COPE

Sarahspangles

Sahara20 said:

Confused as someone said you won't have lost anything yet someone else said you need to know your COPE figure.  If so why?

You haven’t lost anything, you paid some of your earnings into a private pension and less into the old state pension under an arrangement called contracting out. COPE is an estimate of the amount that private pension could be expected to pay out, but the actual amount depends on things like investment performance, and when you take it. So there isn’t a separate pot marked COPE, it’s simply part of your private pension.

You need to know your COPE figure if you’re staring at your New State Pension forecast and asking ‘why won’t I be getting the full New State Pension’? It reminds you that you contracted out for some of your working life (so far) and made alternative provision through a private pension.

Some people (I am one) were contracted out, but when the New State Pension was introduced still had enough working years remaining to build up a full NSP as well.

dunstonh

Today I learnt  that this provider/ scheme does not do COPE. 

No provider does.  There is no such thing in respect of pension providers.

 This scheme  originally offered to amalgamate/ transfer old schemes into one for ease and took care of it.  (This was through my then workplace). 

When protected rights (from contracting out) were abolished) they were reclassified as non-protected rights.   A nice little simplifying bonus for those who contracted out.

Is this normal?   Confused as someone said you won't have lost anything yet someone else said you need to know your COPE figure.  If so why?

Yes its normal.  It is a result of legislation.  You don't need to know your COPE figure in respect of what benefits you are getting elsewhere.

Lets take two identical people where everything is totally the same.    The only difference is that one invested their contracted out rebates in a 60% equities portfolio and the other invested it in a 100% equities portfolio.      The one with 100% equities would have seen their pension grow bigger than the one in 60% equities.   So, despite the two doing the same thing, one is better off than the other.

Both of those examples would have a pot of money. Whereas contracted in people do not have a pot of money.  Nothing to draw lump sums from and nothing to pass down to the next generation.   Unlike those that contracted out.

Should I not have agreed to transfer pensions with COPE?  

Again, no such thing as that.   No pension has COPE.

How does the pension pot size determine the COPE amount if it isn't detailed in any breakdown?

COPE doesn't come into it, as you can draw what you like from your pot in the same way you could invest how you like with the pot.    With your pot, you can take £5000 one year, £3000 the next, £6000 the year after, nothing the year after that or whatever variations you want.   You couldn't do that if you were contracted in.   But it also means you cannot do a straight comparison with the COPE figure.

The key thing is to note that repeated studies over the years have found that the vast majority of people who contracted out are financially better off.

Sorry, I am a pension novice.

Don't worry.  You are asking questions, which is better than most people, and hopefully, over the next few days, you will understand it more.

Sarahspangles

Sahara20 said:

Despite being contacted out (unwittingly)  NI is ok, no gaps. 

Should I not have agreed to transfer pensions with COPE?  

How does the pension pot size determine the COPE amount if it isn't detailed in any breakdown?

Sorry, I am a pension novice.

I think we knew/were told we were contracting out but maybe not in that terminology. It was all about SERPS and SSP at the time. I’m sure many of us didn’t pay much attention, because we were in a new job and there was enough to get our heads round, without worrying about something literally decades away!

There might be reasons it was a bad idea to amalgamate your pensions but you’d have to share what you transferred for people to confirm.

Presumably you’re asking about COPE because you’ve looked at your New State Pension (NSP) forecast. Are you on track? The key line to look at is the one that tells you how many more years you need to contribute.

I’ve qualified for a full NSP with 37 years of contributions, despite a c. £50 COPE for an employer pension. Whereas OH still needs to ‘buy’ a year despite retiring after 44 years continuous employment. 

xylophone

If you were a member of a contracted out pension scheme, you and your employer paid a lower rate of National Insurance

because you were not contributing to  the Additional State Pension (SERPS/S2P) - the ASP was pension over and above Basic

State Pension.

However, in order to be permitted to contract out of SERPS/S2P, the employer had to provide a pension scheme through which

the member would accrue a pension at least as great as he would have accrued had he remained contracted in.


Until 1997,  this was known as the Guaranteed Minimum Pension.  It formed part of the occupational pension the member  was

accruing - it was not in addition to it.


From 6/4/97, the GMP Scheme ended but the   Reference Scheme Test was introduced - in order to remain contracted out, the 

occupational scheme had to provide  benefits at least as great as  prescribed in the  RST.


From 1988 it became possible for individuals to contract out into a personal pension.  The person would receive a rebate of part

of his NI contributions which would go straight into the personal pension.


You appear to be saying that at some point you requested a transfer of  the monies in your contracted out schemes (which would

have included your GMP/RST benefits/ NI rebates) to another pension scheme.


The COPE represents the Additional State Pension you would have received had you not been contracted out. 


Therefore you have lost nothing.

See my previous post for how your starting amount for new state pension was calculated.

Sahara20

Thanks all.   I am on track for full state pension and it says I cannot improve my forecast.

Then below it mentions contacting out and the outcome was me posting this thread with all my questions......