Forces Pension - COPE payments

[busby1971]

Anyone else looked at their COPE payment on their personal tax account.

Quite a chip off the state pension for Forces Pensioners.

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[Dan_Brown]

Eh?

...........

 

[busby1971]

Impact of being contracted out on the new super state pension. On you.gov.

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[Dan_Brown]

Is this what you are referring to?

https://www.ctp.org.uk/assets/document/417241

To qualify for the full new state pension, you will need to have 35 qualifying years. Previously this was 30 years.

Will some people get less than £155?

Yes. Anyone who contracted out of the second state pension before 6 April 2016. This will particularly be the case for millions of teachers, NHS workers, police officers and members of the armed forces - in other words public sector employees.

Such workers will have paid a lower rate of NICs. Instead they will have paid extra into a workplace pension scheme. As a result they will be paid a reduced state pension.

How much less will depend on how long they were contracted out for. Government figures show that only 45% of pensioners will get the full amount in the first five years of the new state pension. As many as two million people will not get the full amount.

More info here:

https://www.gov.uk/government/publi...is-affect-the-amount-of-state-pension-you-get

From the Forces Pension Society:

From April 16 you will have seen your NI contributions increase by 1.4% of pay, and that is to achieve a Single Tier Pension rather than the old 2 part arrangement. The number of years' contributions required to achieve the full entitlement increased from 30 to 35 at the same time. Most of you will achieve the new rate - we understand that 35 years contributions with at least 7.5 yrs contributions at the new higher rate will do the trick. There are items on this in a recent Soldier Magazine and on the CTP website.

From MSE:

Under the new state pension rules that came in on April 6 2016, you need a minimum of 10 years before you'll get any payout at all. Reach this and you'll be paid 10/35ths of the total – currently £155.65, or about £44. These qualifying years can be from before or after 6 April 2016 and don't have to be 10 years in a row – they can be dotted about over a much longer period.

To get somewhere in between

You'll get the equivalent value of the state pension according to the total number of years you've built up – so 23 years would give you roughly two thirds of the current £155.65 payout, or about £102.
As a guide to what you might get, multiply the number of years you've got by £4.44 – this figure is what each qualifying year is roughly worth.

There's a potentially nasty sting in the tail, though, for many people who thought they had built up a given number of years. Not all NI years actually count when working out how much you're entitled – this is because they're not treated as 'full' years – and it could mean you end up with much less than you imagined (see 'contracting out' below).

Basically, because we/MoD contracted out we will 'only' get the Basic State Pension. However, this is why our NI contributions have increased; so we can get the full £155 pension IF you make the full 35 years. However, you do not have to do another 35yrs at a higher rate as some believe, you just need to make up the difference, which is very roughly calculated at a further 7.5yrs at the higher rate.

More info:

http://www.thisismoney.co.uk/money/...ed-country-Ive-told-I-wont-state-pension.html

FPS very kindly keep an eye on this board and offer guidance, hopefully they will be able to better answer this for you.

 

[busby1971]

Yep that's it, looks like rather than not earning pension whilst contracted out you build up a COPE balance, so that when you get your state pension at what ever rate you've earned you then get it reduced by this COPE amount, it also looks like there is no way that paying beyond 35 years to reduce this COPE amount. After 22 my COPE is about 36 quid a week, which is quite a chunk.

Not a specialist but pretty sure under the old SERPS scheme you could get a better deal.

Not noticed any comments out there about this so thought I'd see whats know, Will wait out for Vauxhall to comment.

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[Vauxhall]

Yep that's it, looks like rather than not earning pension whilst contracted out you build up a COPE balance, so that when you get your state pension at what ever rate you've earned you then get it reduced by this COPE amount, it also looks like there is no way that paying beyond 35 years to reduce this COPE amount. After 22 my COPE is about 36 quid a week, which is quite a chunk.

Not a specialist but pretty sure under the old SERPS scheme you could get a better deal.

Not noticed any comments out there about this so thought I'd see whats know, Will wait out for Vauxhall to comment.

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Sorry for the delay but I thought it best to get FPS HQ to give me the info:

Cope stands for Contracted Out Pension Equivalent; it is what used to be called COD – Contracted Out Deductions.
In simple terms the State Pension people produce a statement/forecast of your state pension benefits on the basis that you were contracted in throughout it, and the deduct the difference between contracted in and contracted out entitlement for the periods that you were contracted out – which is all of your Armed Forces service and any other period of membership to a pension scheme that was, prior to 6[SUP]th[/SUP] April 2016, contracted out.. Members of the FPS can learn more on this subject by logging on to the FPS website and in the members’ area look for Leaflet FPS/1.

 

[phantomphixer111]

Yep that's it, looks like rather than not earning pension whilst contracted out you build up a COPE balance, so that when you get your state pension at what ever rate you've earned you then get it reduced by this COPE amount, it also looks like there is no way that paying beyond 35 years to reduce this COPE amount. After 22 my COPE is about 36 quid a week, which is quite a chunk.

Not a specialist but pretty sure under the old SERPS scheme you could get a better deal.

Not noticed any comments out there about this so thought I'd see whats know, Will wait out for Vauxhall to comment.

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I've just checked my forecast and for me the COPE amount has increased to £64 from £56 2 years ago.
Well pissed as I'm paying £500 a month NI

 

[busby1971]

Annoying isn’t it, probably worked out on pension entitlement so as the pension goes up the, deduction goes up too. I just think of my COPE as a 20% deduction rather than a specific amount.

I’m paying about the same NI as you however, it doesn’t matter how much you pay, you earn the same entitlement as someone who pays the minImum of around £500 per year.

And don’t forget about the hidden NI which the employer has to pay to employ you which is about a similar amount, tax take for a basic rate payer is nearly 45% and that’s before the additional NHS tax next year.

 

[Vauxhall]

For those who reached State Pension Age before April 2016, the COPE is worked out when you claim your state pension and it should remain the same. However (and there is often a 'however'), following a recent HMRC reconciliation exercise errors were found in the DWP's calculation of the COPE for some people and action is ongoing to correct the error:


https://forcespensionsociety.org/2021/02/guaranteed-minimum-pension-reconciliation/

For those of you who reached State Pension Age in or after April 2016, your COPE figure was worked out as part of the 'Foundation Amount' for the new Single Tier State Pension. I can only think that the increase that phantomphixer111 has seen is part of this check.

 

[Cooheed]

Annoying isn’t it, probably worked out on pension entitlement so as the pension goes up the, deduction goes up too. I just think of my COPE as a 20% deduction rather than a specific amount.

I’m paying about the same NI as you however, it doesn’t matter how much you pay, you earn the same entitlement as someone who pays the minImum of around £500 per year.

And don’t forget about the hidden NI which the employer has to pay to employ you which is about a similar amount, tax take for a basic rate payer is nearly 45% and that’s before the additional NHS tax next year.

Taxman is just a cnut

 

[Late & Tired]

Taxman is just a cnut

You praise him too highly...

 

[Captain Kirk]

How many here, ex serving, are waiting for this calculator? I have a split 05/15, which I think will go all 05.
Because I’d topped out in rank I don’t think there’s any difference between average career and 05, so I don’t think I’m owed anything, and if it’s the other way round and going purely 05 puts me in debt I do hope they don’t suddenly decide I/ we should be out of pocket.
Nervous few months ahead maybe?

 

[montheton]

Listened to a pensions brief about two months ago and they said you`d be able to choose which one you wanted to be on with the different timings included. They`d provide the numbers for you to decide. The new calculator should be up and running in Jan.