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  • FIRST POST
    • GDB2222
    • By GDB2222 5th Jun 17, 8:19 PM
    • 14,944Posts
    • 81,195Thanks
    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 3
    • dunstonh
    • By dunstonh 16th Apr 18, 12:27 AM
    • 97,034 Posts
    • 65,026 Thanks
    dunstonh
    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 ?
    Yes. (with the scheme itself covering some of it within the defined benefits).

    Bottom line is that you have nothing to check.
    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 16th Apr 18, 12:03 PM
    • 3,764 Posts
    • 5,684 Thanks
    Silvertabby
    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
    Originally posted by SwanseaVillan
    The accrual rate of a DB scheme is set by the scheme number crunchers and is determined by affordability - ie, money coming in from employees, employers and - and this could be the vital bit - the employer's 3.5% NI rebate (no longer applicable) - against future liabilities.

    Some pension schemes may have applied a lower accrual rate (thereby paying a lesser pension) without the benefit of the employer's NI rebate. Or they may have increased the employee and/or employer's contributions. I doubt we'll ever know for sure!
    Last edited by Silvertabby; 16-04-2018 at 1:25 PM.
    • GunJack
    • By GunJack 16th Apr 18, 2:11 PM
    • 10,539 Posts
    • 7,887 Thanks
    GunJack
    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
    Originally posted by SwanseaVillan
    rather than an increase in STATE pension benefits, but you will have whatever pension that you earned in the DB scheme AS WELL as your state pension...
    ......Gettin' There, Wherever There is......
    • tonyteehee54
    • By tonyteehee54 12th Sep 18, 9:45 AM
    • 2 Posts
    • 0 Thanks
    tonyteehee54
    I'm not "COPING" with any of this. I have never seen so may contradictory posts regarding this subject.
    So I am going to ask some questions. If someone answers them I might have a better understanding. The facts....
    I have a final salary pension. "Gold plated according to the press."
    "Hardly" is my answer.
    State Pension online states the following.
    1.The maximum I can get is 164.35pw- If my memory serves me correct
    2.My current forecast is 126.65 per week.
    3.I have 34 years of contributions and retired very young in 2012. No NI contributions made since that date.
    4 I was contracted out and have a COPE value of 86.20
    5. I have 13 years to make up the shortfall.

    THE QUESTIONS

    1. If I do not pay any more NI contributions will my state pension be 126.65pw + annual inflation increases. ie the forecast figure?

    2. Will my works pension remain unchanged when I claim my state pension. ie does COPE have any effect.

    3. Apparently if I make 9 years voluntary contributions I can make up the shortfall and receive the maximum 164.35. Is this correct?

    4 if I do make voluntary contributions do not fill gaps prior to 2016 as this will not impact on my pension payout, only fill from 2016 onwards. Is this correct?

    It's all too confusing. Just out of interest if I were to pay the 9 years NIC 3 contributions I would be paying almost 7000 at todays rate. Now my state pension age is 67. Not one man in my immediate family achieved an age older than 66. Now call me cynical but I am a firm believer in genetics and fear that any added NIC 3 contributions could in my case be a very bad investment. I would have to live until I was 71 to recoup this. My wife has permission to bury me in the garden and not say a word until her death bed. I've no pals anyway so shouldn't be a problem......Oh and don't suggest I get a job, retirement is great and there are not enough hours in the day now to fit in a job
    • xylophone
    • By xylophone 12th Sep 18, 10:33 AM
    • 28,390 Posts
    • 17,180 Thanks
    xylophone
    At 6/4/2016, your "starting amount" for New State Pension was calculated by comparing your entitlement under the new rules with your entitlement under the old.

    Old Rules

    Full Basic State Pension because you had more than 30 years NI (119.30) + (SERPS/S2P - deduction for contracting out).

    New Rules

    (34/35 x 155.65) + (SERPS/S2P - COPE).

    You received the higher of the two.

    You have a number of years between your early retirement date and State Pension Age.

    If you make no more contributions, your pension at SPA will be your starting amount at 6/4/16 but increased (at the moment) under the triple lock rules.

    You can increase your State Pension by making voluntary contributions - your pension at SPA will then be the Full NSP at 6/4/16 but increased( at the moment) under triple lock rules.

