Reconciling COPE to contracted out periods and GMP

xylophone

So, if I understand this correctly, all the periods when I was contracted out, even in a defined contributions scheme, count towards the COPE amount. Is that correct?

Yes. From link in post 7 above:

To reflect all periods of contracting out a “Rebate Derived Amount” is introduced into the new State Pension calculation and comprises the following:
1. Contracted-out Deduction from 1978-1996/97;
2. A new notional deduction in respect of being contracted-out between 1997/98 and 2001/02 - this amount will be the amount of SERPS the person would have had if they had been contracted-in;
3. The deduction made from gross S2P in respect of being contracted-out from 2002/03 to 2015/16.

It still leaves me with a conundrum. How to calculate the equivalent COPE amount for the lump sum and flat annuities I started receiving 12 years for my "protected rights". Any ideas?

The amount used to represent the DC part of the COPE ( or "Rebate Derived Amount") bears no relation to the amount you have actually received from your scheme.

From link above

1988/89-1996/97 – DC Schemes – For members of DC schemes, the COD is calculated as above - as if the individual was contracted-out in a DB scheme, although DC schemes are not required to provide a GMP – the final pension the person receives will depend on how well the money has been invested and/ or the annuity rates which apply

The DC scheme was not required to provide a GMP - as far as I can see therefore the "COD" for 78-97 can only be based on an estimate of what you might receive- see article linked below.*

Whether or not you actually receive an equivalent amount from your pension depends on how the pension has performed.



The provider of a DB Scheme must provide a pension at least equivalent to what would have been provided by SERPS.

https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/

*See also

https://www.thisismoney.co.uk/money/pensions/article-4094526/What-contracting-does-affect-pensions.html

tarbat

A quick update. Using the GMP calculations available on the Government's "How to calculate your scheme member’s Guaranteed Minimum Pension", I've been able to reconcile, within £3.50, my COPE figure to all the various GMPs calculated from my times of being contracted out.

Thanks for all the help.

tarbat

Anyone know what basis HMRC assume when revaluing GMP to derive a COPE figure? Fixed rate or Section 148?

xylophone

Anyone know what basis HMRC assume when revaluing GMP to derive a COPE figure? Fixed rate or Section 148?

For active members of a COSR Scheme, the value of the GMP and SERPS remains broadly similar - for deferred members, as you know, the situation can be different.

See the chart for an active member in https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

and the information on page 6.

The COPE was used only once and that was in the calculation of the starting amount for the NSP.

The COPE was

1. Contracted-out Deduction from1978-1996/97;

2. A new notional deduction in respect of being contracted-out between
1997/98 and 2001/02 - this amount will be the amount of SERPS the
person would have had if they had been contracted-in;

3. The deduction made from gross S2P in respect of being contracted-out
from 2002/03 to 2015/16.

Thus the COD used for the COPE was either the GMP roughly equal to SERPS, or (for deferred members with S148 revaluation) the GMP roughly equal to SERPS, or (for deferred members on FR revaluation) the revalued GMP within their scheme which was almost certainly higher than SERPS.