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Contracting Out, COPE and the State Pension

 

If you need more information about your State Pension you should visit https://www.gov.uk/browse/working/state-pension for details on how to calculate your state pension and how to claim it.  The Government is reviewing the state pension age and the Department for Work and Pensions has published an article on the key points, which can be viewed here

A leaflet has been produced by the Local Government Association for LGPS members who are thinking about topping up their State Pension (PDF 59KB) 

 

Contracted-Out Pension Equivalent (COPE)

If you have received a State Pension forecast you may find that it includes an amount described as the Contracted-out Pension Equivalent (COPE).  This term has been introduced following the changes to the State Pension which came into effect from April 2016. 

Up until April 2016, the State Pension was made up of two parts, a basic state pension and an additional state pension.  A COPE amount appears on your State Pension forecast if you ‘contracted-out’ of the additional state pension.

Many people may have been contracted out of the additional state pension if they paid into a workplace pension scheme (for example – defined benefit, final salary or career-average salary schemes) or personal pension.

If you were contracted out of the additional state pension you would have paid a lower rate of National Insurance contributions because you were contributing to a workplace or personal pension instead and this means that your new state pension amount may be lower than that of someone who was not contracted out.

The workplace or personal pension that you paid into instead of the additional state pension should include an amount that, in most cases, will be the equivalent of the additional state pension you would have got if you had not been contracted out.

The COPE amount on your State Pension Forecast is an estimate of the amount that your workplace or personal pension scheme will pay you as a result of contracting out.  It is only an estimate because the amount that a workplace or personal pension scheme will pay you depends on the particular regulations of that scheme.  The estimate has been made based on the National Insurance records that the Department of Work and Pensions holds for you. 

If you were a member of the Local Government Pension Scheme (LGPS) before April 2016 you will have been contracted-out of the additional state pension.  Please note that because any COPE figure is estimated, it will not necessarily be what you will receive from the LGPS so you should always ask your LGPS fund for an estimate if you want to know the value of your LGPS benefits.  Please note that you will not receive the COPE amount in addition to LGPS benefits.  The COPE amount has already been taken into account when calculating your LGPS benefits.

If you have paid into 2 or more contracted out schemes, the COPE amount is based on all your schemes and all the years when you were contracted out.

Please visit the gov.uk website for more information on COPE: Department for Work and Pensions - COPE

If you have any questions regarding your COPE amount you should contact the Department for Work and Pensions at https://www.gov.uk/contact-pension-service