Confused about buying Pre 2016 and Post 2016 years

snowstormcat

I'm sorry to ask another question but I have done a bit of digging and have found the booklet regarding the private pension. It states in the booklet "if you have completed less than 5yrs Pensionable Service your Employer will make a payment to the State Scheme to provide you with benefits under it as if you had never been contracted-out". I was in the scheme for less than 5yrs do I need to do anything?

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/81992165#Comment_81992165

This was pre 1988?

This only applies if you took a refund of your pension contributions. Having been contracted out (of SERPS) both you and your employer paid reduced rate NI. Your refund would have been paid less tax and your own NI rebate, then your pension scheme would have paid over both your and their NI rebates to COEG in order to put you back into SERPS for this period.

There's nothing for you to do - it should have been done for you back then (I only say 'should' because no system is perfect).

COEG = Contracted Out Employment Group.

snowstormcat

This was 1988/1989 the pension was entirely paid for by the company and my NI was reduced for 1yr which has resulted in a COPE on my account. No refund as I didn't actually pay anything in.

molerat

As Silvertabby says above, the company should have made good your contracted out deductions putting you back to a not contracted out status but, if that is the only contracted out period you have had, it looks like that did not happen. You could query this with the NI helpline to ascertain the exact period and employer they are showing for contracting out and see what they are showing for any restitution. This contracted out period has reduced your current entitlement by £1.20, making your total shortfall equivalent to 2.17 years, but if you want to recover that you need to pay a whole year's contributions. If working that is not a problem but if making voluntary contributions this is going to cost you £900+. It is all down to how much effort you are willing to put into it.

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/81992238#Comment_81992238

If you didn't meet the vesting period for actual pension benefits (usually 5 years pre April 1988, 2 years after) then the pension scheme should still have paid over your NI rebates to COEG even though your scheme wasn't contributory.

The fact that your records are showing a COPE for this period indicates that this wasn't done, for whatever reason. Regardless of this, If you left before the vesting period then you won't have any pension benefits due from this scheme.

The chances of getting your COPE changed to full NI so many years after the event is, sorry to say, extremely unlikely.

snowstormcat

Thank you for the replies. Its good to know the amount is technically correct. Should HMRC remove the COPE (longshot I know!) then that would recalculate and give me an amount of £227.52. The three years that I paid for will remain unaffected? I do believe the COPE was added very recently following a manual check.

molerat

Yes. Your 2016 starting amount was based on new rules with or without the COPE deduction, old rules was £119.30 + £9.22 S2P = £128.52 (S2P may have been slightly higher if not contracted out but unlikely enough to change the outcome), new rules £133.41 - £0.76 COPE = £132.65, (the £137.10 includes that year you purchased at £4.45 as adding additional pre 2016 years recalculates the starting amount). That 76p loss increases each year with the annual uplift so is now £1.20 which would be added to the total pension if removed

snowstormcat

Thanks for your reply. I am finding it quite complicated but as you confirmed if the COPE is removed that will have absolutely no effect on the 3yrs I purchased even though one was pre 2016.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81992165#Comment_81992165

One thing you could do is check if you still have any benefits under that private pension (and in particular any GMP - assuming it was a defined benefit pension). If you left after the change from 5 years to 2 years then it may be that you still have benefits in that pension scheme. If those benefits include a GMP then you know you weren't bought back into SERPS for that period.

ETA Sorry if you were only in that scheme for 1 year not 2 then ignore me.