Is the future pension forecast calculator on gov.uk reliable?

epsilon4900

When I go through the process to find out what DWP forecasts my pension to be
when I retire when I am 67 in a few years time it says I will get the maximum and I cannot increase that amount. Is this forecast reliable? I don't want to discover that there was something wrong with it when I would be claiming the pension? The reason I ask is that it seems to acknowledge that I was contracted out at least for a few years but yet my NI record online shows as full except for a few years in the mid 80s when I was floundering around and so it would be not full. I feel there is a discrepancy somewhere but I can't investigate it? I was likely contracted out for at least 5 years in the 90s and possibly longer. I'm unsure at this point. Any thoughts? OF COURSE IF THIS TOPIC IS ALREADY DISCUSSED ELSEWHERE PLEASE LET ME KNOW AND I WILL JUST REPOST IN THE CORRECT DISCUSSION! THANKS!

molerat

Contracting out only affected your 2016 starting amount.  You would have earned at least the basic old pension up to 2016.  Since 2016 you have added to that amount.  Anyone contracted out with 30 years pre 2016 and a full contribution history up to 24-25 will receive the full new pension, pretty straightforward maths at work.

epsilon4900

Thanks Molerat but I am probably being a bit dumb here or it's too late in the day for me to be thinking of this but surely as I am fairly sure I was contracted out ( and the system seems partly to acknowledge this? ) for at least some of the years from 1990 till possibly 2004 I don't think I did have 30 full years before 2016? The problem I have is that the NI record online only shows not full years for 4 years in the early 80s which is accurate. The years I am questioning are shown as full years on the NI record and it is this I am querying? Eg how can they be full IF I were contracted out yet the system seems to say yes they were full but elsewhere generally says I was contracted out for some years? I am confused!

molerat

Contracting out only applies to the second state pension, you were still earning the basic pension which is what the full year refers to. For every year (up to 30) pre 2016 you were still getting at least £5.65 contracted out or not.  As long as your forecast states that you were contracted out it should be accurate, it is only a concern if the forecast does not state that and you know you were.

Sarahspangles

epsilon4900 said:

Thanks Molerat but I am probably being a bit dumb here or it's too late in the day for me to be thinking of this but surely as I am fairly sure I was contracted out ( and the system seems partly to acknowledge this? ) for at least some of the years from 1990 till possibly 2004 I don't think I did have 30 full years before 2016? The problem I have is that the NI record online only shows not full years for 4 years in the early 80s which is accurate. The years I am questioning are shown as full years on the NI record and it is this I am querying? Eg how can they be full IF I were contracted out yet the system seems to say yes they were full but elsewhere generally says I was contracted out for some years? I am confused!

I have 28 full years before 2016 and was contracted out for 20 of those. I required 8 post 2016 years to qualify for the full New State Pension. OH had 37 full years before 2016 and was contracted out for 31. He also required 8 post-2016 years. The information about contracting out simply explains why our baseline at 2016 wasn’t higher than it was, which would have meant we needed fewer post-2016 years.

SnowMan

Sarahspangles said:

epsilon4900 said:

Thanks Molerat but I am probably being a bit dumb here or it's too late in the day for me to be thinking of this but surely as I am fairly sure I was contracted out ( and the system seems partly to acknowledge this? ) for at least some of the years from 1990 till possibly 2004 I don't think I did have 30 full years before 2016? The problem I have is that the NI record online only shows not full years for 4 years in the early 80s which is accurate. The years I am questioning are shown as full years on the NI record and it is this I am querying? Eg how can they be full IF I were contracted out yet the system seems to say yes they were full but elsewhere generally says I was contracted out for some years? I am confused!

I have 28 full years before 2016 and was contracted out for 20 of those. I required 8 post 2016 years to qualify for the full New State Pension. OH had 37 full years before 2016 and was contracted out for 31. He also required 8 post-2016 years. The information about contracting out simply explains why our baseline at 2016 wasn’t higher than it was, which would have meant we needed fewer post-2016 years.

Might be helpful to explain the calculations relating to your situation to help epsilon4900

Working in 2024/2025 terms throughout:

If you had 28 years before 2016 (either contracted in or contracted out or a mix) then you will have earned at least £158.20pw (= 28/30 x 169.50) pre 2016, where £169.50pw is the amount of basic state pension. Remember contracting out was contracting out of the additional state pension not the basic state pension which is why it doesn't matter for this bit whether the years were contracted in or contracted out.
The difference between the full new state pension £221.20pw (2024/2025) and £158.20pw is £63pw.
So you would need at most £63pw post 2016 to get you to the full new state pension.
Each post 2016 year earns you about £6.32pw (= 221.20/35) until you reach the full new state pension. So at most you would need 10 post 2016 years (= 63 / 6.32 rounded up) to get you to the full new state pension.
In your case you have probably earned slightly more than £158.20pw pre 2016, because of your 8 contracted-in years which would explain why you only need 8 rather than 10 post 2016 years. That's where contracting out becomes relevant.
Again working in 2024/2025 terms other half will have earned at least £169.50pw (= 30/30 x 169.50) pre 2016. So would need at most £51.70 (= 221.20 - 169.50) post 2016 to get to the full new state pension. So he would need at most 9 (= 51.70/ 6.32 rounded up) post 2016 years to get him to the full new state pension. Again he has probably earned slightly more than £169.50pw pre 2016 because of the 6 contracted-in years which would explain why 8 rather than 9 post 2016 years are required.
No doubt if epsilon applies similar logic to their situation all should be clear.

Sarahspangles

That’s brilliant @SnowMan and very clear.

epsilon4900

Thanks Molerat, SarahSpangles and Snowman. I think I misunderstood what contracting in and out actually meant.
I did think it was to do with entitlement to the  basic state pension. I had 4 years where I was at University and then unemployed for a bit after so nothing was credited. But the website says I have a full record since 1978 apart from that so that fits that 2 or 3 years after 2016 I would have made the full thing and what the site says about me not being able to increase it further is correct. What is confusing is that the GOV website on this eg contracting in  / out seems to imply that if you did contract out it could in fact affect your entitlement to OAP pension as you might not have paid enough NI. When I was sent the forecast a  year or two back while it also said then I am entitled to the full thing when I reach the pensionable age of 67 it referenced a notional amount of COPE I think it's called. I say notional as it doesn't come off the OAP pension and is not something I actually get. It's something to do with my contributions to private pension/s. When I look online now at a forecast it makes no mention of COPE or at least there is no figure for it. I would just like to be able to rely on what the forecast site is saying which is that I am entitled to the full thing all being well when I arrive at 67. I don't want then to find there are problems? Really appreciate everyone taking the time here.

epsilon4900

And NB the DWP forecast site on GOV.uk covers itself in small print to say that they do not guarantee that the figures on the site are absolutely accurate and basically if it turns out in the fullness of time that anything is incorrect it is not their fault! Neat right?! I wish I could just say that nothing I do or ever will do for work matters and is not my fault if I ever make a mistake!!!!!!

molerat

COPE is no longer shown in a link in the actual forecast, it supposedly confused people but was essential in working out whether additional pre 2016 contributions were viable and how much they would actually add.  It is still available by clicking https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged in to your on line tax account .  It will be the same as it was last time you found it as it is a 2016 amount.

epsilon4900

Thanks Molerat,
I'm still confused by COPE as it was never a figure I was confirmed to get. I didn't find it at all helpful and was confused. Appreciate the link though. I think the upshot of my posting is that I can trust the figures in the forecast as it references being contracted out for a while and says I get the full thing in any case.