COPE question

Issy005 wrote: »

Does this mean that my workplace pension will pay me the £yyy extra, on top of the payments I am already receiving, when I reach state pension age?

No the amount from your workplace pension, which you indicate came into payment before State Pension Age almost certainly already includes the COPE within your current payments; although it isn't probably really COPE until you pass State Pension Age.

I use the qualification almost certainly because there are a few rare scenarios where workplace pensions have a step up increase when someone reaches State Pension Age, but you should have been made aware that this would happen by your workplace scheme. Check your workplace scheme documentation or ask them if you are not sure.


As a side note the term COPE may be unfamiliar to even some of the pension experts on here, as it seems to be a new term invented by the DWP standing for Contracted Out Pension Equivalent. It represents the reduction in State Pension someone has had because they were contracted-out of SERPS or S2P, and is the same as the Rebate Derived Amount used in the new State scheme amount calculation.

The DWP seem to have very recently started including this on State Pension statements being sent out (for those reaching SPA on or after 6th April 2016), and it is mentioned in the accompanying booklet (from page 10), and explain it this way on the main statement

Because you were contracted out
In the past you have been part of a contracted out pension scheme(s), such as a workplace or personal pension. When you were contracted-out, you and your employer(s) paid lower rate National Insurance (NI) contributions or some of your NI contributions were paid into your private pension scheme(s) instead.

Your workplace or personal pension scheme(s) should include an amount of pension for the periods you were contracted-out. We call this amount your Contracted Out Pension Equivalent (COPE). It is the amount of pension your contracted out private pension sceme should normally pay you for the time you were opted out of the additional State Pension and built up a private pension instead.

The State Pension statements go on to include this wording

If you add your State Pension and COPE amount together the total is £x. The COPE amount is paid as part of your private pension(s) not by the Government.

The inclusion of COPE seems to be because the DWP are concerned that people will think they aren't getting the full single tier pension and by including the COPE they are intending to show that they are getting the full single tier pension (£151.25pw in 2015/2016 terms) in many cases when you allow for contracting-out i.e the amount x is equal to or more than £151.25pw.

While I can understand why the DWP might show this amount, personally I think it is highly confusing. You really just want a State Pension statement to tell you what State Pension you are receiving.