Opting out of SERPs and National insurance

baz8755

A great many years ago I opted out of SERPs and was eventually advised to opt back in. As such I did have a pension pot with the SERPs funds that has now been absorbed into my SIPP

As I no longer work but am not at state pension age I have been checking my state pension status and it states that 'Your forecast is £221.20 a week,£221.20 is the most you can get

You cannot improve your forecast any more'. However it also states 'You’ve been in a contracted-out pension scheme' and seems to suggest this may affect my state pension.

My question is whether the statement about contracting out will have any affect on the £221.20 figure or if that figure has already taken the contracting out into consideration. I have a couple of recent incomplete years and if that is going to have a bearing on my future pension I would consider topping up.

molerat

You’ve been in a contracted-out pension scheme' and seems to suggest this may affect my state pension.

Did you not read the bit where it clearly states that it will not affect your state pension ?

Marcon

baz8755 said:

A great many years ago I opted out of SERPs and was eventually advised to opt back in. As such I did have a pension pot with the SERPs funds that has now been absorbed into my SIPP

As I no longer work but am not at state pension age I have been checking my state pension status and it states that 'Your forecast is £221.20 a week,£221.20 is the most you can get

You cannot improve your forecast any more'. However it also states 'You’ve been in a contracted-out pension scheme' and seems to suggest this may affect my state pension.

My question is whether the statement about contracting out will have any affect on the £221.20 figure or if that figure has already taken the contracting out into consideration. I have a couple of recent incomplete years and if that is going to have a bearing on my future pension I would consider topping up.

Unless your forecast says something about having to pay x years of NI between now and state pension age, then there's no point paying voluntary NI.

baz8755

molerat said:

You’ve been in a contracted-out pension scheme' and seems to suggest this may affect my state pension.

Did you not read the bit where it clearly states that it will not affect your state pension ?

Seeing as it does not clearly state that (see attached) that is the reason for asking the question. It also states on a linked page that extra contributions may be necessary (again see attached), again having done as much research as possible (without waiting and clogging up the NI pensions phoneline) I was still left in some doubt and thought it better to clarify than to fall foul of reductions long after my chance to top-up partial years has passed.

molerat

Seeing as it does not clearly state that (see attached) that is the reason for asking the question

It does if you click the link

Marcon

It's certainly hopelessly confusing, given how much 'standard text' there is (eg the section on increasing your state pension), even when that text doesn't apply to you.

You're at the maximum, so you won't be able to increase your state pension by paying voluntary contributions.

dunstonh

molerat said:

Seeing as it does not clearly state that (see attached) that is the reason for asking the question

It does if you click the link

And the link is purple.  So, the OP did click it.

p00hsticks

molerat said:

Seeing as it does not clearly state that (see attached) that is the reason for asking the question

It does if you click the link

@molerat I don't think it does any more- I looked at mine the other day and whereas when you used to click the link it would tell you exactly how much your individual COPE amount was and stress that this would NOT be deducted from your state pension amount, it now takes you to a generic gov.uk page, the wording of which certainly implies that the COPE amount WILL be deducted

Contracted out of the Additional State Pension: How contracting out affects your amount - GOV.UK (www.gov.uk)

If you reached State Pension age on or after 6 April 2016

If you were contracted out before 6 April 2016, you might not get the full rate new State Pension of £221.20 a week.

An amount is taken off your new State Pension if you were contracted out. This is because either:

• you paid National Insurance contributions at a lower rate
• some of the National Insurance contributions you paid were used to contribute to a workplace or private pension

How much is taken off depends on how long you were contracted out and your earnings at the time. While you were contracted out, you were paying into your workplace or personal pension instead.

Largs

I'm glad you asked the question as my information shows the same as yourself and I could not understand it either. 

SacredStephan

They seem to have changed it recently. The COPE amount is no longer shown.

xylophone

As I no longer work but am not at state pension age I have been checking my state pension status and it states that 'Your forecast is £221.20 a week,£221.20 is the most you can get You cannot improve your forecast any more'. However it also states 'You’ve been in a contracted-out pension scheme' and seems to suggest this may affect my state pension

Your COPE was used once only to establish your "starting amount" for New State Pension.

At 6/4/16 two calculations were done to establish your starting amount for NSP - it was the HIGHER of

Old Rules 

NI Qualifying Years (max 30) /30 x Full Basic SP (£119.30) + (SERPS/S2P - Deduction for Contracting Out)

New Rules

{NI Qualifying Years (max 35) /35 x Full New SP (£155.65) } - Contracted Out Pension Equivalent.

You would have been in one of three positions

(A)  Starting amount equal to NSP

(B) Starting amount more than NSP

(C) Starting amount less than NSP

In the case of A or B, while if you were under SPA and still earning the relevant amount you would continue to pay (be credited) with NI,

this would not improve your state pension - it would just revalue each year in line with the indexing rules set by the government.

In the case of C, contributions from 6/4/16 onwards could improve your SP up to (but not in excess of) a full NSP.