State pension when have previously been contracted out

[Knid]

Ive been checking my state pension entitlement but despite the explanations on the government website I still don’t understand the implications of having been contracted out in the past.

My forecast says that in 4 years, I will have accumulated my full NI contributions for a full state pension, which it shows as a forecast of £185.15 a week. I’m 52, so will be working more years than that. But it says that I have been contracted out in the past (was in a final salary work scheme for a while) and my ‘COPE’ value is about £34 a week.

Does that mean I will get my state pension amount minus the COPE amount, so forecast of about £150, or get the full state pension amount of £185.15 (forecast) regardless? The government info seems to say both of these things at the same time!

I think the COPE amount is an estimate of your private pension from when you were contracted out and will be in addition to your state pension.

Thanks, that’s what I was hoping!

The other implication is that you may have to have more than 35 years contributions for a full state pension as they did a ‘one off’ recalculation for anyone contracted out a few years ago. If you are planning to continue to work this is not an issue. The forecast saying four more years should be correct, but if you count up your full years you may find you have done 36 or so years in total to get the maximum pension.

I agree with the PP about COPE

You'll get the full pension minus the COPE amount, the assumption being your private supplier will include that once you hit your pension age. Contact them, you may not like what they tell you.

Yes, this is what I was wondering - I know I will ‘get’ the £34, but wasn’t sure if it was embedded in my private pension forecast - for financial planning, I was keen to understand whether to add the £185 or £150 forecast to my private pension forecast. And whether I can make up for this by contributing for more years to get the full £185 direct from the govt.

I have an even more confusing thing…I took early retirement on my company pension (final salary). My company ensign will reduce at 65, and state pension not kick in till 67.5. So when my state pension kicks in it’ll make up for that loss and then some….r will the company pay the contracted out pension at 67.5 to make up a full pension for, state.

absolutely no idea 🙄🤷🏼‍♀️. When I was working we had a nice modeller to predict but now I’m retired I have no idea what I’ll be getting given the increases over the years in state and private pension

im pretty financially literate. I’ve spent ages trawling the internet for example of how to calculate this, but can’t even find examples of this happening to anyone else …it is so unnecessarily confusing

And whether I can make up for this by contributing for more years to get the full £185 direct from the govt.

Things may have changed, but I asked this a few years ago and told no.

I retired last year and my state pension was reduced due to being contracted out. So my state pension was £8900 ish while the full pension would have been around £10000. I do have a teachers pension and a couple of other small pensions. I had over 40 years of contributions but was told that I couldn't top up

i believe your COPE will be deducted but it should be broadly similar to your GMP paid by your former employer so you shouldn’t miss out overall

There is some misleading information here. Partly it depends on your age. The OP will qualify for the New State Pension. According to the government website:

You’ll be able to claim the new State Pension if you’re:

a man born on or after 6 April 1951
a woman born on or after 6 April 1953

Prior to the introduction of the new state pension (I.e. under the old state pension rules), you could contract out and pay less NI and qualify for a lower state pension amount with your private pension using the contracted out money to top up your private pension to the level it would have been if you hadn’t contracted out. This contracted out ‘extra’ is the GMP (guaranteed minimum pension) element shown on your private pension prediction.

When the New State Pension came in it was a flat rate maximum dependent on the number of years contributions with 35 years being standard to get the maximum. As per my PP, if you were contributing prior to the change in the rules, you may have to pay more than 35 years contributions for a full state pension as they did a ‘one off’ recalculation for anyone contracted out a few years ago to level the playing field. Your state pension forecast will show this if you count up how many full years you already have and how many more they tell you you need to make to get the maximum possible state pension.

PS there is a limited window to top up. It’s currently extended to allow more top ups than usual because of this change but the door closes in April 2023 so get on with it if you want to top up and can afford to do it, it’s a bargain.

@Whatevergetsyouthroughthenight,
I've just checked again on-line. It states I'm entitled to the full state pension, however an amount of that is covered by Contracted Out Pension Equivalent, and is expected to be paid by my private pension, it will not be in my State Pension payment from the Government.
I've also asked my pension provider who tell me I will not get the COPE amount as extra payment when I meet my pension age, it is already included.

@Ifailed it all depends on your age, the rules are a minefield. I was referring to the likely situation for the OP not for you and others (unless you are the OP with a name change fail). How old are you? This sounds like the old state pension rules or maybe there’s a newer set for younger people too.

Your pension provider is right about the COPE but being already included, as I said that’s what the GMP bit is on your private pension statement, it shows what was provided by the funds from when you were contracted out but it’s a subset of the overall figure not something extra.

I'm 63 this year.

Serious misinformation on this thread.

I suggest if you posted an edited screenshot of what the gov site shows for you it might have helped...

But… if you work another 4 years you will get £185.15 a week - that is the basic state pension in full.

The site will say “Forecast if you contribute another 4 years before 5 April 2035“ and “£185.15 Is the most you can get”

It will also say:

”Your COPE estimate is £34 a week. This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension scheme, not by the government.”

In effect, there used to be two state pensions. When you were contracted out, this removed you from the “additional state pension” and had no impact on your “basic state pension”.

The COPE amount is the amount that It is estimated your “additional state pension” would have added to your £185.15 if you had not contracted out.

The COPE amount is therefore the amount expected that your personal pension will provide in addition to your basic state pension of £185.15

I am around the same age as you and in a similar position, with a similar COPE amount but all of my non-state pension provision is now in a SIPP.

People who have been contracted out - usually those with public sector pensions do not get the full state pension. This was certainly the case for me. Born in 1956 so retired at 66 last year with 40 + yrs NI contributions

Thanks all, not sure if I should be reassured that I might not be alone in thinking this is quite complicated! @RandomPerson42, what you’ve posted is pretty much exactly what it says. Think I understand now! Hadn’t quite appreciated how historic additional state pension was being managed now compared to people like me who were contracted out.

I phoned the future pensions centre (0800 731 0175) to request a pension forecast as I had a long period of being contracted out in the civil service.
Just had to answer a few security questions and they confirmed that I qualified for the full amount.

You can also request a pension forecast on line

You MAY need to pay more than 35 years NI to get a full state pension IF you were contracted out.

Thats the simplest take away. I’m a pensions adviser

I got the full amount last year. I was contracted out but had sufficient years of service in non contracted out employment to qualify.

I have just checked my pension forecast thanks to information here. It says I was opted out to the equivalent of £44.10 per week. It also says I have 44 years NI contributions so far and that I cannot increase the maximum amount of £185.00 per week. So I take it that I am going to be paid the full £185pw pension from that. I still have 7 years until I can take my state pension.

Goodness knows where the COPE pension actually is nowadays...

Exactly my situation too!

I was contracted out for 11 years and then went self employed for the last 17 years of my working life when I took early retirement but had 44 full years of contributions.

State pension is reduced by just over £30 per week.☹️. I receive a small final salary pension and have another private pension the latter of which I just leave invested at present as I don't need it at present thankfully.

My DH retired early 5 years before me - he is 5 years older - and is on the old rate pension. Despite him being contracted out much longer than I was - ex college lecturer with Teachers' Pension - he receives £200 per month state pension more than I do. 🤬

Goodness knows where the COPE pension actually is nowadays...

Contact your employer who had the scheme and ask (check they have the correct details for you for when it's due to be paid). If they don't exist any more I think you can go to a government site and track down old pensions.

@BigFatLiar thank you! I will start the hunt.

That’s NOT correct. COPE can be held by a personal pension