COPE

[renrag40]

Contracted out pension equivalent....... I take it that this figure is already included in the yearly pension statement and is not added on at retirement?....... it would be handy if it was added....mine is £50.02 per week at the moment.

[RobertT]

The COPE amount on your State Pension Forecast is an estimate of the amount that your workplace or personal pension scheme will pay you as a result of contracting out of the state second pension.

i'm sure there's plenty of info about COPE online, but here's a basic and an in depth link to explain further:
https://www.which.co.uk/money/pensions- ... 4r12y9jt41" onclick="window.open(this.href);return false;
https://www.royallondon.com/contentasse ... n-v3-2.pdf" onclick="window.open(this.href);return false;

Depending on the individual, your COPE amount can mean a lower state pension. Or if you have time on your side, it could mean you get the full benefits of being contracted out via your employers scheme, and a full state pension too.

It's a very individual thing based on your own work and national insurance history!

[Dexydog]

The whole COPE thing is extremely confusing.
Have looked at dozens of articles and opinions posted on line and no-one seems to agree if it gets paid on top of your pension forecast or not.
Appreciate it is individual but seems to me it is impossible to tell how much you will get at retirement and if the COPE figure is included or not.
Consensus seems to be it is separate and doesn't affect what you get from the state as it is in effect your 2nd state pension, and anyone not ever having opted out would have a higher forecast, assuming they had enough qualifying years.(in effect your insurer hopefully would give you enough equivalent the the 2nd state pension on top of your basic)
My COPE is 27ish a week, I was contracted out for 10 years, have 34 qualifying years so far, 50k in the pot for serps with a leading provider (this went up by only £300 this year, previous years has been anything up to 2k so a little worrying).
How on earth do I get a definitive answer on this??

[RobertT]

The best place to look in my opinion is the government website, which gives a reasonably short but precise answer to the questions you're asking: https://www.gov.uk/government/publicati ... ne-service" onclick="window.open(this.href);return false;

Your case is perhaps slightly different to many RM employees, as you have a contracted out DC scheme. So your pot value is determined largely by contributions and investment returns, rather than by having a set amount of pension as with a DB scheme.

Don't be fooled by the info on your annual DC pension statement. That's what's known as a Statutory Money Purchase Illustration, which makes certain assumptions about what you'll do with the money in your pot. Such as you'll have a spouse and that you'll buy an inflation linked annuity providing death benefits, amongst other things.

But that is really just an example of what you could do with it. In practice you might be single for example, in which case you obviously won't buy an annuity offering spouses benefits.
Plus under pension flexibility rules, you don't have to take a pension(annuity) when you access your cash at all - you can use drawdown instead. Unless you've perhaps got a Guaranteed Annuity Rate(GAR)?

How much your pension pot increases or decreases by in any given year is obviously down to how your investments perform.

Personally, had the state pension system not been changed in 2016, the maximum I would have got in today's money would be about £138 – and that wouldn't have gone up by continuing to work either!

But under the new system, my current entitlement is about £152(as at 5/4/19) and if I carry on working for another 4 years, which takes me up to age 55, I'll get the maximum of £168.60. My COPE is about £34.
In practice my SP entitlement is increasing by 1/35th of the current maximum rate for each new qualifying year I earn, or £4.82. but it can't go over that £168.60 figure.

That is on top of what I'll get from the contracted out RM pension scheme!

The COPE amount doesn't affect what you get from the state – it's the amount of additional state pension you would have got had you not been contracted out. You should be getting that as part of your contracted out workplace or private pension scheme. Although as stated earlier if you have a contracted out DC scheme, what you get might depend on investment returns and how you choose to access it, etc.

If you get a state pension forecast, the following is included in the info:

Contracted Out Pension Equivalent (COPE)

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.
In most cases the private pension scheme you were contracted out to:

- will include an amount equal to the COPE amount
- may not individually identify the COPE amount

The total amount of pension paid by your workplace or personal pension schemes will depend on the scheme and on any investment choices.

[renrag40]

I only put this thread up as a bit of tongue in cheek.
Thanks to Robert T for his, as usual cogent and helpful answers.
I’m in a very similar position state pension wise, currently need another 4 more full years to get the full state pension although I’m 4 years older than Robert T.
I think as the sage Jim Bowen would have said “let’s see what you could have won” had we not been contracted out.
I’m approaching 55 and have managed to talk myself out of taking the nra 60 at 55...... but it is tempting!
Basically I’m using the approach of “where else would I get at least 5%+ a year guaranteed on my lump sum and yearly pension?” If I cannot come up with an answer to that question then leave it where it is.
All I’ve got to do now is dodge the grim reaper for 5 years

[RobertT]

Your COPE amount is an estimate of how much state second pension you would have got had you not contracted out via the RM pension scheme.

In practice had you chosen to contract into the state second pension instead, you would have had to opt out of the RM pension scheme and got nothing from that during that time.

As it's not possible to opt back into the RMPP once you'd opted out, as and any new entrants haven't been able to join the RMPP since 2008, I suspect what you're getting from the RMPP is worth more than your £50 COPE amount!
And you do have the opportunity to get the best of both worlds by working another 4 years, which many older people haven't got.

It seems many posties are tempted to take their RM pensions early, thinking because they're getting it for 5 years longer they're getting more over all. But in general, you'll actually get more over the longer term by taking it at NRA.