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State Pension Forecast Accuracy

staffordian
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State Pension Forecast Accuracy

#429489

Postby staffordian » July 22nd, 2021, 6:31 am

I have today received my first State Pension payment.

It is less than I expected and I'm therefore wondering how much trust I should have placed in my gov.uk online pension forecasts.

I applied for my SP at the earliest opportunity and had a letter dated 18 March saying it would be £675.68 every 4 weeks, i.e. £168.92 per week. At that time my forecast was £169.78 per week. I put the difference down to the letter probably basing the figures on actual NI contributions up to March 28 whereas the forecast was based on an assumption that they would continue until April 2021

Since April 2021 and the 2.5% triple lock pension increase, my forecast has shown a figure of £174.05 per week so I expected today's first partial payment to be based on this figure. However it is exactly the amount quoted in the 18 March letter, so is less than the online forecast as it was even before the April rise, let alone taking the April rise into account.

Before I ring them and face the inevitable long queue, I thought I'd just check here first to see if I'm making some fundamental errors in my assumptions around whether the gov.uk forecast is something I should rely on.

Thanks in advance for any advice.

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Re: State Pension Forecast Accuracy

#429511

Postby pje16 » July 22nd, 2021, 8:21 am


mc2fool
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Re: State Pension Forecast Accuracy

#429515

Postby mc2fool » July 22nd, 2021, 8:48 am

staffordian wrote:I applied for my SP at the earliest opportunity and had a letter dated 18 March saying it would be £675.68 every 4 weeks, i.e. £168.92 per week. At that time my forecast was £169.78 per week. I put the difference down to the letter probably basing the figures on actual NI contributions up to March 28 whereas the forecast was based on an assumption that they would continue until April 2021

March 28? I don't suppose you kept a printout/save of that forecast? In any case, partial year contributions have no end effect, only full year contributions do. Had you made a full contribution for 2020/21 before the date of the letter? Although the difference you quote is too small for an extra qualifying year to account for.

Have you made your own calculations as to what you should receive? FWIW my state pension matched my forecast, which matched my own calculations.

staffordian wrote:Since April 2021 and the 2.5% triple lock pension increase, my forecast has shown a figure of £174.05 per week...

You're still getting a forecast? Mine got replaced with a page telling me I'd reached state pension age as soon as I had.

Before I ring them and face the inevitable long queue, I thought I'd just check here first to see if I'm making some fundamental errors in my assumptions around whether the gov.uk forecast is something I should rely on.

Thanks in advance for any advice.

Phone them. :D But first, if you're not familiar with how your state pension is calculated (esp. the pre/post 2016 transition calculation) and the relevant lingo around that, let us know here and I'll dig up the appropriate links so you can learn that and be armed with the right questions when you call them.

staffordian
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Re: State Pension Forecast Accuracy

#429522

Postby staffordian » July 22nd, 2021, 9:06 am


Yes, but since qualifying for my pension, the forecast has gone; replaced by a statement stating the date I reached pension age. It gives no figures.

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Re: State Pension Forecast Accuracy

#429528

Postby pje16 » July 22nd, 2021, 9:19 am

OK that's no help - how useless is that :roll: :roll:
Sorry, I checked mine before posting and I see a figure as I'm still a few years away from qualifying
@mc2fool's post looks promising, those links may help

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Re: State Pension Forecast Accuracy

#429540

Postby staffordian » July 22nd, 2021, 9:52 am

mc2fool wrote:
staffordian wrote:I applied for my SP at the earliest opportunity and had a letter dated 18 March saying it would be £675.68 every 4 weeks, i.e. £168.92 per week. At that time my forecast was £169.78 per week. I put the difference down to the letter probably basing the figures on actual NI contributions up to March 28 whereas the forecast was based on an assumption that they would continue until April 2021

March 28? I don't suppose you kept a printout/save of that forecast? In any case, partial year contributions have no end effect, only full year contributions do. Had you made a full contribution for 2020/21 before the date of the letter? Although the difference you quote is too small for an extra qualifying year to account for.

