Can I Cash In My COPE Pension

Can I Cash In My COPE Pension?

If you have checked your State Pension forecast online, you may have seen a figure labelled COPE, which stands for Contracted Out Pension Equivalent. This figure often raises questions, especially around whether it can be cashed in like a personal or workplace pension.

This article explains what COPE really means, whether you can access it as a cash lump sum, and what you need to do to receive the benefits linked to your contracted out service.

What is a COPE pension?

COPE is not a separate pension scheme. It is an estimated amount that the Department for Work and Pensions uses to show how much pension income you are likely to receive from a workplace or private pension that replaced part of your State Pension during the years you were contracted out.

From the late 1970s until April 2016, many employers operated pension schemes that were contracted out of the Additional State Pension. In return, both you and your employer paid lower National Insurance contributions, and your workplace pension scheme promised to provide an equivalent level of pension income.

The COPE figure in your State Pension forecast represents an estimate of that replacement income.

Can you cash in your COPE pension?

You cannot cash in a COPE pension directly, because COPE is not a pension in itself. It is a calculated estimate and not a real pot of money held by the government. However, the pension income it refers to does come from your workplace or private pension provider, and that may give you options for withdrawal.

If you were contracted out, your employer or pension scheme will have set aside benefits for you. These benefits are likely held in:

• A defined benefit scheme, such as a final salary pension

• A defined contribution scheme, if you were in a money purchase plan

Depending on the scheme rules and your age, you may be able to:

• Take a lump sum if the value is below a certain threshold

• Transfer the value to a personal pension and withdraw it from age 55 (rising to 57 from April 2028)

• Receive a regular retirement income, starting at the scheme’s normal pension age

So while you cannot cash in a "COPE pension" itself, you can access the underlying pension benefits, provided you meet the access criteria.

When can you access benefits related to COPE?

The pension scheme that holds your contracted out benefits will set the rules. Common features include:

• Defined benefit pensions typically begin paying from age 60 or 65

• Defined contribution pensions may allow access from age 55

• Small pots under £10,000 may be withdrawn as a lump sum if certain conditions are met

You will need to contact the pension provider or scheme administrator that managed your workplace pension during your contracted out years. The government does not pay your COPE benefit directly.

How do you find your COPE-related pension?

If you are unsure which pension scheme holds your contracted out benefits, you can:

1. Check your old payslips or employment documents to find the name of the pension scheme

2. Use the Pension Tracing Service at www.gov.uk/find-pension-contact-details

3. Contact your former employer’s HR or payroll department

4. Speak to a financial adviser for help locating and consolidating old pension pots

Once you find the provider, you can request a statement or forecast of what your contracted out pension will pay and when it becomes available.

Is COPE money guaranteed?

The COPE figure is only an estimate. The actual amount you receive from your workplace pension scheme may be more or less than the COPE figure, depending on:

• The rules of the pension scheme

• How long you were a member

• How the scheme performed if it is defined contribution

• Whether you took early retirement or transferred out

COPE is not a guarantee. It is used to explain why your State Pension may be lower than the full amount, because you were expected to receive the difference from your workplace scheme.

Final thoughts

You cannot cash in a COPE pension directly, because COPE is not a separate pot of money or a standalone pension. It is simply an estimate of the income you are expected to receive from a workplace or personal pension where you were contracted out of the Additional State Pension.

To access these benefits, you need to contact the pension provider that managed your scheme during those years. Depending on your age and the type of scheme, you may be able to withdraw a lump sum, take income through drawdown, or receive regular payments.