Understanding COPE

tony4147

Both my wife and myself (both 53) have received state pension forcasts at our request, but I'm not sure if we fully understand them.


My forecast states that I will receive £194 / week, of this £155 is the state pension and £39 is COPE.
1. I was contracted out for 20 years and my contracted out element went into a private pension which is today valued at £43k - am I correct that this is the COPE?
if yes can I still take a lump sum?
Can I still draw from age 55?
I assume that if I took this pension early and spent it all or if the investments clapsed that I would receive only the £155 / wk?
How do HMRC know how well my private pension with the contracted out contributions is doing? I mean it could be invested in good funds or bad funds.


2. Will the COPE go up and down over the next few years on state pension forecasts as it is invested for another 14 years if I were to retire at 67


3. For a number of years I worked via a LTD Company. I recently received a NI statement which says I have 30 years contributions and 2 years missing (97/98, 98/99), I know these 2 years contributions were paid (ltd company accounts) and if I were to carry on working until 67 would there be any beneifit to me in me contacting HMRC regarding these 'missing' 2 years?


4. My wife is a Teacher and appartently the TPS is contracted out.
Last time she went on the TPS website it gave some estimates of her expected pension at 60 approx £13k / yr, BUT it does not break out what is COPE and what is her actual teachers pension.
For instance her state pension forecast came in at £175 / week, of this £155 is state pension and £20 is COPE. so will her total pension be -
(175 x 52) + £13k = £22100 Or will it be -
((175 - 20) x 52)) + £13k = £21060


We both have other pensions as well from previous employment where we were both contracted in but we are just trying to get an understanding on the state pension COPE element.

GunJack

AIUI, COPE is an estimate of what your private or company pension may pay you, so for your wife she'll get 155 SP per week plus the 13k per annum (but paid monthly) TPS. For you it will depend what the terms of your contracted-out pension are (annuity, drawdown, etc), so 155pw plus what you get from the fund., so if you blow it one way or the other you'll be left with the 155pw (but remember the155 will increase year-on-year by the triple-lock (CPI, earnings or 2.5%).

if you had contracted-in employment, I'd have thought you'd get some serps/s2p, unless that's what they are referring to as the COPE?


I'm sure one of the more clued-up people can clarify better than me...

tony4147

GunJack wrote: »

AIUI, COPE is an estimate of what your private or company pension may pay you, so for your wife she'll get 155 SP per week plus the 13k per annum (but paid monthly) TPS. For you it will depend what the terms of your contracted-out pension are (annuity, drawdown, etc), so 155pw plus what you get from the fund., so if you blow it one way or the other you'll be left with the 155pw (but remember the155 will increase year-on-year by the triple-lock (CPI, earnings or 2.5%).

if you had contracted-in employment, I'd have thought you'd get some serps/s2p, unless that's what they are referring to as the COPE?


I'm sure one of the more clued-up people can clarify better than me...

It is stated as COPE

GunJack

https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

does this help?

AnotherJoe

How do HMRC know how well my private pension with the contracted out contributions is doing? I mean it could be invested in good funds or bad funds.
=====

You are correct, and they dont. Its a ridiculous and misleading wholly made up figure.

When they say "will receive £194 / week, of this £155 is the state pension and £39 is COPE" what that means is, you'll receive £155 from the SP and who knows what from the pension you invested in , because they certainly dont.

If you invested in Apple at the right time, you might get £3,900 a week, or the wrong time, 39p.

tony4147

It is very very misleading the way the statements are done

speedyrite

GunJack wrote: »

https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

does this help?

Thanks. It's useful in terms of explaining why there is an estimated COPE amount in the statement. But it doesn't give any detail as to what I'm curious about - which is the HOW the estimated COPE amount is actually calculated. Presumably it's a bit more complicated/sophisticated than just by reference to the number of contracted-out years?

xylophone

Have a look at this

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

In effect, the COPE is the amount you would have received had you been contracted in to SERPS/S2P , rather than the amount you will receive as a result of so doing.

Whether your particular personal pension (a Contracted Out Money Purchase Scheme?) actually provides it is a different matter.

Your wife will have a GMP as part of her occupational pension if (as seems likely), she was a member of TPS ( a Contracted Out Salary Related Pension Scheme) between 1978 and 1997 - this amount (equivalent to what she would have received through SERPS had she been contracted in), must be paid to her by TPS.

After 1997, the system changed but the so called Scheme Reference Test for COSR schemes still ensured that benefits for members of such schemes had to meet certain standards.

In practice of course, the occupational pension for lifetime members of such schemes will be far higher than the minimum.

Contracting out ended for COMPS in 2012 and will end for COSRS in 2016.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507213/your-state-pension-statement-explained-dwp042.pdf

drumtochty

In the committee stages of the pension bill a few years ago the question was asked if say the DWP are reducing the persons state pension by say £20 aa week due to contracting out and the persons private or company pension only pays say £12 a week extra in retirement from the amount of money it got either from HMRC if a private pension or from the employees company money purchase scheme from the company paying lesser NI so more into their occupational pension pot, what is the governments take on that.

The answer to simplify it from the government spokesmen in the Lords was tough!