Why is my state pension forecast reduced when it says have 40 years full contributions

[morelippy]

So confused.
Google says I need 35 years. I have 40 full years according to my gateway. My pension forecast is reduced and it says I have to pay more.

Stopped work at 55

I'm now 58

If I have 40 full years is this right?

But you are not missing out.

Yes you do not have a full state pension, but your NHS pension will pay an amount to 'top up' so you will receive the same amount of money.

The full state pension is £203.85 you would receive that if you had never paid into the NHS pension.

But you did pay into the NHS scheme and were contracted out.

Lets say the NHS pension is £100 pw.

So if you had not paid into the NHS scheme you would get £203.85 a week.

Lets say that was reduced by £15 a week so you get £188.85 state pension.

That means you get COPE, so your NHS pension is £100 pw + COPE of £15.

So you receive £115 from the NHS.

So if you had not been contracted out and still payed into the NHS scheme you would get £203.85 + £100 = £303.85

Contracted out means you get £188.85 +£115 =£303.85.

Not necessarily.In that case, you get a health professional to sign for eligibility

https://www.gov.uk/carers-credit/eligibility

Back to Op, the poster above me explains how you are not losing out. Currently you want to have cake and eat it.

@sashh the cope bit is the bit I don’t really understand yet. This isn’t necessarily going to be equal to the pension deducted is it as it will depend on how investments have performed? I was contracted out in a group personal pension rather than final salary scheme, so in theory my contracted out contributions could have crashed and burned and I get no extra or they could have performed well and I get more. Is cope more of an average rather than an actual amount you will get? Surely they can’t calculate an accurate figure from every individual pension scheme

Did you work in mental health? can't think of any way whereby an NHS pension taken at 55 wouldn't be significantly reduced.

COPE is an estimate, so yes it can change but the OP was in the NHS scheme so the pension is backed by the government.

I think cope is actually there for you to make a choice to pay for 'extra' years.

https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

I worked for a local authority in a nursery school. Full time for 34 years then part time for 8.5 years. About 18 months odd work before that. I still didn’t qualify for a full pension had to pay one more year it was about £800 which I did. It was because I was opted out though did not realise

@mycoffeecup you're confusing special class status with mental health officer status

Where can you look this up op?

Your state pension via the Government Gateway.. was easy to set up and all your information is there

I'm a retired local government worker. I didn't quite reach 40 years of paying into the local government pension scheme, I was a few years short, however I get nearly the maximum I could get which is nearly half my salary upon retiring. My late husband did similar and his pension was about half of his pay. As he died last year, I receive a share of his pension. BTW, the local government scheme is very well funded and has been forever, we receive updates on how it's invested and how the funds are managed.
I find I manage comfortably, one thing I did notice was that I spent a fortune on actually buying thing to go to work!

Well I am more confused. I did the state retirement calculator. It shows 40 years NI contributions and state pension of £203 per week. Highest I can get. So far so good. It makes no reference to COPE or deductions for being contracted out. Yet I was, for 20 of those years ( recently had a transfer value from one of them that reference guaranteed minimum pension. Anyone know how I find this out? I'm 55 and trying to plan but without an indication of what my state pension will be it's hard!

@User1685409 how did you get to age 80?
As I understand it each year buys c£5 a week pension = c£260 per annum.

If you buy 5 years at c£907 per year = c£4,535
This results in c£25 a week extra pension, c£1,300 a year x 4 years = c£5,200
So in 4 years you have recouped your initial outlay. For me it’s age 71.

I think that you’re covered there with your 40 years.

For me my estimate says that I need to make one more years contributions to qualify for the full £203.85 and in the NI record it’s showing 38 years of full contribution, (of which 3 years have credits) the year just ended is TBC (which will be a full year making 39) and therefore I need to complete this year 2023/24 to hit maximum

I also have contracted out years so it comes down to me needing x years since the rules change, which is just the one more year …… but then I have to wait until 2035 to claim my state pension
I can retire now, and could live on my civil service pension but wouldn’t be able to support the lifestyle I’ve become accustomed to.
While the money and flexibility work for me

I’ll slog on ….. but i hope not to be one of the old folks I first worked with who would always say that they will ‘retire next year’ which was followed by ‘the next pay rise will up my pension so I’ll wait for that’
Then when they did finally retire the message would filter back that they died within a year

Ps I forgot to add the screenshots

There's a lot of confusion around 'contracting out'. It does not mean that you contracted out of the state pension for those years. It means you contracted out of an earning related top-up that existed prior to 2016. You do not have to make up those years. OP - please look at your forecast again. I don't know if they've changed but they used to list any 'missing years' and offer you the OPTION to top up going back six tax years. This is for information - there is no benefit to making up those years if you already have 40 years of contributions.

From https://www.gov.uk/contracted-out

If you were contracted out of the Additional State Pension (also known as State Second Pension or ‘SERPs’) your National Insurance contributions were either:

It was because I was somehow only about £1 under the maximum state pension I could get a week. I don't think you can go above the maximum.

@tommika thank you so much, that makes complete sense. One less thing to worry about.

@User1685409 that makes more sense. So to get the full amount you had to pay c£907 but only got £1 extra a week so £52 a year. In that case it’s not worth paying.

Listen to Martin Lewis episode How to turn £800 into £5000 through BBC sounds podcasts.

Yes for most people it is best to pay the extra to get much more back but I had seen articles in the past about a few people like me buying extra years and not benefiting as they were at or near the maximum.