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

DullGreyGuy

epsilon4900 said:

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!!!!!!

Well in principle the government could tomorrow propose a change in the law and say retirement age is 95 and the state pension is £10 per month. It's highly unlikely to be the case, it would be heavily challenged were it attempted but inevitably tools like this will have T&Cs that can't be used against them. 

Let's be realistic, my state pension is at least 22 years away... how confident are you that you can say to the penny how much your savings will be worth in 22 years time? Many would be wrong with a 22 day projection.

SnowMan

epsilon4900 said:

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.

When they introduced the new state pension in 2016 they calculated everyone's starting amount in the new system as the greater of

a) the state pension they had accrued at 2016 under the old system

b) the state pension they would have accrued at 2016 under the new system had it been in force throughout

Under the new state pension nobody is contracted out, but under the old system you might be contracted out of the additional state pension and so the benefit from that contracting out would form part of your private pension benefits. Part b) wouldn't be a like for like comparison as a result, and so to adjust for this they deducted the notional benefit of contracting out where this had happened from this calculation in b). That deduction was called the COPE. That deduction didn't apply to part a) only part b) because part a) already took into account contracting-out.

Then 1/35th of the new state pension can be added for each post 2016 year to the starting amount until the full new state pension is reached. If the starting amount was above £155.65pw you kept the additional amount but couldn't earn any further state pension post 2016.

So the COPE was essential in calculating the starting amount at 2016, but provided you earned enough new state pension after 2016 to get you up to the full new state pension then it doesn't affect your ultimate state pension.

I didn't mention part b) in my sarahspangles calculations because with a decent period of contracting out it it's more likely that the part a) calculation would bite.

In terms of your calculations let's assume that you had 34 qualifying years up to 5th April 2016, and as you realise now the qualifying years include years where you were contracted-out as well as years where you were contracted-in. And let's assume your COPE at 2016 was £30pw. And that you had earned £20pw in additional state pension up to 2016

Then your starting amount at 6th April 2016 would be the greater of  

a) (30/30 x 119.30) + 20 = 139.30

b) (34/35 x 155.65) - 30 = 121.20

where £119.30 and £155.65 are the 2016/2017 amounts of basic state pension and new state pension respectively

So the starting amount would be the higher of £139.30pw and £121.20 i.e. £139.30pw

This is £16.35pw (= 155.65 - 139.30) less than the full new state pension. In 2016/2017 amounts you earn £4.45pw (= 155.65/35) for each post 2016 year and so you would have needed 4 post 2016 years to get you to the full new state pension (= 16.35/4.45 rounded up).

Once they've worked out that '4' post 2016 qualifying years are needed, that figure of '4' needed is fixed in time. That is because all the elements in the calculation of that '4' uprate at the same rate (the triple lock increase) from one year to the next.

You might be able to adjust that calculation to your exact own figures, although you may struggle with identifying the additional state pension (i.e the £20pw assumed  above) and that will give you a clearer understanding of your situation to give you that reassurance.  

epsilon4900

Thanks. Dull Grey Guy. I take the point that future governments could decide all manner of things which could alter the calculation but my point is that I should be able to assume that either the figures on the site are accurate up to this date and that if they prove not to have been in the future that the government should be liable? It's not good enough to say that if they made a mistake in what they are telling me now that they are not responsible for it. I look to them to tell me the correct situation and they should be liable for what they do tell me. When I last got a bit of paper from DWP on this as opposed to looking online it said a figure for COPE and that it didn't affect how much pension I would actually get when I come to claim it. That was what confused me as I couldn't see the relevance of it. Snowman I appreciate your taking the time to show the different calculations. I don't have the figure for what my COPE is as I lost the bit of paper they sent me with it on some years ago. I also have no idea what additional pension I was notionally supposed to have either. My point throughout is that if the site is saying I will get the full thing and I cannot add to it any more I should be able just to believe that and rest easy. I am veering between thinking I can trust them as I am said to have a full NI record apart from 4 years and by my calculation I should now have 40/41 or 42 years contributions. That is way over the 35 years. I am going to try to see if I can find the paper they sent referencing the COPE. Thanks.

