Good (and short!) explanation of COPE

Marcon

deeleys said:

I’ve been looking into what to do with my pensions as I’m 55 next year. I came across someone over on another site who reckons you can claim back the invested COPE amount by contacting the National Insurance help line or the pension tracking service and then the provider. There have been a few people in the comments who say they’ve been able to claim and others say theirs had already been transferred to their private pension. I’m going to be looking into this further as I’ve got a COPE amount.

You can't. They simply haven't understood what the COPE figure is.

Sea_Shell

We did some head scratching yesterday, as DH has "34 years of full contributions", but is still £38.58 per week short of the full SP.   

He was contracted out for 7 years, and we believe this is why he is 7 years (and a little bit) short.   He has a COPE of £58.96.

We understand that you can buy up to the last 6 years, and as he is extremely unlikely to go back to work, we are wondering when would be best time to buy at least the additional 1 year, and leave the rest until nearer the time.  He doesn't have any "cheap" part years available.

Are you effectively, therefore, able to buy back your contracted out years?

He's 58 later this tax year.

I'm hoping that the new on-line payment system will be up and running "soon", as that should make the process easier.

molerat

Are you effectively, therefore, able to buy back your contracted out years?

No.  You just add to the 2016 starting amount. 

You can actually buy back as far as 2006-07 but with a reasonable COPE amount years 2015-16 and earlier will not add anything if he already has in excess of 30 of them.  Any year 2016-17 and later can therefore be added. 16-17 to 18-19 cease to be available after April 2025 and years 19-20 to 22-23 will increase in price to the 25-26 rate, likely around £1K, from that date.  Generally years stay at the in year rate until 2 years after the end of the year then increase in line with the current year rate until 6 years after the end of the year when they cease to be available.  This was suspended with the introduction of the new pension making 2006-07 to 2016-17 effectively the same for timeline purposes and the clock was stopped at April 2023 due to DWP / HMRC being unable to process demand and will restart on 6th April 2025.

Sea_Shell

molerat said:

Are you effectively, therefore, able to buy back your contracted out years?

No.  You just add to the 2016 starting amount. 

You can actually buy back as far as 2006-07 but with a reasonable COPE amount years 2015-16 and earlier will not add anything if he already has in excess of 30 of them.  Any year 2016-17 and later can therefore be added. 16-17 and 17-18 cease to be available after April 2025 and years 18-19 to 22-23 will increase in price to the 25-26 rate

Sorry, I think I've not made myself clear.   He wouldn't be specifically buying the contracted out years (in the year they were), but the more recent ones where he hasn't been working and therefore has gaps.  

He has 7 years of "gaps" since finishing work, since 2016/17.

If he bought a more recent one, it would be a post-2016 year.

molerat

Sea_Shell said:

molerat said:

Are you effectively, therefore, able to buy back your contracted out years?

No.  You just add to the 2016 starting amount. 

You can actually buy back as far as 2006-07 but with a reasonable COPE amount years 2015-16 and earlier will not add anything if he already has in excess of 30 of them.  Any year 2016-17 and later can therefore be added. 16-17 and 17-18 cease to be available after April 2025 and years 18-19 to 22-23 will increase in price to the 25-26 rate

Sorry, I think I've not made myself clear.   He wouldn't be specifically buying the contracted out years (in the year they were), but the more recent ones where he hasn't been working and therefore has gaps.  

He has 7 years of "gaps" since finishing work, since 2016/17.

If he bought a more recent one, it would be a post-2016 year.

Yes, he can fill any gap year 2016-17 and later. They are all worth the same so the cheaper ones are better value. There is no such concept as buying back contracted out years as you can see there is a disparity between the contracted out deduction and the pension shortfall and there is no direct 7 years contracted out link, you are simply adding to the 2016 starting amount.  Is that shortfall at 23 or 24 rate ?

Sea_Shell

molerat said:

Sea_Shell said:

molerat said:

Are you effectively, therefore, able to buy back your contracted out years?

No.  You just add to the 2016 starting amount. 

You can actually buy back as far as 2006-07 but with a reasonable COPE amount years 2015-16 and earlier will not add anything if he already has in excess of 30 of them.  Any year 2016-17 and later can therefore be added. 16-17 and 17-18 cease to be available after April 2025 and years 18-19 to 22-23 will increase in price to the 25-26 rate

Sorry, I think I've not made myself clear.   He wouldn't be specifically buying the contracted out years (in the year they were), but the more recent ones where he hasn't been working and therefore has gaps.  

He has 7 years of "gaps" since finishing work, since 2016/17.

If he bought a more recent one, it would be a post-2016 year.

Yes, he can fill any gap year 2016-17 and later. They are all worth the same so the cheaper ones are better value. There is no such concept as buying back contracted out years as you can see there is a disparity between the contracted out deduction and the pension shortfall, you are simply adding to the 2016 starting amount.  Is that shortfall at 23 or 24 rate ?

The 2024 rate.

The gaps are all showing at the same buy price - £824.20, to give £5.29 pw

molerat

At 24 rate that means he has an April 2023 amount of £182.62 leaving him 6.1(7) years short of the full amount, each year giving £6.32.  6 years will take him to £220.54, the 7th only adding 66p.

Your important date is 5 April 2025 when some years cease to be available and some will have a likely 20+% price increase.

Sea_Shell

molerat said:

At 24 rate that means he has an April 2023 amount of £182.62 leaving him 6.1(7) years short of the full amount, each year giving £6.32.  6 years will take him to £220.54, the 7th only adding 66p.

Great, thanks.    So each year buys £6.32, not £5.29.     

Not worth buying the 7th year, which is what I'd worked out previously, and had made a note of, but then got myself confused again yesterday.

So he could leave it right to the "last minute", as it were, to buy all 6 extra beneficial years...you know, just in case 

molerat

Nothing changes before 5th April 2025 so yes. I suspect there will be a rush once again so probably best done before the end of this calendar year. I doubt there will be an extension given this time.

So each year buys £6.32, not £5.29

£221.20 / 35 = £6.32.  £5.29 was the 22-23 amount (£185.15 / 35)

Sea_Shell

molerat said:

Nothing changes before 5th April 2025 so yes. I suspect there will be a rush once again so probably best done before the end of this calendar year. I doubt there will be an extension given this time.

So each year buys £6.32, not £5.29

£221.20 / 35 = £6.32.  £5.29 was the 22-23 amount (£185.15 / 35)

Thanks again.

I meant before SPA rather than tax year, as the cost increases proportional to what you get.   No point in buying early?