State Pension forecast accuracy

RL11

Does anyone have an experience of receiving less than the state pension forecast amount?! - particularly if contracted out.
I was contracted out for many years but my state forecast still shows I will receive maximum if I make 1 more year of contributions- 34 currently with 1 more year to 35. I am still 10 years from state retirement age. I am surprised the forecast shows maximum already and no reduction due to being contracted out. Is my forecast perhaps based on me paying in for 10 more years? And not the 1 more year shown on the forecast?

molerat

I believe there have been some cases of contracted out service not being recorded correctly but that will be obvious by the lack of a COPE amount in the forecast. Does your forecast show a COPE or mention contracting out ?. But the further away from 2016 your retirement date is the more likely it becomes that the full amount will be reached.  The basic old pension is £156.18 which is the absolute minimum a 30+ year worker could expect at 2016 leaving £47.67 to the max new pension which would take 9 years to achieve so by the end of 24-25 at the latest. In reality there will be very few with that minimum.

Post up all the figures and someone will sense check it.

Current £££.pp amount accrued up to April 2022 (and if that amount was from a forecast pre or post April 11th 2023)
Number of pre 2016 NI years full
Number of post 2016 NI years full
Tax year you reach state retirement
Any COPE amount shown

RL11

Sorry folks; I've just discovered I have 39 full years! So forecast makes more sense.

Details shown on forecast page are:

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022: £200.63 a week
Forecast if you contribute another year before 5 April 2032: £203.85 a week

£203.85 is the most you can get
You cannot improve your forecast any further, unless you choose to put off claiming.

If you’re working you may still need to pay National Insurance contributions until xxx 2032 as they fund other state benefits and the NHS.

Your forecast may be different if there are any changes to your National Insurance information. There is more about this in the terms and conditions.

You’ve been in a contracted-out pension scheme
Like most people, you were contracted out of part of the State Pension.

*There is no COPE amount shown*

NI Record:
39 years of full contributions
10 years to contribute before 5 April 2032
2 years when you did not contribute enough

Current forecast to 5 April 2022: £200.63 a week
5 full years post 2016
34 full years up to 2015/16
State Retirement tax year: 2032

RL11

Oops! There is a COPE amount when I click on the link under "you were contracted out of part of the State Pension"

Sarahspangles

RL11 said:

Does anyone have an experience of receiving less than the state pension forecast amount?! - particularly if contracted out.
I was contracted out for many years but my state forecast still shows I will receive maximum if I make 1 more year of contributions- 34 currently with 1 more year to 35. I am still 10 years from state retirement age. I am surprised the forecast shows maximum already and no reduction due to being contracted out. Is my forecast perhaps based on me paying in for 10 more years? And not the 1 more year shown on the forecast?

If it helps, I reach state pension age in 2034/35, have 35 years, more than half contracted out, and will have the maximum if I pay in this year.  My OH has 44 years but as all were contracted out still has a couple more years to pay.

Pat38493

What is described by OP seems perfectly plausible - similar situations for me and my OH - I was contracted out for quite a few years but I already have full new SP accrued with not much more than 35 years of NI.

Wife was contracted out for her entire career and still needs to add 2 years but perfectly possible for her to get full NSP before reaching SPA.

Contracting out was abolished (in 2016?) and so we were all building up at the same rate since then, and a lot of us got "free" years whilst in education between 16 and 18 as well.

molerat

From the figures given your April 2016 starting amount was £130.98 under the old rules, £119.30 + £11.68 S2P, or £151.20 minus COPE under the new. The April 2022 amount shown means the old rules was higher and that 2016 amount is valued at £171.51 today leaving £32.34 or 5.6, so 6 full, post 2016 years needed to reach the maximum.  You already have 5 so only 1 more needed and if you are still working that will be 2022-23.

RL11

@molerat
Thank you so much. That puts my mind at rest!
How did you find out how to do the calculations?

molerat

Just a case of understanding how it works and from then it is just maths (aided by an Excel spreadsheet - just enter the 5 numbers).  From those 5 points everything can be worked out.

Silvertabby

Sarahspangles said:

RL11 said:

Does anyone have an experience of receiving less than the state pension forecast amount?! - particularly if contracted out.
I was contracted out for many years but my state forecast still shows I will receive maximum if I make 1 more year of contributions- 34 currently with 1 more year to 35. I am still 10 years from state retirement age. I am surprised the forecast shows maximum already and no reduction due to being contracted out. Is my forecast perhaps based on me paying in for 10 more years? And not the 1 more year shown on the forecast?

If it helps, I reach state pension age in 2034/35, have 35 years, more than half contracted out, and will have the maximum if I pay in this year.  My OH has 44 years but as all were contracted out still has a couple more years to pay.

Everyone is different.  In my case, I needed 48 years of NI contributions (44 from working, 4 from paying voluntary Class 3s) in order to qualify for the full single tier pension.  We are the winners under the new rules - enough time between 2016 and SPA to be able to add to what would have little more than the old basic pension.

Note that when DWP say 'full NI' they actually just mean 'full financial year'.  But those of us who were contracted out paid reduced rate NI, hence needing more than the headline 35 years.

RL11

Silvertabby said:

But those of us who were contracted out paid reduced rate NI, hence needing more than the headline 35 years.

I'm not sure that we paid a reduced rate, just that some got diverted to a private pension, rather than second state. The basic pension ought to be paid for 35 years, whether contracted out or not. Note that I've paid approx £90k in NI over 39 years and still don't qualify for a full state pension. My OH paid in approx £9k and is now on a £10k state pension!