Sarahspangles

@epsilon4900

That is way over the 35 years.

I’ve skimmmed back through the thread, I didn’t realise you assumed this number of years was relevant to you. It isn’t, it’s only relevant to people who entered the workforce from 2016 on. They have no pre-2016 NI records to take into account as they were only ever on the New State Pension system. 75% of my NI history is under the old system, 

It’s always the case that the taxpayer has some responsibility for checking their tax position is correct. I don’t think it’s realistic for us to have to run our own calculations for our pensions, but we can certainly check that if it says we had a job in a particular year, or were entitled the credits, that was correct. It’s more likely qualifying years would be missed than overstated. Often because people didn’t act in their own interests at the time by checking P60s or applying for credits they were entitled to. There have recently been dozens of threads about retrospectively adding years by correcting this, but I can only think of one where the poster doesn’t think years on their record have been added correctly, and they had a complex multinational working history.

Dazed_and_C0nfused

That is way over the 35 years

Oh dear.  Maybe worth you reading some of the countless threads which explains that that is of no relevance whatsoever to someone in your situation.

SnowMan

epsilon4900 said: I am going to try to see if I can find the paper they sent referencing the COPE. Thanks.

Does your COPE not appear on the government gateway page that molerat gave a link to earlier in this post?

https://forums.moneysavingexpert.com/discussion/comment/81330706/#Comment_81330706

You have to log into your government gateway account then paste molerat's link into your browser rather than try to login via molerat's link. It works for me, but historically not everyone could access their COPE figure so perhaps it doesn't work for you?

Exactly how many qualifying years do you have up to and including 2015/2016? And exactly how many qualifying years do you have from and including 2016/2017 up to and including 2023/2024? And will you have any qualifying years from and including 2024/2025?

Can you confirm the gateway account is saying you have already reached the full new state pension of £221.20pw based on contributions up to 2023/2024, or is it saying you need x number of future years before you reach SPA to reach the full new state pension?

epsilon4900

Thanks Sarah and Dazed, Re Snowman  I clicked on that page and it says my COPE is £25.06

It says

Your forecast

• is not a guarantee and is based on the current law
• is based on your National Insurance record up to 5 April 2024
• does not include any increase due to inflation

£221.20 is the most you can get

You cannot improve your forecast any more.

NI Record says full year from 1978 to 2016 EXCEPT for 4 of those years? Hence I make that 38 minus 4 equals 34 years? It says I have full year between 2016 and 2023 / 2024 but waiting for the record to be complete for 2024 / 2025 which is right as we are not at the end of that tax year yet of course.

It does say that like many people I was contracted out for some time. It gives me no clue about how long this was nor indeed what my base level was at 2016 and how they calculate it is now the full thing.

I just want to believe what it says and not worry but NOT have a problem when I come to claim it abw in 4 years time?

SnowMan

You have 34 qualifying (full) years up to 5th April 2016 (78/79 to 2015/2016 inclusive of both less 4 years), and your COPE at 2016 was £25.06pw. And you have 8 qualifying (full) years after 2016 so far (2016/2017 to 2023/2024 inclusive of both).
Your starting amount at 6th April 2016 would have been the greater of  
a) (30/30 x 119.30) + ASP = 119.30 + ASP
b) (34/35 x 155.65) - 25.06 = 126.14
where £119.30 and £155.65 are the 2016/2017 amounts of basic state pension and new state pension respectively. And ASP is the unknown amount of additional state pension your earned up to 6th April 2016.
So your starting amount at 6th April 2016 would be £126.14pw unless your ASP was more than £6.84pw when it would be higher by the amount that your additional state pension exceeds £6.84pw.

This is at most £29.51pw (= 155.65 - 126.14) less than the full new state pension at 6th April 2016. In 2016/2017 amounts you earn £4.45pw (= 155.65/35) for each post 2016 year and so you would have needed at most 7 post 2016 years to get you to the full new state pension (= 29.51/4.45 rounded up). This figure of 7 post 2016 qualifying years required (or lower depending on your ASP) would be fixed at 2016/2017 and barring error correction not subsequently change.

