Confused about State Pension statement

[BeadedBubbles]

I'm currently in receipt of a Civil Service pension and am due to get my state pension in 2025.

The govt website forecast is that I will get a state pension of £200.56 a week. It also says that I've previously been contracted out and my COPE estimate is £65 pw.

My understanding is that the COPE amount is already being paid to me via my work pension. So does that mean it will be deducted from my state pension? Or is it already reflected in my state pension forecast?

Grateful if anyone can clarify this for me!

I'm in exactly the same position and spent some time exploring this.

As I understand, per the .gov website, the COPE amount does not affect the pension forecast but is an additional amount paid by and as part of your Civil Service Pension.

Are you still working and paying National Insurance?

Been getting my CS pension for a couple of years. Doing a few hours a week paid work but not enough to qualify for NI.

I always thought that if you were contracted out you'd get a reduced state pension so thought I'd check. But my forecast is pretty much the full amount so am thoroughly confused!

How many years were you contracted out for? Someone may correct me here, but I thought as long as you had 35 years contracted in, even if you worked for another ten years that were contracted out, you would still have enough contributions, iyswim.

You can go on the website, and click on each year to see what the government has recorded for you.

The COPE figure is just there for information. You don't need to deduct it from your forecast.

Thanks!

Contracted out years do not count in full for the post 2016 'New' State Pension.

I was in the Civil Service from 1978, aged 18, until 2013 when I was made redundant and took my pension early. I'm old enough to have been credited with NI as soon as I was 16.

As I've worked most years since 2013 I'm now on course for the full £203.85 by 2025 but still need a couple more years to reach that.

@BeadedBubbles you are essentially 1 year short of a full pension.

You say you are working a few hours a week but not enough to pay NI. Do you earn gross £123 per week or more? If so, you meet the threshold to get NI benefits.

Look at your NI record and see if you have any years that are not full years. If so it may be worth topping up 1 year.

However, If you retired this FY I.e. after 6 April 2023 my advice is continue working a few hours. In January 2025 check your NI record and you may find that the 2023/24 year is either a full year or a partial year and with a top up you actually qualify for a full state pension.

@Sisterpita - no, I don't meet the threshold to pay NI I'm afraid.

Hi @Bromptotoo
Please could I ask you to explain this in a little more detail?

When you say Contracted out years do not count in full for the post 2016 'New' State Pension - what is the impact of that?

COPE has been discussed at length on the various Facebook pension advice pages that I am on, when you contracted out of SERPS either you and your employer paid reduced NI, or you paid full NI but some was diverted into your company/works pension either way you paid less into the state system.

Under the old scheme contracting out did not reduce the old basic, you still got that but not the second state pension for the period you were contracted out for, which is why a lot of people may not have realised they had been contracted out as they were receiving the basic state pension they were expecting.

However it does affect the New State Pension for the following reason.

Everyone who had a NI history pre 6th April was given a starting amount, to reach that amount the Government used 2 calculations, what you would have got if the rules had not changed, basic plus SERPS, less time contracted out and other variants such as paying the married woman's stamp, and what you would have got if the new rules has been in place all your working life, flat pension with no SERPS, (therefore no contracting out) and you got the higher of the 2.

Your starting amount could be higher than the NSP in which case you get a protected payment taking you over the NSP, but any NI/credits paid after 6th April 2016 did not increase your pension or if you were contracted out for a longer period it would be lower, therefore any NI/Credits increased that amount until you either reached the NSP amount or you reached state pension age which ever came sooner, if you did not have enough years between your starting amount and your state pension age unless you buy extra NI you would not get the NSP.

Although people say disregard the COPE on a forecast it is a useful thing to know, when people post on our pages saying they have paid 40 odd years but their forecast says they will not get the full NSP unless they pay in more the first thing we say is 35 years is not relevant for anybody with a NI history pre 2016/2017 it can be anything from 28 to 51 years and the second thing we ask is does their forecast show a COPE (Contracted Out Pension Equivalent) if so we can tell them they have a works/company pension that will pay at least the COPE amount.

Thanks @Oldsu

I'll be honest though, I still don't understand what the actual £x impact to a person is!

I wish the government gave some illustrative examples. Is there anywhere that does that?

@MidnightOnceMore its a very personal calculation as people could switch between contracted in and contracted out. What you need to do is a pension forecast which shows your position. https://www.gov.uk/check-state-pension

I feel like it must be my brain, but it feels circular!

