Author Topic: COPE  (Read 2146 times)

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: COPE
« Reply #25 on: January 11, 2020, 09:34:03 pm »
I remember reading an Observer article, probably in the 1970s so there's no chance of it being on the internet, about teachers' pensions. I was definitely still in teaching and I think it was around the time of the Clegg award. I just tried googling that and ended up with a load of picture of Nick Clegg, so that was no help. The Clegg award of circa 1981 was designed to bring teachers close to where they were in 1974 after the Houghton award, which is mentioned in this Graun article from 2001. https://www.theguardian.com/news/2001/feb/03/leadersandreply.mainsection

Anyway, back to the point I was about to make. The said article about teachers' pensions stated, correctly, that the money was not being invested in a "pensions pot" but was simply being clawed back, and teachers' pensions were paid from general taxation according to a formula of 1/80th of your salary for each year that you taught. The article said that this was very unjust as those pension schemes that actually invested the money in the stock market were racing way ahead of the rate of inflation at the time, and therefore well ahead of teachers' pay rises. The Civil Service scheme was similar, except that was non-contributory. When I switched from one to the other, there was no pensions pot there either, but a sum of money did change hands. I may still have the paperwork somewhere, but IIRC about £10k was transferred from the teachers' to the CS scheme in 1986, when I changed careers.

Given that the article I'm referring to singled out teachers' pensions, and not public sector pensions in general, would imply that other bits of the public sector did indeed have "pension pots". You may recall not many years ago when public sector pensions and their recipients were under attack from the gutter press because private sector pensions did not have the "gold plated" pensions that civil servants and teachers had.

There are two words which sum up the shafting of private pensions schemes: Margaret Thatcher. It was under her influence that the good old endowments mortgages also became useless. I'm guessing that people who paid into an NHS pension ended up being royally screwed by Thatcher and her successors. Gordon Brown also did a lot of damage when he gave employers "pensions holidays".

I would be very interested to find out whether your contacting out was something you chose to do or whether it happened by default.
Eating's a serious business. Don't bollocks around wagging your tail.

FifeingEejit

  • Not Small
Re: COPE
« Reply #26 on: January 11, 2020, 10:43:14 pm »
Interesting, the current NHS Scotland pensions are still unfunded and are 1/54th or 1/80th of salary depending on whether it's the 1995 or 2005 scheme.
There is presumably also people on what ever went before the 1995 scheme.

There is of course the lieklyhood that pre-1999 the Secretary of State for Scotland did things differently from what the DfH and its predecessors did.

Re: COPE
« Reply #27 on: January 11, 2020, 10:45:13 pm »
I would be very interested to find out whether your contacting out was something you chose to do or whether it happened by default.

As best I can remember it was a decision, albeit sold to us along the lines of, "You pay 2% less NI; what is there not to like about it?"

A gut feeling says, as Mike vaguely recollects, that whatever replacement pension I opted for was at some point later bought by Scottish Widows but I cannot say for sure. Wait a minute: My Scottish Widows plan has a start date in 1987. I was in the NHS from 1976 to 1986 and I think we had to wait 2 years before our pension started, so I would have started in 1978. It is looking like the plan was sold to Scottish Widows in 1987.

Re: COPE
« Reply #28 on: January 12, 2020, 06:47:06 pm »
I was in the NHS in Scotland from 1985 to 1991, and my pension is still with the NHS Scotland, due to come into payment when I reach 60 in 3 years time, it won't be much but enough to pay my food bills.
If I remember rightly it was contracted out for NI purposes for some of those years at least.
I don't remember any Scottish Widows pension being offerred or involved.

My State Pension statement says if I contribute for another 4 years I will qualify for £168.60 per week.
But also says my contracted out amount is around £13 per week.
Does this mean I will get £168 minus £13, or does it mean my contracted out period was short enough not to affect the amount I eventually qualify for and I will get the full £168?

.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: COPE
« Reply #29 on: January 12, 2020, 07:09:37 pm »
We don't know this. My contracted-out period was 18 years. My "other" years, 17 of them, were not contracted out. I have 3 mystery years credited to me before I was teaching which are listed separately from the rest. I had assumed that they were my 3 years at teacher training college. My Mate Terry Who Art In Sibton also had those 3 years (1972 - 75) credited to him. My wife didn't although we all attended the same college for 3 years. I assumed that because she didn't qualify as a teacher although she completed the course, she didn't have those years added. However, the guy at HMRC said that training years didn't count towards NI. Who knows what was going on 47 years ago? Certainly, none of the staff in post then would still be in post now!
Eating's a serious business. Don't bollocks around wagging your tail.

