State Pension for me - confused - help please
Comments
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So I have questions?
Is the COPE of £85.27 to be paid to me as well. (At the time I had the BT pension that was the only pension I was paying into). I'm confused it mentions being contracted out means that some of my National Insurance contributions were paid into my private pension scheme instead, what private pension is that, I didn't have any private pension, only the BT pension that I started when I was 16?
Also I am confused about why when I rang up in 2005 that I was told I had 30 years and that is enough for a full pension, yet now it seems you need 35 so it looks like I am short?
It mentions contributing another 9 years but why if I have 30 and you need 35?
How much would 9 years likely cost me?
Sort of repeating my earlier questions but so is buying the 9 years better than doing anything like a Sipp instead with the money where I can grow the pot with investments?
Help:undecided0 -
Is the COPE of £85.27 to be paid to me as well. (At the time I had the BT pension that was the only pension I was paying into). I'm confused it mentions being contracted out means that some of my National Insurance contributions were paid into my private pension scheme instead, what private pension is that, I didn't have any private pension, only the BT pension that I started when I was 16?
:undecided
Your private pension IS your BT pension. You paid a lower rate of NI because you had a BT pension than you would have otherwise. If you hadn't had been 'contracted out' because of your BT pension then you would have paid a higher rate of NI, which woudl have gone to an additonal pension (SERPS or S2P (State Second Pension)). The COPE figure is an estimate by the Pension Service of what you might expect to get from your BT pension as a result of this - it's no guarantee that you will, you may get less or more.Also I am confused about why when I rang up in 2005 that I was told I had 30 years and that is enough for a full pension, yet now it seems you need 35 so it looks like I am short?
Under the old rules, you needed 30 NI years to get a full 'basic' pension of £119.30. In April 2016 this figure was raised to £155.65 but the number of years required to get this amount was increased to 35.
As molerat has said above, there were transitional rules to work out your 'starting amount' as at the cut over date of 6/4/16, which is the higher of the two amounts worked out under the old rules. You therefore haven't lost out, as your starting amount of £119.30 is exactly what you would have got if the new rules hadn't been introduced. In fact you stand to win, as you now have an opportuntiy to increase that amount for relatively little cost.It mentions contributing another 9 years but why if I have 30 and you need 35?
Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30
£36.35, which at the rate of
£4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)
If you aren't getting NI credits (e.g by claiming certain benefits, looking after grandchildren or working) you can buy voluntary class 3 contributinons for around £730 a year.Sort of repeating my earlier questions but so is buying the 9 years better than doing anything like a Sipp instead with the money where I can grow the pot with investments?
It's a very good return - a one off payment of around £730 gives you additional £4.45 a week for life.
Read this guide for more info
https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf0 -
Quote from above:
Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30 £36.35, which at the rate of
£4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)
Slight typo so to avoid any confusion that should read as £155.65 - £119.300 -
If the system remained unchanged you would have got £119.30 in 2027. Because of the changes you now have the opportunity to increase that amount to £154.90 by adding another 8 years through employment, credits or voluntary contributions. Purchasing any missing pre 2016 years will not add to your pension. A year currently costs £733.20, increasing with inflation, so for £5866 you will get £1830 taxable per year, increasing by currently 2.5% minimum, for the rest of your life. Your money back in 3 yrs 3 mths.0
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p00hsticks wrote: »Your private pension IS your BT pension. You paid a lower rate of NI because you had a BT pension than you would have otherwise. If you hadn't had been 'contracted out' because of your BT pension then you would have paid a higher rate of NI, which woudl have gone to an additonal pension (SERPS or S2P (State Second Pension)). The COPE figure is an estimate by the Pension Service of what you might expect to get from your BT pension as a result of this - it's no guarantee that you will, you may get less or more.
Ok brilliant, thanks for all this p00hsticks and molerat and everybody else.
So do you think I would see the COPE figures as an extra item in my BT statement or will it just be grouped in my BT figures (I have had some figures from BT, a statement but didn’t notice anything about this COPE figure mentioned in it)?
How do you insure BT would do the right thing with these contributions and not short change me on their potential, I mean how do I check I am getting the right amount at the end?p00hsticks wrote: »Under the old rules, you needed 30 NI years to get a full 'basic' pension of £119.30. In April 2016 this figure was raised to £155.65 but the number of years required to get this amount was increased to 35.
As molerat has said above, there were transitional rules to work out your 'starting amount' as at the cut over date of 6/4/16, which is the higher of the two amounts worked out under the old rules. You therefore haven't lost out, as your starting amount of £119.30 is exactly what you would have got if the new rules hadn't been introduced. In fact you stand to win, as you now have an opportuntiy to increase that amount for relatively little cost.