Have you made your own calculations as to what you should receive? FWIW my state pension matched my forecast, which matched my own calculations.

staffordian wrote:Since April 2021 and the 2.5% triple lock pension increase, my forecast has shown a figure of £174.05 per week...

You're still getting a forecast? Mine got replaced with a page telling me I'd reached state pension age as soon as I had.

Before I ring them and face the inevitable long queue, I thought I'd just check here first to see if I'm making some fundamental errors in my assumptions around whether the gov.uk forecast is something I should rely on.

Thanks in advance for any advice.

Phone them. :D But first, if you're not familiar with how your state pension is calculated (esp. the pre/post 2016 transition calculation) and the relevant lingo around that, let us know here and I'll dig up the appropriate links so you can learn that and be armed with the right questions when you call them.


Many thanks for the detailed reply.

March 28 was a typo meant 18th which was the date of the letter.

I received Carers Allowance for several years, which ceased when my SP became payable, so was credited with NI contributions, presumably on a regular basis. I'm not sure at what point in 2020-21 that became a full year.

I do have screenshots of the forecasts. The latest one I took was in April, and that was 2.5% higher than the earlier one, rounded up to the next 5p. As you say, the forecast disappeared once I reached 66.

With regard to calculating it myself, my query is more about the difference between the forecast on the gov websits and the actual figure the DWP have paid. I assumed the calculation (whatever it is!) would be the same in the forecast as used when making the payments.

In any case, I'd not know where to start. The gov website says I have 45 years contibutions, and to complicate things, I was contracted out from 1978 to 2011 when I worked in local government and paid into their scheme, after which I took early retirement. I then had four years from 2012-13 to 2015-16 inclusive which were not full years. (Three show as zero contributions and 2015-16 shows I had 31 weeks of credits) before receiving Carers Allowance. What with the COPE business and comparisons under new and old systems, I did briefly look at it a few years ago when contemplating whether to buy the missing years* but was happy enough with the forecast as it was not far short of the full figure so didnt even try to make my own calculation.

*I'm pretty sure you helped me get my head around that, and I found that buying the four missing years would not have helped me.

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Re: State Pension Forecast Accuracy

#429558

Postby staffordian » July 22nd, 2021, 10:44 am

A brief update.

I got through to the Pension Service.

They say that the lower amount of £168.92 given in the 18 March letter was the correct amount, and included the 2.5% rise from April!

This means the forecast online of £174.05 is way out if the true figure is £168.92.

He said it can vary because assumptions are made when calculating the online forecast. I'm not happy with this because I can't see that any assumptions made could have been more optimistic that the actual position turned out to be.

They are looking into it and I can expect a response in 7-10 days.

If there is a link to an idiots guide to calculating ones own entitlement, I'd love to have it :D

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Re: State Pension Forecast Accuracy

#429569

Postby Darka » July 22nd, 2021, 11:04 am

That's pretty terrible, I know the forecast is just a forecast but I'd prefer it to be on the worst case side than over optimistic.

If the forecast is less than what you actually get then you get a nice surprise, if the forecast is higher than what you get then you still get a surprise, but not as nice.

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Re: State Pension Forecast Accuracy

#429573

Postby staffordian » July 22nd, 2021, 11:14 am

Darka wrote:That's pretty terrible, I know the forecast is just a forecast but I'd prefer it to be on the worst case side than over optimistic.

If the forecast is less than what you actually get then you get a nice surprise, if the forecast is higher than what you get then you still get a surprise, but not as nice.

If it turns out that what I've been told today is correct, it really does make me wonder what the point is of the forecast.

I cannot see anything in my situation which could have made their assumptions more optimistic than the reality. They have known my circumstances over the years and since receiving pension forecasts I've had NI credits for all possible years. Quite what could therefore account for the difference is totally beyond me.

I know the differences are not exactly life-changing, but over seveal years (hopefully decades!) it will be quite a sum.

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Re: State Pension Forecast Accuracy

#429578

Postby Darka » July 22nd, 2021, 11:24 am

staffordian wrote:I cannot see anything in my situation which could have made their assumptions more optimistic than the reality.


Did they say what the assumptions were?

