GMP Pension & COPE Amounts

burgman

I am endeavouring to understand the GMP and COPE process and (hopefully) have more idea of what i could be entitled to by the time my State Pension commences in around two and a half years time. I have a Post Office pension, this being via the 'Royal Mail Statutory Pension Scheme' (RMSPS).  I joined the organisation in early 1994, and left employment with them in 2008.  After that i worked mostly part time, up to mid February 2014.

I took my R.M pension at age 55,commencing (and backdated to) December 2013, essentially 5 years early, which as a result was actuarially reduced.  I requested a pension forecast in late 2015, (prior to the then forthcoming 'New' pension that was commencing in April 2016. The letter explained that, Quote 'We estimate that when you reach State Pension on */11/24 your state pension will be £128.65 per week.  This is based on your current National Insurance (NI) contribution record which shows you have 37 qualifying years up to the tax year 2013/14. In the past you have been part of a contracted out private pension sceme. When you were contracted out, you and your employers paid lower rate National Insurance (NI) contributions or some of your NI contributions were paid into your private pension scheme instead.

I assume that the £128.65 a week stated in the 2015 forecast was my 'starting amount'?. The COPE (estimated) amount is shown as £29.32 per week.  I requested a further pension forecast dated last November (21) this states, Quote 'You can get your state pension on * 11/2021, Your forecast is £167.86 a week, You need to continue to contribute National Insurance to reach your forecast.  Estimate based on your National Insurance record up to 5th April 2021  £152.47 a week, The most you can improve your forecast to is £179.60 a week.  The COPE amount shown is £29.82 a week, thus (if i am correct)  £152.47 + £29.82=£182.29 prior to this months (April 22) increase.

My R.M pension is paid monthly, and contains a supplement of (approx) £65.00. I receive an annual letter to confirm the pension increase for the coming year, which is shown as, Quote, Pension in excess of GMP,  'Your pension in excess of GMP includes a pension supplement. This part of your pension is due to cease when you reach state pension age, or if you are re-employed by Royal Mail, or Post Office if earlier'

Based on this: Would it be the case that (purely, for example) that if my state pension was due to commence now, it would be the £152.47 + the COPE of £29.82, giving a figure of £182.29, then, with the monthly supplement no longer included my R.M pension would result in an approx figure of £90.00 a week, with the £29.82 COPE amount then deducted from that, which essentially would give an approx figure of £61.00 per week?.  This is the confusing part for me, as some 'advice' suggests the COPE amount will already be included in my monthly R.M pension amount, while other 'advice' suggest not?.  In a letter from the pension fund dated January 2016, Quote ' When you reach age 65 we will compare the level of your RMSPS pension to the part of the COPE which HMRC tell us covers the period 6th April 1978 to 5th April 1997. This amount is called the Guaranteed Minimum Pension (GMP).

If your RMSPS pension is equal to, or higher than, the GMP then no further action will be required. But if your RMSPS pension is less than the GMP we will increase it up to that level.

We cannot do this until you reach age 65.  The remainder of the amount which falls within the COPE period is paid as part of your main benefits and cannot be identified seperately.

All replies gratefully received. Many thanks.

Marcon

burgman said:

I am endeavouring to understand the GMP and COPE process and (hopefully) have more idea of what i could be entitled to by the time my State Pension commences in around two and a half years time. I have a Post Office pension, this being via the 'Royal Mail Statutory Pension Scheme' (RMSPS).  I joined the organisation in early 1994, and left employment with them in 2008.  After that i worked mostly part time, up to mid February 2014.

I took my R.M pension at age 55,commencing (and backdated to) December 2013, essentially 5 years early, which as a result was actuarially reduced.  I requested a pension forecast in late 2015, (prior to the then forthcoming 'New' pension that was commencing in April 2016. The letter explained that, Quote 'We estimate that when you reach State Pension on */11/24 your state pension will be £128.65 per week.  This is based on your current National Insurance (NI) contribution record which shows you have 37 qualifying years up to the tax year 2013/14. In the past you have been part of a contracted out private pension sceme. When you were contracted out, you and your employers paid lower rate National Insurance (NI) contributions or some of your NI contributions were paid into your private pension scheme instead.

