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    • GDB2222
    • By GDB2222 5th Jun 17, 8:19 PM
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    GDB2222
    State pension forecast and COPE
    • #1
    • 5th Jun 17, 8:19 PM
    State pension forecast and COPE 5th Jun 17 at 8:19 PM
    I have my state pension forecast for when I reach retirement age later this year. It shows a pension of 159.55 pw, which I understand is the maximum.

    What is confusing me is that it also shows a COPE of 16 pw. DWP told me that I will get the 159.55 from them, without any deduction.
    In which case, why have they shown the COPE amount?

    Can anyone explain, please?
    No reliance should be placed on the above! Absolutely none, do you hear?
Page 2
    • paulus6
    • By paulus6 10th Apr 18, 11:11 AM
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    paulus6
    It is my (limited) understanding that the COPE figure was used to estimate how far short of your full NI contributions you would fall. My cope figure was something like 40 meaning that I had to make further NI contributions to get my state pension back to the full amount. IIRC I was about 6 years short. Fortuately, I have enough working years left in me to make up this shortfall. Obviously, if you retired in 2016, when your linked to article was written, you wouldn't have had the time to make up that shortfall and you would, indeed, have received a reduced state pension ( or needed to pay additional NI premiums to make up the shortfall)

    Hopefully, your call with Pensionwise will reassure you. Perhaps you will be good enough to report back what they say about it, particularly if I have got hold of the wrong end of the stick regarding COPE
    Originally posted by zolablue25
    Thanks Zolablue, yes I will report back as soon as I speak to to Pensionwise.........unfortunately they have a long waiting list of 7 weeks, but nevertheless I will bookmark this page and report back asap.
    • paulus6
    • By paulus6 10th Apr 18, 11:20 AM
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    paulus6
    No, no, no.

    What is so hard to understand, have you read the posts in this thread and your 2 years old article link properly.
    The COPE figure has already been deducted from your State Pension forcast.
    Originally posted by Asghar
    I have read the article, and yes, I agree it is very confusing,out of date, and also by the Telegraph !! But in the 6th paragraph it states.........

    "Savers who "contracted out" of their state pension entitlement at any point, will have an amount deducted from their new, flat-rate pension, the maximum level of which is 155.65."

    The amount of pension has changed slightly but the implication is that there is a certain amount of money that is deducted from the new flat rate to reflect the amount the person contracting out has built up.
    • dunstonh
    • By dunstonh 10th Apr 18, 11:28 AM
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    dunstonh
    I have read the article, and yes, I agree it is very confusing,out of date, and also by the Telegraph !! But in the 6th paragraph it states.........

    "Savers who "contracted out" of their state pension entitlement at any point, will have an amount deducted from their new, flat-rate pension, the maximum level of which is 155.65."

    The amount of pension has changed slightly but the implication is that there is a certain amount of money that is deducted from the new flat rate to reflect the amount the person contracting out has built up.
    Originally posted by paulus6
    If you have contracted out, you will get a deduction from the 155.65 to reflect the contracted out years. However, this will be in conjunction with the contracted in years that you had previously and any you may get in future. You cant just look at the contracted out years in isolation. e.g you could have 5 years contracted out and 35 years in

    It is quite possible to have higher than 155.65 (as it was then) and still have been contracted out.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • GunJack
    • By GunJack 10th Apr 18, 11:35 AM
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    GunJack
    I have read the article, and yes, I agree it is very confusing,out of date, and also by the Telegraph !! But in the 6th paragraph it states.........

    "Savers who "contracted out" of their state pension entitlement at any point, will have an amount deducted from their new, flat-rate pension, the maximum level of which is 155.65."

    The amount of pension has changed slightly but the implication is that there is a certain amount of money that is deducted from the new flat rate to reflect the amount the person contracting out has built up.
    Originally posted by paulus6
    ...and that is (one of thee many) bits that is incorrect, wrong, inaccurate, b0ll0c$

    The implication in the article was put there by someone who didn't understand how it worked, and caused lots of people (like you, no offence intended) to also understand incorrectly.