Under the new rules, every NI year adds 1/35th of the maximum £155.65 (around £4.45) to your starting amount. If your starting amount was 0 then it would take 35 years to reach the maximum. but from your starting amount of £119.30, you have space to increase that by (£115.65 - £119.30 £36.35, which at the rate of
£4.45 a week would take nine years (although the final year would only add 75p as you can't go above the maximum)
So should I buy the 9 years or less bearing in mind the 75p business you mention?p00hsticks wrote: »If you aren't getting NI credits (e.g by claiming certain benefits, looking after grandchildren or working) you can buy voluntary class 3 contributinons for around £730 a year.
From this am I right in saying the maths for buying 9 years is simply £730 x 9 =£6,570, so it will cost me £6,570 to get me up to maximum?
Do you always buy full years or can they take part years payments to only pay the right amount for the 75p? Maybe a petty question but just curious to understand it all.p00hsticks wrote: »It's a very good return - a one off payment of around £730 gives you additional £4.45 a week for life.
Read this guide for more info
https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf
How do some people get more than £155 per week, not 100% sure but I think my stepfather is getting £177 per week from last time we looked at if my memory serves me right.
Also another question I have just thought of, I am a non tax payer and have contributed my maximum of £2880 this financial year, is there a problem here with buying more state pension or does the payment for more state pension not come into me contributing to a SIPP and my allowance for that (you see what I am getting at they would both be contributions to pension schemes)?0 -
The old state pension was made up of 2 parts, the basic pension and the second state pension. Your BT pension contracted you out of the second pension which is why you paid reduced NI. Your relative would have been contracted in so receives extra above the basic, in fact you can receive around £280 state pension - £119 basic plus £160 S2P. Your BT pension will not mention COPE as it was simply all bundled up in the benefit, you paid less NI and they paid less NI. The only time you usually see it is if you had a separate pension fund made up of this money.
You cannot buy part years so buying the 9th year is not worth it, put the £115 the 70p would cost somewhere else - you will get better value.
Your SIPP contributions and NI voluntary contributions have no bearing on each other.0 -
The state pension was made up of 2 parts, the basic pension and the second state pension. Your BT pension contracted you out of the second pension which is why you paid reduced NI. Your relative would have been contracted in so receives extra above the basic, in fact you can receive around £280 state pension - £119 basic plus £160 S2P. Your BT pension will not mention COPE as it was simply all bundled up in the benefit, you paid less NI and they paid less NI. The only time you usually see it is if you had a separate pension fund made up of this money.
Your SIPP contributions and NI voluntary contributions have no bearing on each other.
Thank you molerat this is so helpful, can you comment on my maths above, if correct etc and whether you think it is a good idea to buy the full 9 years please?
Also up till when could I buy these years please?0 -
I edited my post re 9th year whilst you were posting.
Years can be purchased at the in year price up to 2 years after the end of the year so 2016-17 needs to be purchased by 5 April 2019 to maintain the current price. After then they increase to the price of the year when purchased and are available until the end of 6 years so 5 April 2023 for 16-17. You cannot buy in advance so will have to buy as you go along. 16-17 is £733.20, 17-18 will be £741, each year increasing roughly with CPI.0 -
it just be grouped in my BT figures (I have had some figures from BT, a statement but didn’t notice anything about this COPE figure mentioned in it)?
https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/
https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/
When you left BT, were you not given a Statement of Deferred Benefits
showing a pre 88 GMP, post 88 GMP and excess?
In the BT Scheme, the GMP increases in deferment by S148 orders and the excess by Scheme rules.
http://www.btpensions.net/148/section-b-member-booklet
Please note we are currently updating the member booklets to reflect various changes that came into effect on 6 April 2016, and the updated booklets will be uploaded shortly.0 -
I edited my post re 9th year whilst you were posting.
Years can be purchased at the in year price up to 2 years after the end of the year so 2016-17 needs to be purchased by 5 April 2019 to maintain the current price. After then they increase to the price of the year when purchased and are available until the end of 6 years so 5 April 2023 for 16-17. You cannot buy in advance so will have to buy as you go along. 16-17 is £733.20, 17-18 will be £741, each year increasing roughly with CPI.
For someone who is retired now and reaches SP age in march 2019 can they buy 2 years worth of NI to increase SP amount.
Years 2016/17 2017/18 but not 2018/19? and can the 2 years be paid together after year 2017/18.:T0
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