects this fact and if not why not.

As I said above, it does affect the way that your pension is revaluing in deferment.

Just a quick update on this, as the thread is active again. I asked WTW several questions, and for some up to date figures , especially in regard of taking pension early.

WTW answered all the questions, except the Contracted out one. So, I asked that one again, on it's own. Automated response, saying they'll get back to me, then nothing more. I asked again last week, but have still not heard anything. 

Maybe I should ask for that full NI record. I've viewed the one online , but that only gives an amount paid each year.

Like the OP, we definitely had that conversation at work about opting in or out. I didn't dream it either

If it's impossible for me to have been contracted in for that period, then maybe they should not have offered the choice. But that's exactly what they did.

eastcorkram

Wow. While I was writing that, they've just emailed me to tell me that I was not contracted out at any point

xylophone

Wow. While I was writing that, they've just emailed me to tell me that I was not contracted out at any point 

This is very interesting. Have they confirmed that the RTZ Scheme was contracted in?