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Re: State Pension Forecast Accuracy

#429580

Postby pje16 » July 22nd, 2021, 11:27 am

My view 30 odd years ago was (and I used to joke) that by the time i get to 65 the state pension proably won't be enough to buy me a daily packet of crisps, so that persuaded me to start putting more into my own pension that the minimum
Out of jest - one of the best decisions I ever made ;)

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Re: State Pension Forecast Accuracy

#429581

Postby staffordian » July 22nd, 2021, 11:32 am

Darka wrote:
staffordian wrote:I cannot see anything in my situation which could have made their assumptions more optimistic than the reality.


Did they say what the assumptions were?

Not specifically, despite me asking. All he mentioned was NI contributions and I'm pretty sure that mine are all they could be in any calculation, which is why I'm so frustrated and annoyed with the whole business.

And don't get me started on the second issue we are having trying to claim my wife's pension based on my NI history... (She was one of the women who was able to pay the lower rate "married women's stamp" and have a reduced pension based on her husband's record)

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Re: State Pension Forecast Accuracy

#429591

Postby Darka » July 22nd, 2021, 11:51 am

staffordian wrote:And don't get me started on the second issue we are having trying to claim my wife's pension based on my NI history... (She was one of the women who was able to pay the lower rate "married women's stamp" and have a reduced pension based on her husband's record)


Unnecessarily complicated - what a mess they make of things - should be a very simple process and an accurate forecast.

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Re: State Pension Forecast Accuracy

#429599

Postby mc2fool » July 22nd, 2021, 12:07 pm

staffordian wrote:I got through to the Pension Service.

Good grief! With less than an hour of listening to muzak, eh?!? :o

They say that the lower amount of £168.92 given in the 18 March letter was the correct amount, and included the 2.5% rise from April!

This means the forecast online of £174.05 is way out if the true figure is £168.92.

Hum... did they say it was correct after going off for several minutes and recalculating it, or was it an instant auto-response from their script? ;)

In any case, £174.05 is not way out if the true figure is £168.92 -- it's exactly one qualifying years worth out. The current full new state pension is £179.60, which divided by the 35 years nominally required = £5.13, and as your calculator will tell you, £174.05 - £168.92 = £5.13.

With regard to calculating it myself, my query is more about the difference between the forecast on the gov websits and the actual figure the DWP have paid. I assumed the calculation (whatever it is!) would be the same in the forecast as used when making the payments.

staffordian wrote:He said it can vary because assumptions are made when calculating the online forecast. I'm not happy with this because I can't see that any assumptions made could have been more optimistic that the actual position turned out to be.

My thought about calculating it yourself was to see which of those figures (if either!) you agreed with.

AIUI the assumptions tend to be around the calculation of the Contracted Out Deduction (COD) in calculating your net Additional State Pension (ASP) under the old system, as the Guaranteed Minimum Pension (GMP) offered by contracted out pension schemes can fall under several different methodologies. GMP reconciliation for all schemes was supposed to be done and dusted two or three years ago (as part of the change to the new state pension system), but it wouldn't surprise me if some are being left to "as needed". I had a similar sized drop in my forecast ASP a decade or so ago when they sorted it out for mine for a contracted out scheme I left in 1990.

Anyway, going from the data you've provided, if you now have 45 years then clearly you had more than 35 years in 2016, and so filling any pre-2016 gaps would, indeed, not have helped. And it looks like you must have had a pretty large COPE, and so your 2016 "starting amount" was almost certainly from the old system.

If there is a link to an idiots guide to calculating ones own entitlement, I'd love to have it :D

It's not for idiots I'm afraid. :D I wrote up how the calculations under the old and new systems and the "starting amount" at April 2016 work on TMF some years back. The numbers have changed since, and COD+RDA for the new system is now called the COPE, oh, and where it says "current" state pension it, of course, would now read "old" -- but otherwise the explanation is mostly still good. The thing that's missing from it is that you have to do all the calculations in 2016 figures, and then apply post-2016 increases to get a "today" number.