I assume that the £128.65 a week stated in the 2015 forecast was my 'starting amount'?. The COPE (estimated) amount is shown as £29.32 per week.  I requested a further pension forecast dated last November (21) this states, Quote 'You can get your state pension on * 11/2021, Your forecast is £167.86 a week, You need to continue to contribute National Insurance to reach your forecast.  Estimate based on your National Insurance record up to 5th April 2021  £152.47 a week, The most you can improve your forecast to is £179.60 a week.  The COPE amount shown is £29.82 a week, thus (if i am correct)  £152.47 + £29.82=£182.29 prior to this months (April 22) increase.

My R.M pension is paid monthly, and contains a supplement of (approx) £65.00. I receive an annual letter to confirm the pension increase for the coming year, which is shown as, Quote, Pension in excess of GMP,  'Your pension in excess of GMP includes a pension supplement. This part of your pension is due to cease when you reach state pension age, or if you are re-employed by Royal Mail, or Post Office if earlier'

Based on this: Would it be the case that (purely, for example) that if my state pension was due to commence now, it would be the £152.47 + the COPE of £29.82, giving a figure of £182.29, then, with the monthly supplement no longer included my R.M pension would result in an approx figure of £90.00 a week, with the £29.82 COPE amount then deducted from that, which essentially would give an approx figure of £61.00 per week?.  This is the confusing part for me, as some 'advice' suggests the COPE amount will already be included in my monthly R.M pension amount, while other 'advice' suggest not?.  In a letter from the pension fund dated January 2016, Quote ' When you reach age 65 we will compare the level of your RMSPS pension to the part of the COPE which HMRC tell us covers the period 6th April 1978 to 5th April 1997. This amount is called the Guaranteed Minimum Pension (GMP).

If your RMSPS pension is equal to, or higher than, the GMP then no further action will be required. But if your RMSPS pension is less than the GMP we will increase it up to that level.

We cannot do this until you reach age 65.  The remainder of the amount which falls within the COPE period is paid as part of your main benefits and cannot be identified seperately.

All replies gratefully received. Many thanks.

You belonged to a pension scheme which was 'contracted out' of the State Additional Pension. In return for you and your employer paying lower NI contributions, the scheme had to provide a minimum level of pension - the 'Guaranteed Minimum Pension'.  This is broadly equal to the COPE (but for technical reasons not necessarily identical - but the differences are minor).

The COPE figure on state pension forecasts causes endless confusion. It is only used to determine the starting level of your state pension for those who are covered by 'transitional' state pension arrangements. In short, ignore it! More info if you really want to know more: https://www.barnett-waddingham.co.uk/comment-insight/blog/what-is-a-gmp/

p00hsticks

As Marcon says, you can now ignore the COPE amount - it was only used once , in April 2016, to calculate your potential 'starting amount' under the new scheme rules, and from the sound of it in your case the higher of the two amounts will have been that under the old rules anyway, so this is what DWP will have used goni forward.

If you do nothing, your State Pension at SPA will be £152.47 (plus whatevever annual increases between now and then).

Assuming you have average life expectancy, it is incredibly good value to make voluntary NI contributions or earn credits to increase that to the maximum £179.60.   A year of Class 3 NI contributions costs around £800 and adds just over £5 to your weekly State Pension for life.If you are registered self employed Class 2 is cheaper and if you look after young granchildren whiel the parents work you can get NI credits.

Speak to the Future Pension Centre for advice on what buying extra years will get you  (they'll need to be post 2016 years).

https://www.gov.uk/future-pension-centre

You then make payments to HMRC to buy the years.

burgman

Thanks Marcon and P00hsticks, Much Appreciated. Will look into that.