FifeingEejit

  • Not Small
Re: COPE
« Reply #30 on: January 12, 2020, 09:21:03 pm »
Did you and Terry sign on, qualify for Child benefit or some other thing that your wife didn't at the time?

I've got the years from my 16th birthday to 18th listed as qualifying years, the next 2 aren't and then I was earning enough from part time work placements the other 2 years at uni to qualify.

MikeFromLFE

  • Previously known as Millimole
Re: COPE
« Reply #31 on: January 12, 2020, 10:04:00 pm »
hrm... that sounds like something you've set up yourself at some point due to the "Personal Pension Plan" component rather than one of the former Public Sector pensions being sold off to SW.

SERPs is one of the previous names of there former Additional State Pension (also previously known as the "Second State Pension") it's a bit like Prince really...
I've a vague recollection of there being an NHS option for additional pensions with two providers, one of which was Scottish Widows (I think the other might have been Equitable Life - which is where I went).
The details are hazy but I'll see if I can find the paperwork.
Free Standing Additional Voluntary Contributions FSAVCs - that's what I was thinking of. There was a choice of two NHS providers Scottish Widows & Equitable Life. Heaven alone knows how this feeds into this discussion, but I think I got a payout when Equitable Life went tits up.
Too many angry people - breathe & relax.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: COPE
« Reply #32 on: January 12, 2020, 10:12:08 pm »
Did you and Terry sign on, qualify for Child benefit or some other thing that your wife didn't at the time?

I've got the years from my 16th birthday to 18th listed as qualifying years, the next 2 aren't and then I was earning enough from part time work placements the other 2 years at uni to qualify.

Neither Terry nor I were the named recipients for CB.

Our wives were the named recipients for CB. Terry's wife Janet spent 24 years teaching. They had 2 sons but I don't know how long she received CB for. My wife Janet spent ... 1979 to 2004 in receipt of CB. I suspect that, for NI purposes, that would be 1979 to 1998 (when our youngest was 12). From 2001 to 2018 she was in receipt of Carer's Allowance. So 19 years and 17 years gives her a full complement. She receives £168.60 a week.
Eating's a serious business. Don't bollocks around wagging your tail.

Adam

  • It'll soon be summer
    • Charity ride Durness to Dover 18-25th June 2011
Re: COPE
« Reply #33 on: January 12, 2020, 10:14:18 pm »
I remember reading an Observer article, probably in the 1970s so there's no chance of it being on the internet, about teachers' pensions. I was definitely still in teaching and I think it was around the time of the Clegg award. I just tried googling that and ended up with a load of picture of Nick Clegg, so that was no help. The Clegg award of circa 1981 was designed to bring teachers close to where they were in 1974 after the Houghton award, which is mentioned in this Graun article from 2001. https://www.theguardian.com/news/2001/feb/03/leadersandreply.mainsection

Anyway, back to the point I was about to make. The said article about teachers' pensions stated, correctly, that the money was not being invested in a "pensions pot" but was simply being clawed back, and teachers' pensions were paid from general taxation according to a formula of 1/80th of your salary for each year that you taught. The article said that this was very unjust as those pension schemes that actually invested the money in the stock market were racing way ahead of the rate of inflation at the time, and therefore well ahead of teachers' pay rises. The Civil Service scheme was similar, except that was non-contributory. When I switched from one to the other, there was no pensions pot there either, but a sum of money did change hands. I may still have the paperwork somewhere, but IIRC about £10k was transferred from the teachers' to the CS scheme in 1986, when I changed careers.

Given that the article I'm referring to singled out teachers' pensions, and not public sector pensions in general, would imply that other bits of the public sector did indeed have "pension pots". You may recall not many years ago when public sector pensions and their recipients were under attack from the gutter press because private sector pensions did not have the "gold plated" pensions that civil servants and teachers had.

There are two words which sum up the shafting of private pensions schemes: Margaret Thatcher. It was under her influence that the good old endowments mortgages also became useless. I'm guessing that people who paid into an NHS pension ended up being royally screwed by Thatcher and her successors. Gordon Brown also did a lot of damage when he gave employers "pensions holidays".

I would be very interested to find out whether your contacting out was something you chose to do or whether it happened by default.