    COPE was calculated once, and used in the calculation of your starting amount at Apr 2016, that's it, not used again, not taken off your newSP, and will not be identified by your personal pension provider...
    ......Gettin' There, Wherever There is......
    • paulus6
    • By paulus6 10th Apr 18, 11:44 AM
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    paulus6
    So, lets clarify ....if , according to the many replies to my question (did you notice the question mark at the end of my reply ? I am asking for advice, not abuse by the way !! ), you not only receive the flat rate stated in your pension forecast ,which in my case is 159, but you also receive the benefits you have built up by contracting out, which in my case is approx 50,000 in a private pension and 5 years of contributions in a final salary pension ? Agreed ?
    So, what benefits does a person who remained contracted in receive, compared to me ? If 159 is now the maximum we can all receive in the form of a state pension (because the second state pension has been scrapped ), then , if I was one of the contracted in millions, I would be pretty !!!!ed off, to say the least.
    Before anyone replies, this is a question, not a statement of fact !
    • molerat
    • By molerat 10th Apr 18, 12:10 PM
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    molerat
    If you were not contracted out you received the benefit of S2P which comes from the extra NI paid. Of course the new 35 year 155.65 pension is only 100% applicable to those starting out their working life after April 2016 where contracting out has been abolished. Those starting out before then are subject to a transitional arrangement where they receive the higher of the new or old system calculations so no one loses out. At that calculation date I was given the higher old method figure as my contracted out deduction would have brought the new pension down to around 80 so I lost nothing and have the benefit of increasing that figure going forward. MrsM on the other hand was given the new method figure as she was never contracted out and had little S2P, gaining around 13. 155.65 is not the maximum you can receive, only the maximum attainable under the new system. If you had more than that at April 16 you keep it but you cannot add to it and the part above the 155.65 is revalued at a different inflation figure each year. Note I use 155.65 as that is the figure at April 16 when the calculation was done and any revaluation must be backdated to then.
    Last edited by molerat; 10-04-2018 at 12:19 PM.
    www.helpforheroes.org.uk/donations.html
    • GunJack
    • By GunJack 10th Apr 18, 12:12 PM
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    GunJack
    So, lets clarify ....if , according to the many replies to my question (did you notice the question mark at the end of my reply ? I am asking for advice, not abuse by the way !! )any abuse in my reply was aimed at the article writer and their editor, not you , you not only receive the flat rate stated in your pension forecast ,which in my case is 159, but you also receive the benefits you have built up by contracting out, which in my case is approx 50,000 in a private pension and 5 years of contributions in a final salary pension ? Agreed ? Yes, that's correct.
    So, what benefits does a person who remained contracted in receive, compared to me ? If 159 is now the maximum we can all receive in the form of a state pension (because the second state pension has been scrapped ), then , if I was one of the contracted in millions, I would be pretty !!!!ed off, to say the least.
    Before anyone replies, this is a question, not a statement of fact !
    Originally posted by paulus6
    In the case of your last paragraph, if you had built up SERPS up to Apr 2016, that took you above the new flat rate, you would have kept that as your starting amount, but unable to increase that amount other than the inflation increases (or deferral).
    ......Gettin' There, Wherever There is......
    • dunstonh
    • By dunstonh 10th Apr 18, 12:16 PM
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    dunstonh
    you not only receive the flat rate stated in your pension forecast ,which in my case is 159, but you also receive the benefits you have built up by contracting out, which in my case is approx 50,000 in a private pension and 5 years of contributions in a final salary pension ? Agreed ?
    yes

    So, what benefits does a person who remained contracted in receive, compared to me ? If 159 is now the maximum we can all receive in the form of a state pension (because the second state pension has been scrapped ),
    They get the same as you except no personal pension of 50k (final salary was not a choice so not applicable). - caveat, they may have built up an entitlement that takes them over the 155. So, they could have more.

