What COPE means to me

coyrls

woolly_wombat wrote: »

Bad luck.

Hope you didn't do as badly as my OH - he chose Equitable Life with-profits for his opt-out bribe!

Mine was with Equitable Life with-profits too! In retrospect not one of my best decisions.

dunstonh

Its reassuring that I haven't been done in my case. However if the figures are coming out about the same, would you agree that the option with less risk would be to not contract out.

As I mentioned, the benefits of contracting out changed over the years. When contracting out was first introduced, the rebates and growth rates of that era were much higher. In 1996, the SIB did a review of contracting out and found that up to that date, everyone who contracted out was better off. In 1997, Labour got into power and started to reduce the rebates. An easy stealth tax. After this, advisers started advising people to contract back in once they hit an earlier pivotal age. There then came a point where it almost became best for everyone to be back in. Then Labour started to increase the rebate again and the 2006 changes made contracting out attractive again.

Contracting out went from being a better option to a cost neutral option with a difference on how the benefits would be paid. My contracted out benefits are far higher than I would have got had I remain contracted in. However, my investments have not been invest and forget. I also contracted in much earlier. So, only had the best years.

That said, i think my original thinking was that the money is better under my control than the governments.

And that is important to remember. i have a report from 2005 which I used to issue to people who were contracted out. Contracted in benefits had been reduced four times since 1978 (to 2005). Contracted out benefits were not clawed back.

Legislative risk is just one of the number of risks that exist. It is not just investment risk that you need to be concerned about.

coyrls

xxkk wrote: »

"what a COPE of £55 pw is worth in real money".

I've got the answer:-
Pension forecast 160 per week.
Cope 55 per week
Total 215 p week. 11,180 p a

Delay SP for 1 year increases it by 5.8% = 482 p annum

It would take (55x52)/482 years to get the cope amount.
=5.933 years

Cost to provide pension for this time is 11,180 x 5.933 =66,330

You haven't included inflation increases both to the initial £11,180 and during the 6 years of payment in in your "cost to provide pension for this time" but it's a very good way of making the comparision.

Ganga

I do not fully understand what COPE is but i had a private pension with the PRU,i was advised to contract out for several years then advised to contract back in. The biggest surprise was that as well as a pension of over £45000 there was also £80000 of money from contracting out!As i have a quote of nearly £170.00 a week from my state pension ( i have not drawn it yet,i am over 65 ) i am over the moon that the advice given at the time was good.

Ganga