State Pension Forecast Sticky

MallyGirl

Hi
I asked for a sticky thread on 'How to read your state pension forecast' as we seem to be getting the same question a lot recently and I'd like to cut down on everyone's time pasting the same answer over and over. 
I'd appreciate it if those with a good working knowledge of how the calculation was done in 2016 and transitional rules, how buying extra years may or may not help, and all that jazz could have a quick read at some point and let me know if anything is wrong/missing or if there are obvious improvements that can be made.
Thanks

p00hsticks

I've only had a quick look through it at present but one of the things that didn't seem obviously answered is the question that we get asked an awful lot - namely

'My State Pension forecast includes a COPE figure - will this be subtracted from my forecast amount ?' (Answer: NO !!!)

squirrelpie

Is that https://www.moneysavingexpert.com/savings/state-pensions/  ? As linked from

https://forums.moneysavingexpert.com/discussion/6406767/mse-guide-how-much-state-pension-will-i-get  ?

If so then it doesn't start well, by beginning with the usual "The flat-rate state pension ONLY applies to those reaching state pension age on or after 6 April 2016." which is nonsense. It only applies to people who start paying NI after 2016. Anybody older is under transitional arrangements etc etc which is one of the questions that keeps coming up.

State pension is not paid every four weeks unless you accept the defaults.

I lost the will to live at that point ...

eskbanker

Likewise, this isn't helpful:

To get the full new state pension (currently £185.15 a week), you'll likely need at least 35 qualifying NI years (though some will need many more).

in that the misconception that 35 years is a relevant figure (for here and now) is widespread, judging by the number of threads perpetuating it.

Daniel54

It makes a lot of sense to have a sticky on the state pension, but as others so far have suggested  the current MSE explainer needs to be tightened up

A particular point I have come across on forums is that deferred state pension increases are by CPI ,not triple locked

Likewise ,for those receiving /eligible to more than the NSP due to earnings related entitlements , then too that excess increases by CPI,not triple  lock

Both can still be a very good deal ,and are identical for next year's CPI driven increases

I leave aside that deferral conditions otherwise differ pre and post April 2016

But I think it it important to note that there are limitations on the extent to which the triple lock applies.Maybe worth adding in to the Q&A ?

Audaxer

eskbanker said:

Likewise, this isn't helpful:

To get the full new state pension (currently £185.15 a week), you'll likely need at least 35 qualifying NI years (though some will need many more).

in that the misconception that 35 years is a relevant figure (for here and now) is widespread, judging by the number of threads perpetuating it.

Agree, and I seem to remember about a year ago or more, we were asked to review the guide and I'm sure it was changed following comments by some of us, to say that many people actually need well over 40 years of NI contributions to get the maximum new SP.  However, from a quick look, I can't see that wording now anywhere in the guide?

I also think if the sticky thread is to be headed, 'How to read your state pension forecast' it should highlight and explain the important points in the actual forecast like for example the Estimate figure based on NI contributions to date.

xylophone

in that the misconception that 35 years is a relevant figure (for here and now) is widespread, judging by the number of threads perpetuating it.

It is relevant to certain calculations for those in transition and for all those whose contribution history begins post 6/4/16.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

MallyGirl

Thanks all - I will feed back

squirrelpie

xylophone said:

in that the misconception that 35 years is a relevant figure (for here and now) is widespread, judging by the number of threads perpetuating it.

It is relevant to certain calculations for those in transition and for all those whose contribution history begins post 6/4/16.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Yes, but that's only 'relevant' in a technical sense and I believe eskbanker was meaning it in the sense that posters typically believe it's an iron rule that applies to everyone, and specifically to them.

p00hsticks

p00hsticks said:

I've only had a quick look through it at present but one of the things that didn't seem obviously answered is the question that we get asked an awful lot - namely

'My State Pension forecast includes a COPE figure - will this be subtracted from my forecast amount ?' (Answer: NO !!!)

I've just had a more detailed look at the sticky and not only does it fail to make clear that the COPE figure isn't deducted from the forecast, it actually seems to encourage the misconception that it is. The guide includes the following statement;

As a result of contracting out, the Government will deduct a sum from your new state pension. It says that although you'll get less than the full £185.15 (2022/23), retirees will still be paid what they would have got under the old state pension.

I'd suggest better wording would be something along the lines of;

When originally working out an individual 'starting amount' at the introduction of the new State Pension in April 2016, allowance was made for the fact that people who had been contracted out had paid a lower rate of NI. The 'Contracted Out Pension Equivalent' (COPE) figure used in this initial calculation is shown on the State Pension forecast but the figure will NOT be deducted from the forecast figure now quoted and can be ignored. 

eskbanker

squirrelpie said:

xylophone said:

in that the misconception that 35 years is a relevant figure (for here and now) is widespread, judging by the number of threads perpetuating it.

It is relevant to certain calculations for those in transition and for all those whose contribution history begins post 6/4/16.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Yes, but that's only 'relevant' in a technical sense and I believe eskbanker was meaning it in the sense that posters typically believe it's an iron rule that applies to everyone, and specifically to them.

Indeed - my reference to 'here and now' related to the fact that the question is typically asked by those who are approaching or just past SPA and who have mistakenly formed the impression that if they have at least 35 years of NI contributions then that means they'll receive full SP.

I do entirely understand that 35 years is the correct answer for those who've started paying NI since 2016 (who'll mostly start drawing SP in the 2060s) but don't believe I've ever seen any posts from such people on this board!