    , if I was one of the contracted in millions, I would be pretty !!!!ed off, to say the least.
    Contracting out had a risk. It may or may not have resulted in a better outcome. Those that took that risk have now benefitted from it. Those that didnt take the risk have got exactly what they expected. So, they shouldnt be p'd off.

    Your risk decision to contract out made you 50k better off.
    Last edited by dunstonh; 10-04-2018 at 12:28 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Silvertabby
    • By Silvertabby 10th Apr 18, 12:22 PM
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    Silvertabby
    So, lets clarify ....if , according to the many replies to my question (did you notice the question mark at the end of my reply ? I am asking for advice, not abuse by the way !! ), you not only receive the flat rate stated in your pension forecast ,which in my case is 159, but you also receive the benefits you have built up by contracting out, which in my case is approx 50,000 in a private pension and 5 years of contributions in a final salary pension ? Agreed ?
    Yes.

    So, what benefits does a person who remained contracted in receive, compared to me ? If 159 is now the maximum we can all receive in the form of a state pension (because the second state pension has been scrapped ), then , if I was one of the contracted in millions, I would be pretty !!!!ed off, to say the least.
    Before anyone replies, this is a question, not a statement of fact !
    The (old rules) maximum State pension is something like 280 per week, ie 120 basic pension plus SERPS/SP2. Due to the provisional protections, someone who had already accrued more than the new single tier pension of 155 as at April 2016 will still receive that higher amount. However, and this is the crunch, even if that person is some years off State pension age and is carrying on working their State pension will be 'frozen' (apart from cost of living increases). So, yes, there will be many people out there who may have been expecting over 200 per week who will only get their 2016 foundation amount.

    Contracting out ended in 2016, so everyone - paying into a private/occupational pension scheme or not - will eventually get 159 per week State pension in return for 35 years of full, non-contracted out, NI contributions.
    Last edited by Silvertabby; 10-04-2018 at 12:25 PM.
    • GunJack
    • By GunJack 10th Apr 18, 12:27 PM
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    GunJack
    BUT, to go along with the state pension, everyone working past Apr 2016, in theory, should have either:-

    1. a company pension
    2. an auto-enrollment/workplace pension, or
    3. a private (personal) pension like a SIPP, stakeholder, etc.

    to go along with their state pension.
    ......Gettin' There, Wherever There is......
    • paulus6
    • By paulus6 10th Apr 18, 12:56 PM
    • 22 Posts
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    paulus6
    Thanks for the reply..............I think we "got there" ...in the end
    • paulus6
    • By paulus6 10th Apr 18, 1:07 PM
    • 22 Posts
    • 11 Thanks
    paulus6
    Yes.

    The (old rules) maximum State pension is something like 280 per week, ie 120 basic pension plus SERPS/SP2. Due to the provisional protections, someone who had already accrued more than the new single tier pension of 155 as at April 2016 will still receive that higher amount. However, and this is the crunch, even if that person is some years off State pension age and is carrying on working their State pension will be 'frozen' (apart from cost of living increases). So, yes, there will be many people out there who may have been expecting over 200 per week who will only get their 2016 foundation amount.

    Contracting out ended in 2016, so everyone - paying into a private/occupational pension scheme or not - will eventually get 159 per week State pension in return for 35 years of full, non-contracted out, NI contributions.
    Originally posted by Silvertabby
    The calculations on who the winners and losers must be so complex that its not worth worrying about. I think personally, I am savvy enough to spend my built up fund wisely, whereas a higher weekly amount via s2p may suit someone who prefers the reliability and longevity of the pension it provides. It is tempting to prefer the contracted in route, especially if you are healthy and will benefit from all those years of security, but there is no point crying over spilt milk.....thanks for the detailed reply.
    • dunstonh
    • By dunstonh 10th Apr 18, 3:36 PM
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    dunstonh
    It is tempting to prefer the contracted in route, especially if you are healthy and will benefit from all those years of security,
    In 1996, the SIB did a review of everyone who had contracted out from the start (1988), and found no-one who contracted out was worse off at that stage.

    in 1997 Labour started a period of reducing rebates (a stealth tax as most people wouldn't see the lower rebates and recognise it as a tax). So, contracting out became less favourable and it swung to being about 50/50 being best contracting out in monetary terms but was so minimal either way that it didnt really matter. Towards the end, Labour did start increasing the rebates again.

