What is COPE?

12 March 2021

Collating data on existing plans and investments for a client is usually part of our initial process of helping a client meet their financial planning objectives. It's part of the fact-finding, amongst other points, needed to know your client properly. This information can include investments, pensions, life cover and of course any State Pension accumulated over the years. Some readers will know that we are an advocate of getting this checked regularly and this can be achieved directly online here: https://www.gov.uk/check-state-pension

Within many State Pension statements, there can be a reference (usually on the second page) to COPE? But what is it, as a client recently asked?

COPE stands for Contracted Out Pension Equivalent and is the amount of pension you might get from your workplace or personal pension scheme for the periods you were contracted out, which 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.

More detail can be found here: https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

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Some will be able to reach back to 1988 and Margaret Thatcher MP, the Prime Minister of the time, introducing the ability to 'contract-out' and build your own individual pension pot. This was known at the time as 'contracting-out of SERPS', with SERPs standing for State Earnings Related Pension Scheme.

Millions did contract out at the time, noting that this option ended in 2016. You could only contract out of the additional State Pension (previously called SERPS), and you could only have lower National Insurance contributions entering the state system if you were part of a private pension – such as a workplace or personal pension scheme – that could build up to replace the State Pension from which you were contracting out. This was about the same time that Personal Pension legislation was introduced (July 1988), with the plan that this would reduce the burden on the state scheme in the future.

State Pensions can form an important part of an overall retirement strategy and are valuable. Please do take the opportunity to check the value to you online.

No individual advice is included within this blog.

Keith Churchouse FPFS


CFP Chartered FCSI

Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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