You've earned 8 qualifying (full) years post 2016 so far which is more than the at most 7 years you needed. So you reached the full state pension at the latest after the 2022/2023 tax year ended. The diagram (all in 2016/2017 terms) assuming your starting amount was £126.14pw illustrates your position

You will have reached the full new state pension earlier if you had additional state pension of at least around £10pw.

The only thing that is relevant in terms of contracting-out and your state pension is your COPE figure. You don't need to know the periods of contracting-out and earnings, they are all encapsulated in that COPE figure of £25.06pw. And that COPE is only relevant in terms of calculating the starting amount as above. You'll get the full new state pension at SPA (it's increased with the triple lock from the above £155.65pw to currently £221.20pw) with nothing deducted.

Even in the very unlikely scenario that they revised your COPE significantly upwards at a later date because of an error they'd spotted, and even if your additional state pension was zero (very unlikely), and even if they removed a few of your pre 2016 years because of an error they'd spotted (very unlikely) then your starting amount would have been at least £119.30pw which means you would have needed at most 9 post 2016 qualifying years (= (155.65 - 119.30)/4.45 rounded up) to get you up to the full new state pension. And so in this extremely unlikely scenario gaining 2024/2025 as a qualifying year would still get you to the full new state pension.    

So given you've reached the full new state pension with a bit to spare you should be confident in their statement that you've reached the full new state pension.    

By the way I agree that their small print that effectively said 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!' was a bit strong, albeit they do need to be able to correct what are hopefully rare errors. Have they now changed this to 'Your forecast may be different if there are any changes to your National Insurance information. There is more about this in the terms and conditions.' which is reasonable and a bit less off-putting.

epsilon4900

Thanks Snowman for this amazing diligence and comprehensive research on my behalf! I would hope they have changed those words. I will check at some point. I am delighted and now feel that I can accept what the website says and what you wrote makes sense to me and explains why they say I am entitled to the full thing when I retire abw.  Much obliged to you!

daisy_1571

SnowMan said:

epsilon4900 said:

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.

When they introduced the new state pension in 2016 they calculated everyone's starting amount in the new system as the greater of

a) the state pension they had accrued at 2016 under the old system

b) the state pension they would have accrued at 2016 under the new system had it been in force throughout

Under the new state pension nobody is contracted out, but under the old system you might be contracted out of the additional state pension and so the benefit from that contracting out would form part of your private pension benefits. Part b) wouldn't be a like for like comparison as a result, and so to adjust for this they deducted the notional benefit of contracting out where this had happened from this calculation in b). That deduction was called the COPE. That deduction didn't apply to part a) only part b) because part a) already took into account contracting-out.

Then 1/35th of the new state pension can be added for each post 2016 year to the starting amount until the full new state pension is reached. If the starting amount was above £155.65pw you kept the additional amount but couldn't earn any further state pension post 2016.

So the COPE was essential in calculating the starting amount at 2016, but provided you earned enough new state pension after 2016 to get you up to the full new state pension then it doesn't affect your ultimate state pension.

I didn't mention part b) in my sarahspangles calculations because with a decent period of contracting out it it's more likely that the part a) calculation would bite.

In terms of your calculations let's assume that you had 34 qualifying years up to 5th April 2016, and as you realise now the qualifying years include years where you were contracted-out as well as years where you were contracted-in. And let's assume your COPE at 2016 was £30pw. And that you had earned £20pw in additional state pension up to 2016

Then your starting amount at 6th April 2016 would be the greater of  

a) (30/30 x 119.30) + 20 = 139.30

b) (34/35 x 155.65) - 30 = 121.20

where £119.30 and £155.65 are the 2016/2017 amounts of basic state pension and new state pension respectively

So the starting amount would be the higher of £139.30pw and £121.20 i.e. £139.30pw

This is £16.35pw (= 155.65 - 139.30) less than the full new state pension. In 2016/2017 amounts you earn £4.45pw (= 155.65/35) for each post 2016 year and so you would have needed 4 post 2016 years to get you to the full new state pension (= 16.35/4.45 rounded up).

Once they've worked out that '4' post 2016 qualifying years are needed, that figure of '4' needed is fixed in time. That is because all the elements in the calculation of that '4' uprate at the same rate (the triple lock increase) from one year to the next.