OK, quick pensions lesson!

At the time of your teaching employment, most Government schemes were unfunded, although the Local authority ones were funded.  However, what they did have in common was that they were final salary schemes, meaning you get a set amount of salary for each year of service, such as 1/60th or 1/80.  Teachers got 1/80th for each year of employment for pension, plus 3/80th of salary as a tax free lump sum, which in monetary terms was broadly equivalent to getting 1/60 for pension and then having to commute some of that pension for tax free cash.

At that time, many large company schemes were also final salary schemes, also often called defined benefit, meaning you easily knew what your pension benefit would be at retirement age.  In a funded final salary scheme, they'd work out all the potential liabilities for all the employees, and make assumptions for the number of deaths, early retirements and leavers, and know that at any given point in time they'd need £x pa to pay out benefits for everyone.  Then you add on assumptions for future investment growth based on whatever assumptions they decide to use based on a comprehensive spread of assets, fund costs etc etc, to then arrive at an annual cost required to be paid to cover all the liabilities, on the assumption the scheme carries on.  In most schemes, employees paid some of the cost, with employers paying the majority.  And if there was an unexpected event, such as a stock market crash, then employers would have increase their contribution.  *

Similarly, when over the years legislation gradually required better benefits, such as more index linking, generally employers had to pay the majority of the cost. The scheme would however carry on, guaranteeing the levels of benefits, with the employer being liable to a large extent for ensuring the overall fund was adequate to provide the required benefits for everyone.

The unfunded Government scheme, just like the State pension, are all paid for out of the Government's general taxation income.  And the potential liability for those is a very big figure.  But that's another story. 

However, prior to 2016 regardless of being funded or unfunded, if you left a Government pension scheme, you were entitled to have a transfer of the notional value of your accrued pension.  In very simple terms, if your leaving salary was say £40,000 and you'd accrued 30/60ths meaning a pension of £20,000 which would then be index linked to your retirement age, they'd work out what that rolled up pension would be, then work backwards to arrive at what lump sum would need to be invested now, and grow (based on a defined set assumptions for investment growth and costs) to then be of sufficient size to secure whatever that rolled up pension is.  And that lump sum would be the transfer value. 

Personal pensions operate on what's called a money purchase basis - money goes into a policy written in your name, invested in whatever fund you want, and whatever it's grown to at your retirement age is used to secure benefits, (or even cashed in).  The point is you bear the investment risk, so if you decide (or are advised) to invest in Russian property (for example) and it all collapses the day before you retire, you lose.  In a large funded final salary scheme, they wouldn't invest in a single asset, so reducing risk, and being a pooled fund, investment risk is spread, with the employer being liable for most of any long term increase.  A short term fall in the stock market wouldn't make a large scale change in the fund, as they'd assume in the long term that markets would recover.

Unfortunately, Mrs Thatcher's Government, in encouraging private provision, meant lots of unscrupulous salespeople persuaded people to opt out of their final salary scheme, on the basis of the then booming stock market - ignoring the fact that in a personal pension, they no longer had the benefit of the employer's contribution.  A lot of nurses were conned into coming out of the NHS scheme for example, although most were hopefully compensated and bought back into their original schemes as they had never opted out, under the pension mis selling campaign in the 1990's.

Personal pensions could only contract out of SERPS from 1988 onwards (but if set up then could also cover 1987).  Employer schemes could however contract all their employees out in bulk from 1978 onwards.


* Back in the early 80's when I worked for Sun Life, one of my tasks was working out the liabilities to arrive at an employers funding rate for a number of company pension funds.  Incredible complex manual calculations.  Took me ages with a reverse polish logic calculator.
“Life is like riding a bicycle. To keep your balance you must keep moving.” -Albert Einstein

Adam

  • It'll soon be summer
    • Charity ride Durness to Dover 18-25th June 2011
Re: COPE
« Reply #34 on: January 12, 2020, 10:17:40 pm »
Free Standing Additional Voluntary Contributions FSAVCs - that's what I was thinking of. There was a choice of two NHS providers Scottish Widows & Equitable Life. Heaven alone knows how this feeds into this discussion, but I think I got a payout when Equitable Life went tits up.

