41 years NI, & still being asked for more??!!

onesixfive

I have requested my state pension forecast
I am 61 years old.
I gave up work almost 4 years ago to care for my mum who died almost 2 years ago
Having worked the majority of my life in Local Govt & Civil Service I took my Occupational Pension
That has been my sole income since then to date
My husband is 71, retired & state pension & occupational pension
I don’t intend returning to paid employment.
I wont get state pension until June 2028

My state pension forecast reads

You can get your state pension on 11 Jun 2028
Your forecast is £185.15 a week

Estimate based on your National Insurance record up to 5 April 2022

£174.34 a week

Forecast if you contribute another 3 years before 5 April 2028

£185.15 a week

£185.15 is the most you can get

However:

My NI record shows

You have:

• 41 years of full contributions
• 6 years to contribute before 5 April 2028
• 4 years when you did not contribute enough
  
  

The 4 years when I did not contribute enough are the past years (since I left work)

But surely 41 years worth are enough for a full pension?

Apparently I was contracted out for some time
Contracted Out Pension Equivalent (COPE) – my forecast shows

Your COPE estimate is £41.77 a week (whatever this means ??)

This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government. (I dont get any mention of this on my occupational pension paperwork?)

Why do I need another 3 years worth of NI to get a full pension?

Is it worth my while to pay the 3 years shortfall NOW (or in the future would these 3 years simply move forwards)– this would cost me:

Pay a voluntary contribution (for 2018/19) of £142.65 by 5 April 2025. This shortfall may increase after 5 April 2023.
Pay a voluntary contribution (for 2019/20) of £824.20 by 5 April 2026. This shortfall may increase after 5 April 2023.
Pay a voluntary contribution (for 2020/21) of £795.60 by 5 April 2027. This shortfall may increase after 5 April 2023.

and if this was found to be a mistake after I paid them – would I get a refund of these voluntary contributions ?

 appreciate any advice 
thanks

 

Linton

This has been covered hundreds of times in this forum.

The widely publicised 35 years for a full new state pension is only valid for people who have spent all their lives working under the new rules.  You like everybody else at the moment will have spent most of your life working under the old rules and so are covered by transition arrangements.

The reason you dont get a full pension now is becauuse you spent some time contracted-out of SERPs because you were in a DB (eg final salary) pension scheme.  By being contracted out you paid less NI and the scheme took on responsibility  for paying you at least what you would have received if you were contracted in - that is where the COPE figure comes in.

The statement says you need to pay 3 years more to get a full state pension.  In general you will be able to pay back-contributions for the previous 6 years. so you dont actually need to buy the extra years until close to your State Pension Age. However  paying sooner would be cheaper, especially for the 2018/19 tax year.

The chances of there being something wrong is very low.  Your figures are similar to many others.

One option to check on - you say you cared for your mother, perhaps https://www.gov.uk/carers-credit could be relevent though I dont know how long after the event you can claim.

molerat

Is 21-22 not showing as available for £800.80 ?

Although paying 3 years will get you to the full £185.15 the 3rd will only get you 23p so not really worth bothering with, 2 will get you to £184.92.  If it is too busy on the lines to get through you could wait until later in the year and get 18-19 for £157.05 and 21-22 for £800.80 or 22-23 for £824.20.  There is no real panic for you to beat the deadline as the cost increase is not that great. Going forward prices are increasing, 23-24 will be £907.40 and old years will be that price after 2 years so get in before April 2024 if you want to beat the big increases

onesixfive

Linton said:

This has been covered hundreds of times in this forum.

Sorry but this is all new to me.

I may have been "contracted out" 1980-89 - civil service.
There is nothing on my pension records which matches the COPE amount, so I've contacted my pension provider - local govt.just to double-check I'm actually getting this amount!

So I COULD still pay/claim these 3 x years at a max cost of £1762.45. which I'd get back in max 3 years-worth of retirement?

molerat

There is nothing on my pension records which matches the COPE amount, so I've contacted my pension provider - local govt.just to double-check I'm actually getting this amount!

There won't be. All you will likely get back is a stock reply which will not answer your question.  It really is all hypothetical, it is simply tied up in your pension.  You paid less NI so the government are not giving you the full amount for those years is what it all boils down to.

onesixfive

molerat said:

Is 21-22 not showing as available for £800.80 ?

Although paying 3 years will get you to the full £185.15 the 3rd will only get you 23p so not really worth bothering with, 2 will get you to £184.92.  If it is too busy on the lines to get through you could wait until later in the year and get 18-19 for £157.05 and 21-22 for £800.80 or 22-23 for £824.20.  There is no real panic for you to beat the deadline as the cost increase is not that great. Going forward prices are increasing, 23-24 will be £907.40 and old years will be that price after 2 years so get in before April 2024if you want to beat the big increases

Sorry I dont really understand - how will the 3rd year only get me 23p?

It's 142.65 for 2018/19 for the voluntary contribution
     824.20 for 2019/20
     795.60 for 2020/21
     800.80 for 2021/22 - yes as you say!

Which 2 x years do I need to pay for then please? - the cheapest 2, the earliest 2, or any?

They each say the shortfall prices may increase after 5 April 2023 that's why I was going to pay now

calcotti

onesixfive said:

So I COULD still pay/claim these 3 x years at a max cost of £1762.45. which I'd get back in max 3 years-worth of retirement?