    However, the main benefit of contracting out was always to get access to the money earlier. Contracted in could only get the income from state pension age, whatever that was. Contracted out could get it from age 60 (reduced to 55 from 2006 and the 25% TFC came with it.)

    The 2006 changes and the 2015 changes along with the single state pension changes have been very good to those that contracted out via a money purchase scheme.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 10th Apr 18, 4:59 PM
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    xylophone
    Didn't understand a word of it
    On 6/4/16, two calculations were done

    NI years/30 +( Additional State Pension - Deduction for Contracting Out)

    NI years/35 - COPE (Rebate Derived Amount).

    Your Foundation Amount (Starting Amount) for NSP was the higher of the two.

    If your starting amount was equal to a full NSP, then you could not increase it by further NI contributions, although if you were under SPA and earning over the LEL then you would still need to pay NI.

    If your starting amount was under full NSP then there was the possibility of increasing it, depending on your personal circumstances - see

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

    If your starting amount was over full NSP then the amount over would be a "protected payment" - the relevance of this relates to how your State Pension increases in payment.

    See https://www.gov.uk/new-state-pension/how-its-calculated
    • SwanseaVillan
    • By SwanseaVillan 15th Apr 18, 9:34 PM
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    SwanseaVillan
    So having just taken early retirement at 56 my forecast state pension for my contributions to date is about 130 per week. The COPE figure quoted on the the Govt website is 85 per week (which i assume forms part of my works pension - but how can i check ?). Does that mean i am (130+80-159) better off than if i'd not contracted out ?

    Many Thanks
    • molerat
    • By molerat 15th Apr 18, 9:51 PM
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    molerat
    Unless your contracted out NI saving was paid into a separate pension there is no way of checking. If not contracted out you would have earned S2P which could have brought your SP up to a maximum of 298.23 so not as clear cut as you suggest.
    www.helpforheroes.org.uk/donations.html
    • SwanseaVillan
    • By SwanseaVillan 15th Apr 18, 9:57 PM
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    SwanseaVillan
    But isn't SP MAX 159 ?
    • p00hsticks
    • By p00hsticks 15th Apr 18, 11:07 PM
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    p00hsticks
    But isn't SP MAX 159 ?
    Originally posted by SwanseaVillan
    For those just starting their working lives, yes.

    But if people had already accumulated more than that under the old rules at the time the new State Pension was introduced (from SERPs / S2P / being contracted in ) the transitional rules mean that that higher amount will be honoured.

    They have just lost the opportunity to increase it any further ....
    • dunstonh
    • By dunstonh 15th Apr 18, 11:10 PM
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    dunstonh
    But isn't SP MAX 159 ?
    It will be in time but at present, there are benefits that people have accrued under the old scheme that will take time to work their way out (e.g. graduated, SERPS and S2P).

    The COPE figure quoted on the the Govt website is 85 per week (which i assume forms part of my works pension - but how can i check ?).
    You would either be contracted out with a money purchase pension (so the rebates go into a pension fund and increase its value). Or you would be contracted out into a defined benefit scheme. This does not involve you getting any personal value added to your pension. You would have paid a lower NI rate and the defined benefit pensions would pay its defined benefits.

    DB schemes dont need checking as there is nothing to check. DC schemes would have been paid annually into your pension and your statements would show the rebates being added. The pension may still be segmented showing "former protected rights" if you havent transferred it recently and are in an older scheme.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • SwanseaVillan
    • By SwanseaVillan 15th Apr 18, 11:35 PM
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    • 1 Thanks
    SwanseaVillan
    Mine was a DB scheme. So i think you're saying the benefit i derived was from paying a lower NI rate, rather than an increase in pension benefits ? Is that correct ?

    Thanks
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