State pension - contracted out

player1_2

Hi all, according to Government Gateway I am entitled to the full state pension at age 66yrs 8 months ( I am approaching 63 and remain in full time employment ). The summary states "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year. £203.85 is the most you can get. You cannot improve your forecast any more".

The summary also states "Your COPE estimate is £100.71 a week. This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government".

Does this mean that I will still receive the full £203.85 a week directly from the government ?

My National Insurance record shows no gaps (continuous employment since 1978).

Can anyone explain how I would still be entitled to a full pension ? (not complaining, I just thought contracting out would have reduced it). ( I am not sure how long I was contracted out but I do know it would have ended in 2009 when my DB scheme was deferred.

Ayr_Rage

Yes, you will get the full state pension.

 "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year. £203.85 is the most you can get. You cannot improve your forecast any more".

Full stop.

Pat38493

It's a bit complicated but it's because the whole system was changed in 2016.

Some people who were never contracted out will end up getting more than the "full" new state pension so they will actually get more than you as their additional benefits were protected.

Prior to 2016, you would have received the old "basic State pension" which would have been more like £156 or so I think, plus a bit more depending on how long you were contracted out and how much you were paying in NI, so you have probably ended up better off than you would have been under the old system, but, if you had never been contracted out you would have potentially had even more than the "full" amount.

xylophone

Does this mean that I will still receive the full £203.85 a week directly from the government ?

When you reach SPA, you will receive the full NSP at whatever rate is then applicable.

At 6/4/16, two calculations were done in order to establish your "starting  (foundation) amount" for NSP.


Your SA was the higher of

Old Rules

NI qualifying years/30 x Full Basic State Pension + (Additional State Pension - "Contracted Out Deduction").

New Rules

(NI qualifying years/35 x Full NSP) - Contracted Out Pension Equivalent.


In your case, the Old Rules would have given the "starting amount".

It was either equal to or less than a full NSP.

If equal to a full NSP, although you will still have been paying NI (and will continue to do so up to SPA if working and earning the relevant amount), it will not have improved your SA which will simply have been increasing in accordance with the "triple (double) lock" rules.

If less than a full NSP, your qualifying years from 6/4/16 onwards will have improved your SA up to (but not in excess of) a full NSP.

Once you reached full NSP, the amount will simply have been increasing as explained above.


And you will continue to pay NI up to SPA if working and earning the relevant amount.

With regard to the DB pension which is just about to come into payment, have you checked your scheme guide as to how it will increase in payment once you have reached age 65?

Beddie

player1_2 said:

Hi all, according to Government Gateway I am entitled to the full state pension at age 66yrs 8 months ( I am approaching 63 and remain in full time employment ). The summary states "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year. £203.85 is the most you can get. You cannot improve your forecast any more".

The summary also states "Your COPE estimate is £100.71 a week. This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government".

Does this mean that I will still receive the full £203.85 a week directly from the government ?

My National Insurance record shows no gaps (continuous employment since 1978).

Can anyone explain how I would still be entitled to a full pension ? (not complaining, I just thought contracting out would have reduced it). ( I am not sure how long I was contracted out but I do know it would have ended in 2009 when my DB scheme was deferred.

I'm in a similar position, was contracted out for about 15 years via a final salary pension scheme. It turns out we are actually the lucky ones, as the changes worked in our favour. We've been able to top up our state pension to the full amount as we've worked after 2016, yet still get our contracted out money via the FS scheme.

I'm never on the "right" side of changes to pensions, taxes, benefits etc. So to actually be a beneficiary of a change for once has been great!

player1_2

xylophone said:

With regard to the DB pension which is just about to come into payment, have you checked your scheme guide as to how it will increase in payment once you have reached age 65?

How the DB scheme that will come into payment later this year increases is not clear. The DB pension  increases annually but the increases vary according to when the pension was earned and age.
I have attached an image of the table but it is not clear (to me) and I'd appreciate if you (or anyone is able to explain it in a more simple way ? ( I will be in the middle column until November 2025 then in the end column. I tried to ascertain what the annual uplift would be for deferring, but the administrator is not able to provide a figure ("the actuaries set deferral rates annually based on late retirement date provided"), which makes it difficult to assess the benefit of deferral when assessing my options. 

Pat38493

Do you have a breakdown of the amount of deferred pension that you have in each of the above categories?  If not, I would think that you should be able to request one.  The pension administrators have the breakdown of how the amounts are split between the categories mentioned above.

