New state pension, contracting out and COPE

C_Mababejive

Hi experts,

I'm just wondering how this works. 

If an individual was contracted out into a DB scheme until this ended in 2016, they are now entitled to the new state pension (from aged 67).

How much might they actually receive and how is it calculated?

Id there a way of making up any shortfall?

dunstonh

The best place to start is to get an online state pension forecast.   This will let them know the current position, projected position and if a shortfall can be made up.

xylophone

The person should check state pension forecast here

https://www.gov.uk/check-state-pension

https://www.gov.uk/government/publications/new-state-pension-if-youve-been-contracted-out-of-additional-state-pension/the-new-state-pension-transition-and-contracting-out-fact-sheet

C_Mababejive

I checked my forecast and it says im in line for the full state pension but i have always been in a DB scheme and contracted out until the rules changed in 2016 ?? I'm just wondering how COPE affects this?

molerat

The only thing that COPE affected was the starting amount at 2016.  You can then add to that amount with post 2016 contributions at (currently) £5.29 per year.  Your forecast shows how many years you need to add to reach the maximum.

xylophone

I checked my forecast and it says im in line for the full state pension but i have always been in a DB scheme and contracted out until the rules changed in 2016 ?? I'm just wondering how COPE affects this?

The COPE was used once only (6/4/16) to establish your starting  (foundation) amount for NSP.

At 6/4/16, your starting amount for NSP was the higher of

(a) Your entitlement under the old rules

NI years/30 (max) x full basic state pension (£119.30) + (Additional State Pension - Deduction for Contracting Out).

(b) Your entitlement under the new rules

{NI years/35 (max) x Full NSP (£155.65)} -  Contracted Out Pension Equivalent.

If your starting amount was not equal to a new state pension, there was the possibility of improving your forecast through NI contributions or credits.

For a person under SPA and still earning enough to pay or be credited with NI, further qualifying years up to the  tax year before he reached SPA could bring him up to (but not in excess of) a full NSP.

See below produced by the government before the introduction of the new scheme.

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

and link in my post above.

Steve_666_

If an individual was contracted out into a DB scheme until this ended in 2016, they are now entitled to the new state pension (from aged 67).

This is a common misconception. To be entitled to the NSP you would have to have 35 qualifying years since 2016, nobody can have this until 2051...

Silvertabby

Steve_666_ said:

If an individual was contracted out into a DB scheme until this ended in 2016, they are now entitled to the new state pension (from aged 67).

This is a common misconception. To be entitled to the NSP you would have to have 35 qualifying years since 2016, nobody can have this until 2051...

Everyone is different.  I retired at 60 (SPA 66) and needed 48 years of NI contributions in order to qualify for the full nsp.

This was achieved through 44 years of work, and 4 years of paying voluntary Class 3s.

....and, yes, I do consider myself to be one of the winners under the new scheme.

eskbanker

Steve_666_ said:

If an individual was contracted out into a DB scheme until this ended in 2016, they are now entitled to the new state pension (from aged 67).

This is a common misconception. To be entitled to the NSP you would have to have 35 qualifying years since 2016, nobody can have this until 2051...

That looks like another misconception - you seem to be answering the point as if the word 'full' was in there!  Everyone starting to access their state pension since 2016 will be receiving the new state pension, but the amount varies, as documented in @xylophone's post immediately before yours....

C_Mababejive

So to simplify, if the forecast says ill get the full state pension of £185, is that what ill get or is the website misrepresenting the actual situation ?

Dazed_and_C0nfused

C_Mababejive said:

So to simplify, if the forecast says ill get the full state pension of £185, is that what ill get or is the website misrepresenting the actual situation ?

It's not that simple.

Most top line forecasts will say £185.15/week.

You need to read the whole thing to see what you have already accrued (usually show to 5 April 2022 at the moment) and how much, if anything you can add to that.

Unless your starting amount, back in 2016, was greater than the standard new State Pension at that time then you will be limited to a maximum of £185.15/week.

If you exceeded the standard amount them you keep the extra but cannot add anymore.

If you earn enough you still need to pay NI even if you have already reached your personal maximum State Pension.  Which for most people will be £185.15.