You might be able to adjust that calculation to your exact own figures, although you may struggle with identifying the additional state pension (i.e the £20pw assumed  above) and that will give you a clearer understanding of your situation to give you that reassurance.  

SnowMan said:

epsilon4900 said:

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.

When they introduced the new state pension in 2016 they calculated everyone's starting amount in the new system as the greater of

a) the state pension they had accrued at 2016 under the old system

b) the state pension they would have accrued at 2016 under the new system had it been in force throughout

Under the new state pension nobody is contracted out, but under the old system you might be contracted out of the additional state pension and so the benefit from that contracting out would form part of your private pension benefits. Part b) wouldn't be a like for like comparison as a result, and so to adjust for this they deducted the notional benefit of contracting out where this had happened from this calculation in b). That deduction was called the COPE. That deduction didn't apply to part a) only part b) because part a) already took into account contracting-out.

Then 1/35th of the new state pension can be added for each post 2016 year to the starting amount until the full new state pension is reached. If the starting amount was above £155.65pw you kept the additional amount but couldn't earn any further state pension post 2016.

So the COPE was essential in calculating the starting amount at 2016, but provided you earned enough new state pension after 2016 to get you up to the full new state pension then it doesn't affect your ultimate state pension.

I didn't mention part b) in my sarahspangles calculations because with a decent period of contracting out it it's more likely that the part a) calculation would bite.

In terms of your calculations let's assume that you had 34 qualifying years up to 5th April 2016, and as you realise now the qualifying years include years where you were contracted-out as well as years where you were contracted-in. And let's assume your COPE at 2016 was £30pw. And that you had earned £20pw in additional state pension up to 2016

Then your starting amount at 6th April 2016 would be the greater of  

a) (30/30 x 119.30) + 20 = 139.30

b) (34/35 x 155.65) - 30 = 121.20

where £119.30 and £155.65 are the 2016/2017 amounts of basic state pension and new state pension respectively

So the starting amount would be the higher of £139.30pw and £121.20 i.e. £139.30pw

This is £16.35pw (= 155.65 - 139.30) less than the full new state pension. In 2016/2017 amounts you earn £4.45pw (= 155.65/35) for each post 2016 year and so you would have needed 4 post 2016 years to get you to the full new state pension (= 16.35/4.45 rounded up).

Once they've worked out that '4' post 2016 qualifying years are needed, that figure of '4' needed is fixed in time. That is because all the elements in the calculation of that '4' uprate at the same rate (the triple lock increase) from one year to the next.

You might be able to adjust that calculation to your exact own figures, although you may struggle with identifying the additional state pension (i.e the £20pw assumed  above) and that will give you a clearer understanding of your situation to give you that reassurance.  

Can I please say thank you to @epsilon for raising this and @molerat @SnowMan , @sarahspangles, grey man and anyone else I've forgotten to mention.   Such an interesting and usefully laid out thread. 

I read it as I too had a niggling feeling that I was going to get to 67 and they would shout "ya boo, sucks to be you!  You didn't actually believe you were getting a state pension did ya? Hahaha. Sucker!" 

Clarity on some of these terms is amazing.  I feel much more confident i understand contracting out now so thank you all so very much.

I have diligently worked my way through the quote above substituting my own figures (I think) but am stuck at how to calc any additional state pension.

I have 1981-1987 = 6 years, full ni years, not contracted out
1987-1988 5 months not contracted out, 7 months contracted out, ni shows full year
1988-2016 28 years contracted out. 

So 35 full ni years, mix of contracted out and not contracted out

My cope is £46.83


So I think my a) calc is   30/30 x £119.30 + ??? (Additional state pension) = ?    (35 mix years gives me full 30 for the calc?)

b) calc  35/35 x £155.65 - £46.83 = £108.83      (again is the 35 mix years is the correct first bit?)

I'm assuming its likely that a) is going to be best for me given the scenario above posited asp as £20 with 34 qual years and ive got 35, therefore can anyone help with the magic formula for asp please?  Or is it good enough to work with the assumed £20ish?

Thank you all again, much obliged

Daisy