FSAVCs were merely a money purchase pension that you could set up to pay additional personal contributions into, outside of the main pension scheme, meaning you could invest in whatever funds were offered by the insurance company.  They were all rebadged years ago as personal pensions when the restrictions on not allowing people to be in a company pension and also pay into a personal pension at the same time were lifted.
“Life is like riding a bicycle. To keep your balance you must keep moving.” -Albert Einstein

Adam

  • It'll soon be summer
    • Charity ride Durness to Dover 18-25th June 2011
Re: COPE
« Reply #35 on: January 12, 2020, 10:19:04 pm »
I was in the NHS in Scotland from 1985 to 1991, and my pension is still with the NHS Scotland, due to come into payment when I reach 60 in 3 years time, it won't be much but enough to pay my food bills.
If I remember rightly it was contracted out for NI purposes for some of those years at least.
I don't remember any Scottish Widows pension being offerred or involved.

My State Pension statement says if I contribute for another 4 years I will qualify for £168.60 per week.
But also says my contracted out amount is around £13 per week.
Does this mean I will get £168 minus £13, or does it mean my contracted out period was short enough not to affect the amount I eventually qualify for and I will get the full £168?


You'll get £168 minus £13, if you contribute for another 4 years.
“Life is like riding a bicycle. To keep your balance you must keep moving.” -Albert Einstein

tonycollinet

  • No Longer a western province of Númenor
Re: COPE
« Reply #36 on: January 13, 2020, 08:30:41 pm »
The articles I've read state that you don't need to subtract the cope from the forecast:
See page 14 here:
https://www.royallondon.com/contentassets/8c6335d848984476bb2e1edcd8daa045/good-with-your-money-guide-8-new-state-pension-v3-2.pdf


On the gov info site, it states it less clearly (my bold):
Quote
Your COPE estimate is£xx.xx a week.

This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.


There is massive confusion wherever this is discussed on a forum. I'm going to phone the pensions people and request a written statement - including period I was contrcated out an the effect it has had on the calculation.


*****

EDIT NEXT DAY: - So I've phoned up, and confirmed that the COPE figure does NOT need to be subtracted from the forecast figure. The forecast is what you will get from the state. The COPE figure is there to illustrate why your pension might be lower than expected in the event that the calculations result in less than full state pension.

I've also requested a written statement.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: COPE
« Reply #37 on: January 14, 2020, 02:06:01 pm »
The puzzling bit for me is why it said £168 or thereabouts until I actually had requested a pension start date. It tid say that amount was not guaranteed, but it makes you wonder why they bother when it's so far out.
Eating's a serious business. Don't bollocks around wagging your tail.

Adam

  • It'll soon be summer
    • Charity ride Durness to Dover 18-25th June 2011
Re: COPE
« Reply #38 on: January 14, 2020, 10:21:05 pm »

EDIT NEXT DAY: - So I've phoned up, and confirmed that the COPE figure does NOT need to be subtracted from the forecast figure. The forecast is what you will get from the state. The COPE figure is there to illustrate why your pension might be lower than expected in the event that the calculations result in less than full state pension.

I've also requested a written statement.

Fair enough - I was just going by what they'd notified the financial services industry in 2015/16.  As with anything from the DWP, always get them to confirm the figures in writing!

Over the years, I've seen so many mistakes they've made.  In fact, after my dad died in 2016, they advised that they'd realised they'd never paid out his widower's pension entitlement based on my mum's State pension after she died in 1997.  So they paid out £63,000!
“Life is like riding a bicycle. To keep your balance you must keep moving.” -Albert Einstein

tonycollinet

  • No Longer a western province of Númenor
Re: COPE
« Reply #39 on: January 14, 2020, 11:11:42 pm »
The puzzling bit for me is why it said £168 or thereabouts until I actually had requested a pension start date. It tid say that amount was not guaranteed, but it makes you wonder why they bother when it's so far out.

I asked about people who'd had erroneous statements. I was told that only happened to people where the system had not picked up the contracted out status. I've no idea if that applies to you, but in those cases, triggering the pension application causes a more careful assessment to be made.

She said that if the forecast was showing a cope figure, then that means the system has alread factored that into the calculation.

Re: COPE
« Reply #40 on: January 15, 2020, 11:32:46 am »
I checked my figures - they're pretty much what I expected; there's come COPE from when I was self-employed (the NI record lists these years as "missing" which is odd, I just paid NI through self-assessment/my accountant) which amounts to about £25 a week.

No matter - I don't get the state pension for another 7 years; plenty of time for our Gov to "do a Greece" and say "Sorry folks, there's no money - your state pensions are hereby halved".  ::-)