It's archived at http://web.archive.org/web/201701120049 ... 01655.aspx

Now, if you want to work it out you're going to have to call them to get the TASP, COD and (if you were working pre-1976) GRB figures, but those are almost certainly going to lead to the result they have given you, so really what you want to know is which of those has changed from the forecast to the actual, and I don't know if they'll be able to tell you that.

What we can try and work out without reverting to them is the "missing" £174.05 - £168.92 year. Do you happen to have saved any forecast figures from previous years? How much is your COPE, and how many 2016-onward years do you believe you have (and does that match what .gov tells you)?

They are looking into it and I can expect a response in 7-10 days.

Ok, well that (hopefully!) means they didn't just fob you off!

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Re: State Pension Forecast Accuracy

#429602

Postby pje16 » July 22nd, 2021, 12:12 pm

@mc2fool
ahhh that's an old friend
the Wayback Machine
https://archive.org/web/
had a lot of fun with that over the years :lol:

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Re: State Pension Forecast Accuracy

#429605

Postby staffordian » July 22nd, 2021, 12:17 pm

mc2fool wrote:
staffordian wrote:I got through to the Pension Service.

Good grief! With less than an hour of listening to muzak, eh?!? :o

They say that the lower amount of £168.92 given in the 18 March letter was the correct amount, and included the 2.5% rise from April!

This means the forecast online of £174.05 is way out if the true figure is £168.92.

Hum... did they say it was correct after going off for several minutes and recalculating it, or was it an instant auto-response from their script? ;)

In any case, £174.05 is not way out if the true figure is £168.92 -- it's exactly one qualifying years worth out. The current full new state pension is £179.60, which divided by the 35 years nominally required = £5.13, and as your calculator will tell you, £174.05 - £168.92 = £5.13.

With regard to calculating it myself, my query is more about the difference between the forecast on the gov websits and the actual figure the DWP have paid. I assumed the calculation (whatever it is!) would be the same in the forecast as used when making the payments.

staffordian wrote:He said it can vary because assumptions are made when calculating the online forecast. I'm not happy with this because I can't see that any assumptions made could have been more optimistic that the actual position turned out to be.

My thought about calculating it yourself was to see which of those figures (if either!) you agreed with.

AIUI the assumptions tend to be around the calculation of the Contracted Out Deduction (COD) in calculating your net Additional State Pension (ASP) under the old system, as the Guaranteed Minimum Pension (GMP) offered by contracted out pension schemes can fall under several different methodologies. GMP reconciliation for all schemes was supposed to be done and dusted two or three years ago (as part of the change to the new state pension system), but it wouldn't surprise me if some are being left to "as needed". I had a similar sized drop in my forecast ASP a decade or so ago when they sorted it out for mine for a contracted out scheme I left in 1990.

Anyway, going from the data you've provided, if you now have 45 years then clearly you had more than 35 years in 2016, and so filling any pre-2016 gaps would, indeed, not have helped. And it looks like you must have had a pretty large COPE, and so your 2016 "starting amount" was almost certainly from the old system.

If there is a link to an idiots guide to calculating ones own entitlement, I'd love to have it :D

It's not for idiots I'm afraid. :D I wrote up how the calculations under the old and new systems and the "starting amount" at April 2016 work on TMF some years back. The numbers have changed since, and COD+RDA for the new system is now called the COPE, oh, and where it says "current" state pension it, of course, would now read "old" -- but otherwise the explanation is mostly still good. The thing that's missing from it is that you have to do all the calculations in 2016 figures, and then apply post-2016 increases to get a "today" number.

It's archived at http://web.archive.org/web/201701120049 ... 01655.aspx

Now, if you want to work it out you're going to have to call them to get the TASP, COD and (if you were working pre-1976) GRB figures, but those are almost certainly going to lead to the result they have given you, so really what you want to know is which of those has changed from the forecast to the actual, and I don't know if they'll be able to tell you that.

What we can try and work out without reverting to them is the "missing" £174.05 - £168.92 year. Do you happen to have saved any forecast figures from previous years? How much is your COPE, and how many 2016-onward years do you believe you have (and does that match what .gov tells you)?

They are looking into it and I can expect a response in 7-10 days.

Ok, well that (hopefully!) means they didn't just fob you off!


