Quick answer: If you were contracted out, your State Pension forecast can look lower because some of what you would have built up in the state system got pushed into your work pension instead. That’s why “35 years means full pension” is not always true for everyone.
A lot of people see a big list of qualifying years and think the maths should be simple. It isn’t, mainly because the rules changed on 6 April 2016 and the government had to convert everyone from the old setup to the new one.
Before that date, some workplace pension schemes let you “contract out”. In plain terms, you paid less National Insurance towards the extra, earnings-based part of the State Pension. The trade-off is that your workplace pension scheme should cover that value in its own way. Think of it like your payslip: if less goes into one pot, it has to go somewhere else, or you feel the difference later.
Here’s the key thing people miss. On 6 April 2016, Department for Work and Pensions set your “starting amount”. They didn’t pick a random number. They did two calculations and used whichever result was higher.
One calculation used the old rules idea. It took what you had built under the old system, including the basic part and any earnings-based top-up you earned, then it applied a deduction for the years you were contracted out.
The other calculation used the new rules idea. It worked out what you had under the new State Pension rules, then it applied a deduction linked to contracting out.
Whichever of those two came out higher became your starting point going forward. That’s why two people can both say “I’ve got loads of years” but get different forecasts.
IMPORTANT: DO NOT PAY FOR MISSING YEARS UNTIL YOU CHECK THEY INCREASE YOUR FORECAST.
After April 2016, you can usually build up more by adding new qualifying years, but only until you hit the maximum. If your forecast says you can improve it, each extra year can add a bit. If your forecast says you cannot improve it, paying voluntary years often won’t change anything.
You might also see something called COPE on your forecast. That number scares people. COPE is just an estimate of what you should get from your workplace pension because you were contracted out. It is not a fine. It is not a surprise bill that turns up later. It is a rough way of showing why your State Pension part looks smaller.
One more practical point. If you are working in the UK and earning enough, you usually still pay NI up to State Pension age because it comes via salary. If you are not working or overseas, voluntary NI makes sense when your forecast is less than the maximum.
If you want, send us the line from your forecast that says whether you “can improve” it, plus how many years you have. We’ll tell you what it really means before you pay HM Revenue and Customs anything.