The entries mean that parts of  pension will increase with CPI price inflation each year, but there is a cap which applies - for example if inflation is more than 5%, you will just get 5% increase on that corresponding part of the pension.

So for the part that says 5%, if inflation is 3%, you get a 3% increase.  If inflation is 6% you get a 5% increase.

Regarding the increases in deferment, this is usually driven by the the “occupational pension revaluation tables” that are published in November each year, which are mentioned on the other thread that you are running.   In this case, the increases are calculated cumulatively so it’s the overall inflation across all the years since deferral that is capped at an annual average.  As mentioned on the other thread this means that the pension is better protected against inflation when it’s not in payment.

There should be a section in the documents you have about increases in deferral but it will probably refer to statutory revaluations.

player1_2

Pat38493 said:

Do you have a breakdown of the amount of deferred pension that you have in each of the above categories?  If not, I would think that you should be able to request one.  The pension administrators have the breakdown of how the amounts are split between the categories mentioned above.

The entries mean that parts of  pension will increase with CPI price inflation each year, but there is a cap which applies - for example if inflation is more than 5%, you will just get 5% increase on that corresponding part of the pension.

So for the part that says 5%, if inflation is 3%, you get a 3% increase.  If inflation is 6% you get a 5% increase.

Thanks Pat38493, that is really helpful. 
I do not have the breakdown of deferred pension. 
Can you advise how does row 4 (pension earned)  differ from row 2 and 3 (GMP or pension above GMP earned) ?  
  

Pat38493

player1_2 said:

Pat38493 said:

Do you have a breakdown of the amount of deferred pension that you have in each of the above categories?  If not, I would think that you should be able to request one.  The pension administrators have the breakdown of how the amounts are split between the categories mentioned above.

The entries mean that parts of  pension will increase with CPI price inflation each year, but there is a cap which applies - for example if inflation is more than 5%, you will just get 5% increase on that corresponding part of the pension.

So for the part that says 5%, if inflation is 3%, you get a 3% increase.  If inflation is 6% you get a 5% increase.

Thanks Pat38493, that is really helpful. 
I do not have the breakdown of deferred pension. 
Can you advise how does row 4 (pension earned)  differ from row 2 and 3 (GMP or pension above GMP earned) ?  
  

You are stretching my knowledge now - there are a few posters here who know more than me about it.

GMP stands for Guaranteed Minimum Pension and it's something that was related to the contracting out arrangements in the past where the DB scheme has to compensate or match somehow the pension you might have lost out by paying less NI.  

Row 4 seems to only apply up to a certain age, so before that age, your entire pension earned before that date may not get any increase (trustee discretion).  After that age, the parts of your pre 1997 pension would be split and one part would increase by inflation capped at 3% and the other is again at trustee discretion.

Can I ask - how old is this document you are posting because the part about different increases for male vs female seems wrong to me - I thought that had been made illegal and everything should have been equalised but I could be wrong.  Such documents are sometimes updated in line with the latest legislation as it applies to the pension rule book.

As said above you would also need to ask for the exact split of your deferred amounts between the different boxes.

player1_2

Pat38493 said

Can I ask - how old is this document you are posting because the part about different increases for male vs female seems wrong to me - I thought that had been made illegal and everything should have been equalised but I could be wrong.  Such documents are sometimes updated in line with the latest legislation as it applies to the pension rule book

it is part of the recently issued options pack, less than a month old. 

Can anyone else offer advice about the legality of different increase for male vs female before I
question it with the pension  provider?

Can anyone also offer a view  on how does row 4 in the image a couple of posts up (pension earned)  differ from row 2 and 3 (GMP or pension above GMP earned) ?  

Audaxer

player1_2 said:

Hi all, according to Government Gateway I am entitled to the full state pension at age 66yrs 8 months ( I am approaching 63 and remain in full time employment ). The summary states "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year. £203.85 is the most you can get. You cannot improve your forecast any more".

The summary also states "Your COPE estimate is £100.71 a week. This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government".

Does this mean that I will still receive the full £203.85 a week directly from the government ?

My National Insurance record shows no gaps (continuous employment since 1978).

Can anyone explain how I would still be entitled to a full pension ? (not complaining, I just thought contracting out would have reduced it). ( I am not sure how long I was contracted out but I do know it would have ended in 2009 when my DB scheme was deferred.

You are definitely forecast to get the full SP which is a very nice position to be in  As regards the number of years NI that individuals need, it is based on re-calculations made in 2016. I was also contracted out and have 47 years full NI to date, but still need two more years of voluntary NI payments to get to the max SP.