Contracted out of state pension scheme

Carlton7256

For most of my working life I was in a job where I was contracted out of the state pension scheme.

I would like to fill the incomplete years from 2006-2016 but have been told by the Future Pensions 

Centre that only completing years from 2016, when the rules changed, will increase my pension. The work I did from 2006-2016 was not contracted out.

Has anyone else found themselves in this situation and, if so, what did they do about it?

molerat

Generally speaking if you were contracted out, especially so if for a long period, filling pre 2016 years will not add to your pension.  The reason being that if your 2016 starting amount is based on the old rules, very likely if contracted out, you can only use a maximum of 30 of those years towards the basic pension amount so adding more will not add anything to the pension.  To answer "what did they do about it", they filled post 2016 gaps.  For any contracted out person  with 30 pre 2016 years filled then a full new SP should be achievable from April 2025, most likely April 2024.

If you post up some anonymous details someone will provide a more tailored explainer.

Current weekly £££.pp amount accrued up to April 2023
Number of pre April 2016 NI years full
Number of post April 2016 NI years full
Tax year you reach state retirement
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme", if there is one.
Years which show not full and prices

pinnks

With a starting amount equal to the old basic pension max (contracted out, large COPE etc), you need 9 post 2015/16 years to reach the new max.  I am a March 59er, so reach pension age in March 2025. That gives me 8 post 2015/16 years up to 2023/24 and I end up about £1 short of the nSP max.  A 9th year would get me there, if only I were a week or so younger, but then, I would have to still be working and paying mandatory NI, as paying £907 to get £52 per year would be idiotic, lol 

Carlton7256

Current weekly £££.pp amount accrued up to April 2023      £158.54
Number of pre April 2016 NI years full                                            36           
Number of post April 2016 NI years full                                            0
Tax year you reach state retirement                                      2024/25
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme", if there is one.
£35.93 per week

Years which show not full and prices                                     

      £221.90 2007/2008 £95.10 2009/2010 £142.65 2015/2016 £269.45 2016/2017 £824.20 2017/2018 £824.20 2018/2019 £824.20 2019/2020 £824.20 2020/2021 £795.60 2021/2022 £800.80 2022/2023 £824.20

2006/2007

NB I took my workplace pension in 2016

Dazed_and_C0nfused

7 post April 2016 years will take you to £199.31/week.

One more post April 2016 year will get you the final £4.54.

Ther is no point buying pre April 2016 years.

molerat

In addition to the above

At April 2016 your starting amount was £121.07, the higher of the old or new calculations - new of 35 x £155.95 / 35 - £35.93 COPE so £119.72 and old of 30 x £119.30 / 30 + S2P of £1.77 so £121.07.  Under the old scheme that would have been your final pension amount.

As you had already reached the maximum number of years for each scheme then you could not add to those amounts with pre 2016 contributions.  

Luckily for you after 2016 you were able to increase that starting amount up to the new full pension.   That £121.07 has increased with the annual inflationary rises to the current £158.54 which is £45.31 short of the full pension.  Each additional year purchased adds £203.85 / 35, around £5.82, so another 8 full years to reach that maximum and will be as described by D&C above.  You need all the 8 post 2016 years that are available to you, 2016-17 to 2023-24.  The capital outlay, £6624.80, will pay back gross, from the next FY at £49.17 per week, in around 2.6 years and is the equivalent of a 38% single life annuity - where would you get that on the open market ?

Bod_1234

Similar question, no idea what my COPE estimate actually means to me.

In my main summary, it says "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year" and "£203.85 is the most you can get"

It also says. "Your COPE estimate is £34.73 a week"

37 years of full contributions

14 years to contribute before 5 April 2037

How will this last statement affect me in retirement? Do I need to do anything?

Thanks.

Dazed_and_C0nfused

Bod_1234 said:

Similar question, no idea what my COPE estimate actually means to me.

In my main summary, it says "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year" and "£203.85 is the most you can get"

It also says. "Your COPE estimate is £34.73 a week"

37 years of full contributions

14 years to contribute before 5 April 2037

How will this last statement affect me in retirement? Do I need to do anything?

Thanks.

Have you actually accrued £203.85 now or is that only achieved by adding further years?

You just ignore the COPE figure.  Somewhere you will have a DB pension which pay out per the scheme rules, almost certainly far more than £34.73/week.

Bod_1234

Dazed_and_C0nfused said:

Bod_1234 said:

Similar question, no idea what my COPE estimate actually means to me.

In my main summary, it says "Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year" and "£203.85 is the most you can get"

It also says. "Your COPE estimate is £34.73 a week"

37 years of full contributions

14 years to contribute before 5 April 2037

How will this last statement affect me in retirement? Do I need to do anything?

Thanks.

Have you actually accrued £203.85 now or is that only achieved by adding further years?

You just ignore the COPE figure.  Somewhere you will have a DB pension which pay out per the scheme rules, almost certainly far more than £34.73/week.

 
It does state "You cannot improve your forecast any more.".

I'm still really confused as to why I need to know and care about this £34.73.   I guess it could be 4 things:

1. The government will deduct £34.73 from my  £203.85 every week, as I took that money and put it elsewhere.
2. The government are going to pay me £203.85 every week, but take £34.73 out of my private pension.
3. If I hadn't contracted out, my weekly payment would have been £203.85 + £34.73
4. It's a totally pointless figure that needs removing from the pension website, as it confuses everyone.

Dazed_and_C0nfused

Personally I would go with option 4.

Option 3 would likely cause further confusion with some people not understanding that £203.85/week + company pension is better than £238/week

COPE was a factor in determining your new State Pension starting amount back in 2016 but really means nothing else.

Given you have clearly accessed and read your State Pension forecast in some detail I don't know why you think 1 & 2 could be possibilities 🤔

Bod_1234

Dazed_and_C0nfused said:

Personally I would go with option 4.

Option 3 would likely cause further confusion with some people not understanding that £203.85/week + company pension is better than £238/week

COPE was a factor in determining your new State Pension starting amount back in 2016 but really means nothing else.

Given you have clearly accessed and read your State Pension forecast in some detail I don't know why you think 1 & 2 could be possibilities 🤔

It was more to cover some of the other posts in this thread.