Someone's forecast shows a COPE amount, which is often said can be ignored, but the poster above said it shouldn't always be ignored - how does one know which category your individual COPE amount falls into?

Or does the COPE amount only need further investigation if the forecast pension isn't for the full amount?

@MidnightOnceMore you are confusing two things that is why it appears circular.

Basic pension - get a forecast to see if you need to more years NI. If you have a COPE it will show on the forecast.

COPE - This explains it far better than trying to write a post. 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

@MidnightOnceMore sorry I didn’t quite answer your question.
There is only one type of COPE. Everyone should check their COPE figure against their private pensions.Most people don’t because they don’t know how to or can’t be bothered.

It’s the same as you are personally responsible for checking your payslip is correct and reporting over and underpayments. Most people don’t because they don’t know how or can’t be bothered.

@MidnightOnceMore The government cannot give illustrative examples as everyone is different it would be an impossible task and there is not really anywhere else that does for the same reason.

The reason why I say it should not be ignored as often its the only way a person knows they have been contracted out, either not knowing they have a works/company pension that they should access, although companies actually have a statutory duty to tell their employees that they have been contracted out its clear that either some companies did not or they did and people have forgotten about it, or they know they have a works/company pension but didn't know their NI contributions have been reduced to pay into it which affects what they will get from the state.

In simplistic terms if your forecast says you have a COPE amount of say £20 a week you will have a works/private that should give you an annuity of at least that amount, depending of course on your actual scheme and how you choose to take it. There are no categories of COPE.

The trouble now is expectations, people assume that the NSP is the new basic if they have paid in for 35 years they are going to get it and that is far from the reality

.

What I meant was that the publicity suggests that one needs 35 years of qualifying contributions for the full pension of £203.85.

At the time I left the Civil Service in 2013 I had nearly 38 years but my projected amount was considerably less than £203.85. That, as I understand it, is because conts while I was in the PCSPS were at the contracted out rate.

In practice as I've embarked on a second career in the Voluntary Sector and, unless my project loses funding, will pay contributions until my pension age (66) by which time I will have enough to get £203.85.

@Bromptotoo I think the 35 years is very misleading and there should be more publicity about checking your record.

I was in a similar position but retired. I have topped up the partial year and will pay the next 2 as soon as I can. I think it is Jan 2024 for 2022/23.

@Sisterpita I totally agree it causes a lot of anger and confusion among people who post on pension sites, we are all in the transition period with our NI record pre and post 6th April being used in our calculations, its actually those who were born in 2000 who could start paying NI when they are 16 who only need 35 years as they would have no NI record before then, in fact the Govs own website do actually mention this as they state' You’ll need 35 qualifying years to get the new full State Pension if you do not have a National Insurance record before 6 April 2016.

Thank you for posting that link to the gov site re contracting out. I'm still trying to digest it 🙂

I'm still confused though. I thought I did only need 35 qualifying years, and when I was I contracted out, they didn't count as qualifying. I've got a mixture of non-contracted out years, and contracted out years, pre 2016. I thought as I have 35 years of non-contracted out contributions (including post-2016), I'd still get the full state pension.

I think I'll only believe it when it's in my bank account in a few years time! 😂

@Oldsuit’s why I try to tell as many people as I can.

@LozengeShaped each January I check the online state pension forecast and my NI record. To me it’s part of my routine financial planning.

I've read that page already.

What I can't understand is how many £ I will receive from the government each week.

What I don't understand is what impact the COPE figure will have on the number of £ I will receive in my state pension.

In simplistic terms if your forecast says you have a COPE amount of say £20 a week you will have a works/private that should give you an annuity of at least that amount, depending of course on your actual scheme and how you choose to take it. There are no categories of COPE.

The thing I don't understand is: Will a person's state pension be £20/week lower (so £183 instead of £203) or are the two things not connected?

Can you have been contracted out and still get the full state pension, and how do you know that?

Overall, the pensions webpages are SHIT. They absolutely could do illustrative examples - not personalised ones obviously, just highlighting what you should look for and some scenarios.

It tells you on your Government Gateway page. I can see mine says my pension forecast is for a full State pension if I pay 2 more years NI contributions. I am now 64, have worked all my life apart from when at Uni, built was in receipt of child benefit at that time. However, as a teacher for 20 of my 44 working years I too have been affected by the same thing. Hence the need to have more than 35 years.