    See https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf


    With regard to your occupational pension, assuming that you have a GMP it is very likely there will be a change to how your pension escalates in payment - it would be usual for your pension to be split into pre 88 GMP/post 88 GMP/excess.

    Pre 88 GMP no increase from the scheme

    Post 88 GMP increase up to 3% CPI (possibly RPI)

    Excess increased by Scheme Rules.

    Check the above with your scheme administrator.

    Also check with your administrator whether your particular scheme applies any deduction to your pension at State Pension Age.

    Read your Scheme Booklet.
    • p00hsticks
    • By p00hsticks 12th Sep 18, 10:58 AM
    • 6,710 Posts
    • 7,339 Thanks
    p00hsticks
    THE QUESTIONS

    1. If I do not pay any more NI contributions will my state pension be 126.65pw + annual inflation increases. ie the forecast figure?

    2. Will my works pension remain unchanged when I claim my state pension. ie does COPE have any effect.

    3. Apparently if I make 9 years voluntary contributions I can make up the shortfall and receive the maximum 164.35. Is this correct?

    4 if I do make voluntary contributions do not fill gaps prior to 2016 as this will not impact on my pension payout, only fill from 2016 onwards. Is this correct?
    Originally posted by tonyteehee54

    THE ANSWERS

    1. Yes

    2. It depends on the particulars of your particular works pension scheme - some pay more prior to state pension age and reduce when state pension scheme kicks in, although I think these are in a minority. (But that's nothing to do ith COPE)

    3. Yes (assuming you do not reach State Pension age first)

    4. Yes (as you have more than 30 years NI already)
    • drumtochty
    • By drumtochty 12th Sep 18, 11:16 AM
    • 186 Posts
    • 97 Thanks
    drumtochty
    1. If I do not pay any more NI contributions will my state pension be 126.65pw + annual inflation increases. ie the forecast figure?

    Correct

    2. Will my works pension remain unchanged when I claim my state pension. ie does COPE have any effect.

    You would have to look at your works pension handbook to answer that question. The COPE figure is nothing more than a notional figure to advise how much your works pension should have increase as a result of contracting out.

    If your pension provider can advise how much the pension did increase as a result of contracting out and it is a lesser number, that reduction on the notional COPE is not made up by the government.

    3. Apparently if I make 9 years voluntary contributions I can make up the shortfall and receive the maximum 164.35. Is this correct?

    It appears correct from some simple calculations.

    4 if I do make voluntary contributions do not fill gaps prior to 2016 as this will not impact on my pension payout, only fill from 2016 onwards. Is this correct?

    Without knowing all the details by and large your statement appears to be correct

    It's all too confusing.

    Stop lying you worked out what was happening.

    Just out of interest if I were to pay the 9 years NIC 3 contributions I would be paying almost 7000 at todays rate. Now my state pension age is 67. Not one man in my immediate family achieved an age older than 66. Now call me cynical but I am a firm believer in genetics and fear that any added NIC 3 contributions could in my case be a very bad investment. I would have to live until I was 71 to recoup this. My wife has permission to bury me in the garden and not say a word until her death bed. I've no pals anyway so shouldn't be a problem......Oh and don't suggest I get a job, retirement is great and there are not enough hours in the day now to fit in a job

    You appear not to have read the recent information on Class 2 NI contributions still being available until the end of the parliament if you get off your backside to go through the motions of paying Class 2 contributions.
    • Linton
    • By Linton 12th Sep 18, 11:47 AM
    • 10,290 Posts
    • 10,660 Thanks
    Linton
    ........
    It's all too confusing. Just out of interest if I were to pay the 9 years NIC 3 contributions I would be paying almost 7000 at todays rate. Now my state pension age is 67. Not one man in my immediate family achieved an age older than 66. Now call me cynical but I am a firm believer in genetics and fear that any added NIC 3 contributions could in my case be a very bad investment. I would have to live until I was 71 to recoup this. My wife has permission to bury me in the garden and not say a word until her death bed. I've no pals anyway so shouldn't be a problem......Oh and don't suggest I get a job, retirement is great and there are not enough hours in the day now to fit in a job
    Originally posted by tonyteehee54

    From Office Of National Statistics around 85% of all people who survive childhood live to 67. Of those who live to 67 more than 95% live beyond 71. So unless you lead a seriously unhealthy lifestyle paying voluntary NI is an astonishingly good deal.
    • Jakeywakey
    • By Jakeywakey 18th Oct 18, 12:49 PM
    • 2 Posts
    • 1 Thanks
    Jakeywakey
    Good afternoon

    Would someone please be kind enough to clarify something for me?

