A State Pension puzzle
Discussion
Since 2016 there have been two types of State Pension.
In 2016/17, those already I receipt of a Basic (old) State Pension, continued on the same scheme and were paid (maximum £119.30 per week.
The New State Pension in that first year paid (2016/17 maximum £ 159.55).
If the same annual percentage increases have been applied each year to both schemes, I was expecting the new scheme to steadily move ahead of the old scheme. Every percentage increase being applied to higher figures.
Can anyone see what is wrong with my notes below, which appear to show the old scheme narrowing the gap to the new scheme.
I think I have brain fog somewhere.
Thank you.
Zigster said:
I haven’t checked it in detail but first glance looks like your starting figure for the New State Pension is wrong.
I think you’ve quoted the 17/18 figure. The 16/17 figure was £155.65pw.
I think you’ve quoted the 17/18 figure. The 16/17 figure was £155.65pw.
Thank you Simon.
It makes sense now.
The percentage difference between old and new remains constant, but of course the Pound difference increases each year.
Began with the new weekly pension being greater by £36.35, and in April will be £53.80 more.
People now talk about two tier this and that.
Why it was decided that pensioners have to be in one of two tiers, I don't know.
State pensions are immensely complicated.
It used to be two tier: Basic State Pension plus SERPS.
It changed from April 2016 to a single, higher, new State Pension.
But there are messy transitional arrangements so people retiring post April 2016 get the better of both, subject to their NI history as accrual differs between the pre and post 2016 pensions. Further complicated by people being able to opt out of SERPS pre -2016 and receive some form of credits to a non-State pension in return.
I deal with this as part of my day job and I get confused about the detail - there’s no hope for the layperson.
It used to be two tier: Basic State Pension plus SERPS.
It changed from April 2016 to a single, higher, new State Pension.
But there are messy transitional arrangements so people retiring post April 2016 get the better of both, subject to their NI history as accrual differs between the pre and post 2016 pensions. Further complicated by people being able to opt out of SERPS pre -2016 and receive some form of credits to a non-State pension in return.
I deal with this as part of my day job and I get confused about the detail - there’s no hope for the layperson.
It then gets even more complicated when you find out you have paid reduced NI contributions so won't get the max SP, instead it will be topped up with a separate COPE payment 
I've never had a definitive answer whether this COPE payment is actually being paid now (as it doesn't show anywhere) as part of my employer's pension on retirement or it's added when I reach SP age?
I've never had a definitive answer whether this COPE payment is actually being paid now (as it doesn't show anywhere) as part of my employer's pension on retirement or it's added when I reach SP age?
Dealing with the financial impact of COPE (a “SERPS adjustment”) when an individual transfers from a DB scheme (with GMP) to a personal pension is possibly the most legislatively challenging part of my job. It’s related to the SERPS part of your State pension rather than the Basic State Pension.
Broadly, your COPE is, in effect, being paid by your private pension. It does not form part of your State pension but is what you are assumed to have received in return for contracting-out (bear in mind that you paid lower NIC for all the years you were contracted-out). I’m not going to try and explain further in a forum post because I’ll probably get some technical detail wrong and get called out on it. But have a look at the link below which should explain it more comprehensively than I would.
https://www.moneyhelper.org.uk/en/blog/retirement/...
Broadly, your COPE is, in effect, being paid by your private pension. It does not form part of your State pension but is what you are assumed to have received in return for contracting-out (bear in mind that you paid lower NIC for all the years you were contracted-out). I’m not going to try and explain further in a forum post because I’ll probably get some technical detail wrong and get called out on it. But have a look at the link below which should explain it more comprehensively than I would.
https://www.moneyhelper.org.uk/en/blog/retirement/...
My HMRC pension statement says I've got a COPE part of around £20 a week, from memory.
I don't recall contracting out, but I'm going to assume I did and it was a long time ago. It would have been when I was working in a small company around 1990 for 18 months. That company no longer exists and hasn't for about 30 years.
I've no idea where this money is sitting, and how to access it.
Have I lost it forever?
I don't recall contracting out, but I'm going to assume I did and it was a long time ago. It would have been when I was working in a small company around 1990 for 18 months. That company no longer exists and hasn't for about 30 years.
I've no idea where this money is sitting, and how to access it.
Have I lost it forever?
£20pw sounds quite a lot for just 18 months of contracting out. Are you sure you weren’t in contracted-out employment other than that?
In terms of tracking down pensions, you need to remember where you were working and roughly when. You then need to contact those employers and explain the situation:
https://www.gov.uk/find-pension-contact-details
You may find out that you have some pension benefits sitting with those old employers, and perhaps house moves over the years mean they lost contact with you.
Or you may found out that you transferred those benefits to a personal pension arrangement.
Or there could be another reason.
It would have been quite unusual to have been employed for several decades without any pension to show for it.
In terms of tracking down pensions, you need to remember where you were working and roughly when. You then need to contact those employers and explain the situation:
https://www.gov.uk/find-pension-contact-details
You may find out that you have some pension benefits sitting with those old employers, and perhaps house moves over the years mean they lost contact with you.
Or you may found out that you transferred those benefits to a personal pension arrangement.
Or there could be another reason.
It would have been quite unusual to have been employed for several decades without any pension to show for it.
I was going to let you know my COPE amount as I know how many years that is based on. But, they seem to have removed that information from my HMRC personal account "State Penson Summary".
If I select the link in this section;
You’ve been in a contracted-out pension scheme
Like most people, you were contracted out of part of the State Pension.
all it does is take me to the standard explanation as to what contracting out is.
Where is it now shown?
However, I do have a screen shot from a couple of years ago and the amount is about £70 per week (which shouldn't have changed). This is calculated based on about 20 years contacted out service, first with a personal pension for a couple of years and then a public sector pension. I mention the types of pension to indicate I wasn't earning huge amounts during my career.
If I select the link in this section;
You’ve been in a contracted-out pension scheme
Like most people, you were contracted out of part of the State Pension.
all it does is take me to the standard explanation as to what contracting out is.
Where is it now shown?
However, I do have a screen shot from a couple of years ago and the amount is about £70 per week (which shouldn't have changed). This is calculated based on about 20 years contacted out service, first with a personal pension for a couple of years and then a public sector pension. I mention the types of pension to indicate I wasn't earning huge amounts during my career.
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