As advised by molerat, it isn’t worth paying three years because the third year will only increase you SP by a very small amount. Paying two years is sensible,

molerat

onesixfive said:

molerat said:

Is 21-22 not showing as available for £800.80 ?

Although paying 3 years will get you to the full £185.15 the 3rd will only get you 23p so not really worth bothering with, 2 will get you to £184.92.  If it is too busy on the lines to get through you could wait until later in the year and get 18-19 for £157.05 and 21-22 for £800.80 or 22-23 for £824.20.  There is no real panic for you to beat the deadline as the cost increase is not that great. Going forward prices are increasing, 23-24 will be £907.40 and old years will be that price after 2 years so get in before April 2024if you want to beat the big increases

Sorry I dont really understand - how will the 3rd year only get me 23p?

It's 142.65 for 2018/19 for the voluntary contribution
     824.20 for 2019/20
     795.60 for 2020/21
     800.80 for 2021/22 - yes as you say!

Which 2 x years do I need to pay for then please? - the cheapest 2, the earliest 2, or any?

They each say the shortfall prices may increase after 5 April 2023 that's why I was going to pay now

You currently have £174.34.  Each year you purchase will add £5.29 to your pension but you are capped at £185.15.  1 takes you to £179.63, 2 to £184.92 leaving you 23p short of the cap so that is all a 3rd will pay out.

So this year, before April 5th, you need to get 18-19 and 20-21 for £938.25.  If you leave it to before April 2024 you would need to get 18-19 and 21-22 for £957.85 so only £19.60 more for avoiding spending hours on the phone. You could leave it for another year, before April 2025, and get £18-19 and 22-23 for maybe around £997 (that is using a 10% increase on 18-19, likely less if inflation drops) as 22-23 will still cost £824.20.  So in your particular case their is no absolute panic to get it all done and dusted before April this year, the most important thing is to get the part year 18-19 paid before April 2025 as that would cease to be available after then.

hyubh

onesixfive said:

Linton said:

This has been covered hundreds of times in this forum.

Sorry but this is all new to me.

I may have been "contracted out" 1980-89 - civil service.
There is nothing on my pension records which matches the COPE amount, so I've contacted my pension provider - local govt.just to double-check I'm actually getting this amount!

If your only PCSPS/LGPS membership was before April 1997, then the 'COPE' would essentially match the 'Guaranteed Minimum Pension' (GMP) figure shown on your PCSPS/LGPS statements. Since you have post-97 membership however, the COPE will be more. You won't be able to check unfortunately. However, despite that, you are in fact a winner under the new state pension. Let me explain...

Simplifying slightly, before 2016, the state pension was in two parts, basic and additional, where the additional state pension was originally for employees who didn't enjoy a good quality occupational scheme like the PCSPS or LGPS. As such, as a member of the PCSPS then LGPS, you 'contracted out' of the State Earnings Related Pension Scheme (SERPS), which was the additional state pension for most your time in the PCSPS and LGPS.

For membership before April 1997, this worked by your occupational scheme having to at least promise the 'GMP' that represented the SERPS you forgone. In practice your PCSPS pension will very likely exceed (maybe far exceed) the GMP. However, there was a quirk: once the pension is in payment and you reached your state pension age, some of the increase due on your GMP would be paid with your state pension. So, once you reached SPA, you wouldn't have got the full 'pension increase' against your entire PCSPS pension (or LGPS pension, if you transferred your PCSPS benefits into the LGPS).

Since you reach SPA after 2016 though, you benefit from so-called 'GMP equalisation' as it affects public sector schemes. It's a complicated business, but before 2016, public sector schemes had a rule that said, if for whatever reason a pensioner with GMP wasn't in receipt of their state pension, then the additional bit of increase on their GMP that they would have got through their state pension will be paid by the scheme after all. This rule, for members who reach SPA after 5/4/16, is now universal - i.e. you can basically forget the fact some of your PCSPS pension is GMP, it will all increase by uncapped CPI. Which makes you a winner by default...

pinnks

Each year you buy adds £5.29 to your pension, so what molerat is saying is, if you buy 2 years you add £10.58 to take you to 23p per week less than the max.  To get that extra 23p, or £12 per year, you would have to buy a full year at £800+ and that would never pay for itself.

The cheapest 2 years are 2018/19 and 2020/21 but unless you can pay for that before 5 April it will go up by 10.1%. 2018/19 goes up to £157.05 and that year is certainly worth paying and it only makes £15 difference if you pay it after 5 April, so wasting time and money on the phone is  probably not worth it.

The next cheapest year is 2020/21 but unless you waste that time and money on the phone to pay it before 5 April it will increase by £80.35.  However, you do not need to pay that year at all and could just opt to pay 2021/22 at £800.80 as it does not increase in April 2023.

So, by waiting as molerat suggests, you would pay about £20 more than if you dash to pay before 5 April.  Personally, I would wait until the middle of the year when this has all settled down again and then call HMRC for your reference number to pay.

onesixfive

hyubh said:

If your only PCSPS/LGPS membership was before April 1997, ............. i.e. you can basically forget the fact some of your PCSPS pension is GMP, it will all increase by uncapped CPI. Which makes you a winner by default...

Gosh that was all very complicated....
I was in a Non Contributory Civil Service Pension Scheme (1980-89?), and transferred all benefits into the Council's Local Govt Pension Scheme when I moved there in 1989 til 2006.
Deferred LGPS till I finished work in 2018 (albeit they lopped 14% off it because I took it before I was 60!)