    I am due to retire next year and have just received my state pension forecast showing 164.35 per week. However, I am wondering if this is correct because I was expecting there to be a reduction for the years that I was contracted out.
    I have 47 qualifying years but within this, I was contracted out for 10 years between 1977 and 1987 in a final salary scheme.
    As mentioned, I was expecting a reduction in my state pension because of the contracted out years but this does not appear to be the case! Is this because I have 37 qualifying years when I was not contracted out and this negates the contracted out years?
    My COPE estimate is 19.08 per week and because my final salary pension has been sitting there so many years with annual increases, it is significantly better than the COPE figure.

    I'm not sure if I should get in touch with DWP or not!

    Any thoughts would be greatly appreciated.
    • nrsql
    • By nrsql 18th Oct 18, 12:57 PM
    • 1,840 Posts
    • 645 Thanks
    nrsql
    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?
    Originally posted by GDB2222
    Glad (and not surprised) I'm not the only one.
    https://forums.moneysavingexpert.com/showthread.php?t=5889243

    Think this maybe should be a sticky.
    Well, actually I think they should change the wording on the statement.
    • molerat
    • By molerat 18th Oct 18, 1:19 PM
    • 20,237 Posts
    • 14,521 Thanks
    molerat
    Good afternoon

    Would someone please be kind enough to clarify something for me?

    I am due to retire next year and have just received my state pension forecast showing 164.35 per week. However, I am wondering if this is correct because I was expecting there to be a reduction for the years that I was contracted out.
    I have 47 qualifying years but within this, I was contracted out for 10 years between 1977 and 1987 in a final salary scheme.
    As mentioned, I was expecting a reduction in my state pension because of the contracted out years but this does not appear to be the case! Is this because I have 37 qualifying years when I was not contracted out and this negates the contracted out years?
    My COPE estimate is 19.08 per week and because my final salary pension has been sitting there so many years with annual increases, it is significantly better than the COPE figure.

    I'm not sure if I should get in touch with DWP or not!

    Any thoughts would be greatly appreciated.
    Originally posted by Jakeywakey
    It is most likely your old system calculation at April 2016 was higher than the new due to the long non contracted out period and post 2016 years have topped up to the full amount.
    https://www.helpforheroes.org.uk/give-support/donate-now/
    • dunstonh
    • By dunstonh 18th Oct 18, 1:30 PM
    • 97,034 Posts
    • 65,026 Thanks
    dunstonh
    In very simple terms, the contracted out years are superceded by the contracted in years. You have more than 35 contracted in years. So, you are a winner under the new system.
    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 18th Oct 18, 1:38 PM
    • 28,390 Posts
    • 17,180 Thanks
    xylophone
    Would someone please be kind enough to clarify something for me?
    At 6.4.16 two calculations were done.

    Old Rules

    Full Basic State Pension because you had more than 30 years NI + (SERPS/S2P - deduction for contracting out).

    So 119.30 + ( SERPS/S2P - Deduction for Contracting Out).

    New Rules

    Full NSP (because you had more than 35 years NI) - COPE

    So 155.65 - COPE.

    Your starting amount was the higher of the two.

    If your starting amount was less than full NSP then you could increase it by post 2016 contributions up to full NSP prior to your state pension age.

    If it was equal to full NSP then you could not increase it but would continue to pay NI up to SPA.

    If more than full NSP then you would receive that amount.

    At SPA this would be split into full NSP and excess over NSP - the "protected payment" - this is because the two amounts are index linked differently in payment.

    It seems that in your case you had accrued enough SERPS/S2P to negate your COD/COPE.

    You mention that you are in receipt of the contracted out pension - it will have a GMP because you were contracted out for a period between 1978 and 1997.

    All your GMP is pre 1988. Your scheme has no obligation to index link this part of your pension beyond GMP age although some schemes (at the moment) do.

    You might wish to check your scheme booklet.
    • Jakeywakey
    • By Jakeywakey 18th Oct 18, 4:15 PM
    • 2 Posts
    • 1 Thanks
    Jakeywakey
    Thank you everyone for your explanations - I am much clearer now and obviously happier to be a winner than a loser under the new system :-))
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