Thanks again for all this. Will digest it in detail later and see what I come up with. I very much appreciate the time you have taken to help me.

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Re: State Pension Forecast Accuracy

#429789

Postby staffordian » July 22nd, 2021, 11:37 pm

mc2fool wrote:What we can try and work out without reverting to them is the "missing" £174.05 - £168.92 year. Do you happen to have saved any forecast figures from previous years? How much is your COPE, and how many 2016-onward years do you believe you have (and does that match what .gov tells you)?


Yes, I have several saved forecasts. I'm not sure what the COPE is, but maybe this can be calculated/deduced from the forecasts by comparing my figures with that years full amount?

I am confident that the .gov site has the number of years contributions correct.

On this point, I have 40 up to 5/4/12, then four "missing" years to 5/4/16 then five full years up to 5/4/21. It's what .gov says and it tallies with my work and carers allowance dates.

Forecasts I've saved show the following...

Date / My maximum / My current / Includes NI to / NI years by my calculation
21-4-21 / £174.05 / £174.05 / Not quoted /45
17-4-21 / £169.78 / £164.77 / 5-4-20 /44
18-4-19 / £163.38 / £153.75 / 5-4-19 /43
7-3-19 / £159.27 / £145.18 / 5-4-18 /42
7-7-17 / £154.61 / £136.38 / 5-4-17 /41
21-4-16 / £152.61 / £128.60 / 5-4-15 /40

It looks to me (and I think it is what you suggested) as though the current calculation (ie the £168.92 they are actually paying me) doesn't take account of the 45th NI year. Does this seem plausible?

Many thanks!

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Re: State Pension Forecast Accuracy

#429804

Postby mc2fool » July 23rd, 2021, 1:00 am

staffordian wrote:Forecasts I've saved show the following...

Date / My maximum / My current / Includes NI to / NI years by my calculation
21-4-21 / £174.05 / £174.05 / Not quoted /45
17-4-21 / £169.78 / £164.77 / 5-4-20 /44
:

Aha! (You're going to kick yourself!)

You said in your OP that your (first) forecast was for £169.78 per week, but in your table £169.78 is in the My maximum column. The My current column for that row -- the actual forecast pension -- shows £164.77.

Uprate that by the 2.5% triple lock increase and you get £168.89, so in paying you £168.92 they're giving you 3p more than expected. Be happy! :D

And yes, it does look like they haven't taken the 45th year into account, most probably a timing issue as they did the calculation prior to tax year end, although I'm a bit surprised it wasn't foreseen and handled....

BTW, are the dates on those two above correct? You said in your OP that the first forecast was at the time of the letter but 17-4 is a month later. And what do you mean by "Not quoted" for Includes NI to in the 21-4 forecast?

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Re: State Pension Forecast Accuracy

#429830

Postby staffordian » July 23rd, 2021, 7:50 am

Again, many thanks for your help (BTW, don't you ever sleep? :D )

I've always used the maximum quoted forecast figure rather than the current figure because I've always worked on the basis of the NI credits will continue until 5 April 2021, as they indeed did, so I didn't twig the link you immediately spotted...

The forecast dates are essentially correct, I checked quite regularly around then as I expected to see the forecast uprated by the 2.5% via the triple so looked from time to time.Alhough I quote 17/4 above, it was the same on the date of my letter, in March as I'd checked then.

"Not quoted " is probably my oversight. That screenshot was only the "headline" figure from the top half of the page as it said that figure of £174.05 was what my pension forecast was. As far as I recall there was no warning of needing to continue NI payments, which I assumed was because I didn't :) So unfortunately I can't confirm which contributions it includes.

Again, I can't thank you enough for your patience, help and advice. It is very much appreciated.

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Re: State Pension Forecast Accuracy

#429924

Postby UncleEbenezer » July 23rd, 2021, 1:00 pm

I thought you could make top-up NI contributions to bring your state pension up to the "full" amount. And that supposedly it's a no-brainer to do so if you're not expecting means-tested benefits.

Is that time-limited, so that reaching pension age means you've lost your chance? If so, I'd better look into it while there's still time!


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