What Is COPE Pensions

What Is COPE Pensions?

If you have ever checked your State Pension forecast online, you may have come across a figure labelled COPE, short for Contracted Out Pension Equivalent. Many people are confused by this term and wonder whether COPE is a separate pension, when it is paid, and how it affects their overall retirement income.

This article explains what COPE means, how it is calculated, and what role it plays in your retirement planning.

What does COPE stand for?

COPE stands for Contracted Out Pension Equivalent. It represents an estimate of how much additional pension income you are likely to receive from a workplace or private pension due to having been contracted out of the Additional State Pension during part of your working life.

What does it mean to be contracted out?

Between the late 1970s and April 2016, many people were members of workplace pension schemes that were contracted out of the Additional State Pension, also known as SERPS or the State Second Pension.

When you were contracted out:

• You and your employer paid lower National Insurance contributions

• In return, you gave up the right to earn Additional State Pension for that period

• Your employer's pension scheme promised to provide a replacement pension income

Contracting out ended for all schemes on 6 April 2016 with the introduction of the new State Pension.

What is the purpose of the COPE figure?

The COPE figure helps explain why your new State Pension forecast might be lower than the full amount. It is the government’s way of showing you the estimated value of the pension income that your workplace scheme is expected to provide instead.

In other words, the COPE figure is not money paid by the government. It is simply an estimate of the pension you should receive from a scheme that replaced the Additional State Pension during the years you were contracted out.

Is COPE a separate pension?

No, COPE is not a separate pension and it is not paid by the Department for Work and Pensions. It is a figure used for information only.

The pension you receive as a result of contracting out is part of your occupational or personal pension scheme. You may already be receiving this income, or you may be entitled to it later, depending on your age and scheme rules.

How is COPE calculated?

COPE is calculated by looking at the number of years you were contracted out and estimating how much Additional State Pension you gave up during that time. The government then estimates what your employer’s scheme would need to provide to replace that amount.

It is important to remember:

• COPE is only an estimate, not a guaranteed amount

• Your actual pension from your employer may be higher or lower

• COPE does not reduce your State Pension directly, but helps explain the amount you are forecast to receive

Does COPE reduce my State Pension?

Not exactly. The new State Pension is calculated using a combination of your National Insurance record and any time you were contracted out. If you were contracted out for many years, your starting amount under the new State Pension system may be lower than the full rate.

For the 2024 to 2025 tax year, the full new State Pension is £221.20 per week. If you have a COPE figure, it means you may receive less from the State, but more from your workplace pension to make up for it.

Where can I find my COPE figure?

You can check your COPE amount by viewing your State Pension forecast online:

• Visit www.gov.uk/check-state-pension

• Sign in using your Government Gateway account

• Your forecast will show your expected State Pension and any COPE figure

If you see a COPE figure, it will usually be explained with a note that this is the amount expected from your private or workplace pension.

How do I access the pension linked to COPE?

You will not receive a payment called "COPE" directly. Instead, you will receive pension income from your workplace or personal pension scheme.

To find out how and when this will be paid:

• Contact your pension scheme provider

• Check old payslips or letters from past employers to trace old pensions

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

Final thoughts

COPE is not a pension in itself. It is a figure used by the government to show how much income you are likely to receive from a workplace or private pension due to being contracted out in the past.

Although it does not directly reduce your State Pension, it helps explain why your forecast may be lower than the full amount. Understanding COPE can help you plan your retirement income more effectively and ensure you are not missing out on any workplace pensions you are entitled to.