Contracted out & NI top-up

CrazyOldLady

I'm 63 and my state pension age is 66. I've stopped working and I'm drawing my company pension, a DB scheme I was in between 1978 and 2021. I've looked at my state pension forecast (£185. 16) and understand that the estimate (£168.77) reflects being in a contracted out pension between 1978 & 2016. I see that this roughly equates to a difference of 3 NI years. 

Meanwhile, my NI contribution summary indicates I already have 47 full years with no gaps.

How is the reduction in state pension calculated? Is it a coincidence that it tallies with my 'early' retirement of 3 years?

molerat

Nothing to do with retiring early but all about your pre 2016 service, the 3 years is just coincidence.  What exactly does your forecast show ?  There will be a statement something like " if you contribute X years before 20XX"  If you post up all the details someone will talk you through your options.

Current amount accrued up to April 2022
Number of pre 2016 years full
Number of post 2016 years full
Financial year you reach state retirement
Any COPE amount shown
Years which show not full

CrazyOldLady

If a reduction has been made to the state pension you are already receiving (as a result of being contracted-out). Can you still purchase additional NI qualifying years to top it up?

molerat

If they are available gaps then yes.  If you would like to give more details someone will talk you through your options.

Current pension amount.
Number of pre 2016 years full
Number of post 2016 years full
Financial year you reached state retirement
Any COPE amount if known
Years which show not full.

I have asked for the posts to be merged but they are confusing as one states you are receiving the state pension and the other not ?

CrazyOldLady

Thanks, it says

The forecast if I contribute another 3 years before 5 April 2025 is £185.15.

The estimate based on the NI record up to 5 April 2022 is £174.06.

My NI shows 40 full years up to 2015/16 and 7 full years up to 21/22.

My retirement date is 6 Jan 2026.

I can't find any detail on my COPE.

calcotti

Two extra years will add £10.58. A third year would only add 51p.

molerat

CrazyOldLady said:

Thanks, it says

The forecast if I contribute another 3 years before 5 April 2025 is £185.15.

The estimate based on the NI record up to 5 April 2022 is £174.06.

My NI shows 40 full years up to 2015/16 and 7 full years up to 21/22.

My retirement date is 6 Jan 2026.

I can't find any detail on my COPE.

So your only option is to purchase 2 more years from the 3 available 22-23, 23-24 & 24-25.  No point really buying a third as that will only give you 51p.  The 2 will take you to £184.64.  No real panic to buy as 22-23 stays at the current price until April 25.  Purchasing those years is excellent value as the capital outlay will be returned in around 3 years.

The COPE will be in a click link in the section "You were in a contracted out pension" but is not really needed as from the information you have given it is clear that pre 2016 years are not available, it will likely be fairly large though.

p00hsticks

CrazyOldLady said:

Thanks, it says

The forecast if I contribute another 3 years before 5 April 2025 is £185.15.

The estimate based on the NI record up to 5 April 2022 is £174.06.

My NI shows 40 full years up to 2015/16 and 7 full years up to 21/22.

My retirement date is 6 Jan 2026.

I can't find any detail on my COPE.

In that case, with no gaps, it would be a very good investment to make voluntary contributions for two of the three years 2022-23, 2023-4 or 2024-5 to take your forecast up to close to the maximum (£174.06 + £5.29 + £5.29 = £184.64) but there is no particular urgency to do this, so wait until after April when hopefully the rush dies down. The third year would only increase your weekly pension by 51p so is not really worth it.

You can either make a one-off payment for previous years, or pay for the current year in monthly installments via direct debit. 

Either way you need to phone the HMRC NI enquiries line to make the payment, and they may ask if you have spoken to the Future Pension Centre first tot check that the years will actually increase your pension.   

Alternatively there are ways of earning NI credits (e.g. if you look after grandchildren while their parents work)

CrazyOldLady

Apologies for posting 2 separate questions at the same time. The 1st relates to my circumstances and the 2nd to my partners.

molerat

CrazyOldLady said:

Apologies for posting 2 separate questions at the same time. The 1st relates to my circumstances and the 2nd to my partners.

No probs but it was a bit confusing

If you could post up the details for them then we will be able to give a pointer.

Current pension amount.
Number of pre 2016 years full
Number of post 2016 years full
Financial year you reached state retirement
Any COPE amount if known
Years which show not full.

CrazyOldLady

Thanks, my partners details are

Date of birth : 11 April 1951.
He reached pension age of 65 in 2016 and retired in 2019.

He had 39 full years pre 2016 and 3 post 2016.

He currently receives roughly £150 pw state pension.