Pension forecast worries

Veloflyer

I read with a little concern that the HMRC on-line tool for forecasting state pension may not be correct for those who contracted out of SERPS in the past. I am pretty certain I did contract out around 1998, but I have no real idea for how long or exactly when this started or indeed stopped. I have no payslips from then and previous employer has long since departed. I'd like to understand how long I was contracted out for, but not sure how to go about this.

Supplementary question perhaps - Would it be the case that even if I started work with a new employer some 3 or 4 years after contracting out that I would still be contracted out? Or does it revert with a new employer?

I logged in via government Gateway and according to them I have 40 years full years NI contribution from 1982 plus 5 years not full. Not entirely sure how this is arrived at as I only really started full time work in 1988. Do they credit part time work before then?

In any event, given the concerns with my contracting out, is there any way I can verify - or not - whether my state pension forecast is accurate? Contact HMRC? Currently it stands at around 12K /ann, but given my contracting out, I am not sure if this is correct. In addition, looking at their website and an example below I believe I fall into the example category - and incidentally I am 61 and may take retirement as of now.

Jo is 60 years old and they have just stopped working. They were contracted out which reduced their forecast State Pension to £170 per week. They will reach State Pension age at 67.

Jo could choose to pay 7 years of voluntary National Insurance contributions, to get qualifying years when they are not working. Each additional qualifying year will increase their amount by £6.58 per week, but Jo will not reach the full rate of the new State Pension.

Looking at the above, and if my forecast is reduced, I would like to pay additional voluntary contributions to address any shortfall. Any ideas how I go about this please?

p00hsticks

I logged in via government Gateway and according to them I have 40 years full years NI contribution from 1982 plus 5 years not full. Not entirely sure how this is arrived at as I only really started full time work in 1988. Do they credit part time work before then?

You would have been automatically credited with the three years you turned 16, 17 and 18.

You would also been given credits if you were receiving certain benefits such as Child Benefit or (I think) Job Seekers Allowance.

It's also possible due to the way NI works to get a full years credits without actually working a full year, depending on how much NI you actually pay and your payment frequency.

If you select the individual years it shuoud tell you whether the year is made up from earnings or credits (or a mixture of both).

sammyjammy

Contracting out may or may not make a difference to your state pension. If you were contracted out it still means you get a full NI year of contributions which MAY mean you would need more years that in you were never contracted out. Look at the gaps first as suggested above.

DRS1

If you were contracted out that means you were in a pension scheme of some sort (an occupational pension scheme probably). So what pension scheme did you join when you started to contract out and when did you stop being a member of it?

Yes when you change employers your contracted out employment with the old employer ceases and a new employment begins (hopefully in a new pension scheme) and it is up to that new employer whether the new employment is contracted out or not

Or you could have contracted out via a personal pension scheme instead of an occupational pension scheme. That may have been a personal decision rather than your employer's. So hopefully you'd have some record of it.

molerat

It is fairly straightforward to sense check your forecast. I believe the news reports are a bit over stating the problem and as has been mentioned in the other post on the subject it is those that had a forecast a while back and never bothered checking again that are mainly affected. If you have 30 full years pre 2016 whether contracted in or out and have a full post 2016 record up to April 2025 you cannot fail to be entitled to the full pension and every additional year since reduces that 30 years, if you are full post 2016 up to April 2026 you only need 28 years maximum pre 2016, pretty straightforward maths figures that one out. Also the amount of COPE you have does not have a straight line effect on the starting amount, my COPE was around £75 but anything above £19 would have had the same outcome so a COPE correction may not have any effect. If you post up some details from the forecast / NI record it will be fairly easy to see if there is any possibility of an error.

Current weekly £££.pp amount up to April 2025.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later
Any COPE amount. If you have "You've been in a contracted-out pension scheme" on your forecast then click
here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account

Veloflyer

Molerat

Sincere thanks for taking the trouble. Figures as follows

Current weekly £££.pp amount up to April 2025. - It states 230.25 is the most SP I can get. If this is true then fair enough.

Number of full NI years 15-16 and earlier - 31

Number of full NI years 16-17 and later - 10 - assuming 25/26 is full

Any COPE amount. If you have "You've been in a contracted-out pension scheme" on your forecast then click

here https://www.tax.service.gov.uk/check-your-state-pension/account/cope whilst logged into your tax account

States my COPE estimate is 28.91/week

molerat

Your forecast shows you do have contracted out service recorded and you meet the 30/9 criteria for a definite full pension amount contracted out or not. No jiggling of figures by HMRC can therefore reduce that amount.

The maths work out as at April 2016 you had 30+ years basic pension which gave, in today's money, at least £176.45. That left a maximum of £53.80 required post 2016 which needed £53.80 / £6.58 = 8.18 so 9 full years maximum to achieve. With that relatively small COPE you would likely have an additional pension amount pre 2016 so needed fewer post 2016 years to reach the full amount. There is though no way of us figuring out at when you actually reached the target.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/81878859#Comment_81878859

This is great comfort so many thanks. Of course, I guess this depends if their NI figures are correct and that I do indeed have the full years contributions as stated. I simply counted them from the detailed list they provided on my account. I also have 5 years not full - does this signify?

Lorian

On the forecast page today

"A system update planned for 13 February 2026 will further improve the accuracy of forecasts for customers who reach State Pension age after 5th April 2029.

You should wait until after this date to request a State Pension forecast using this tool."

Dont know if it's related.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/81879050#Comment_81879050

We shall see. Perhaps they have been prodded into action by the recent articles in the DT and elsewhere. Quite why such prodding is required for HMRC to give an accurate forecast is another question. I enjoy the notion that we are "customers" - as if we are choosing our state pensions and could shop around for others.

dunstonh

Perhaps they have been prodded into action by the recent articles in the DT and elsewhere. 

I very much doubt it. This has been a known issue for some time and fixes do not occur within days. It takes a lot more effort and time.