State pension forecasts change with people seeing money 'knocked off' pot
State pension forecasts are changing - as an expert has issued a clarification over why. Pensioners have complained the Contracted Out Pension Equivalent (COPE) figure, once a familiar sight on forecasts, had disappeared.
Former Liberal Democrats pensions minister Sir Steve Webb, who is now a partner at LCP (Lane Clark and Peacock) answered a readers query about COPE. They said: "I recently received my state pension statement as I will qualify for the full state pension when I am 66 in November. However, it does not state the 'COPE' - the 'contracted out pension equivalent' - I have built up in previous years when I was contracted out while employed in the civil service.
"My COPE was approximately £50 a week on pension forecast statements but now seems to have disappeared when I go online. I'm beginning to wonder if I have misunderstood COPE and that this figure is purely information only and not a valid payment that I will actually receive in my hand? Can you clarify?"
READ MORE Met Office warns UK will wake up to 'notable' weather shift starting today
Writing on This is Money, Webb explained COPE was a figure that was meant to be a signal to people that "something had been knocked off their state pension" because of past contracting out, but they should be getting a similar figure instead from a workplace pension.
He continued: "The problem was that the COPE figure itself confused people. The figure often led to misunderstandings, particularly for those with 'pot of money' type pensions where investment performance or annuity rates might not have matched the COPE estimate.
"Many pensioners were unsure whether they needed to mentally deduct the COPE figure from their forecast to determine their actual state pension entitlement, adding to the confusion." Webb clarified that people should "always ignore the COPE figure" as it had already been taken into account as part of the calculation.
He said: "COPE was designed to help people understand that they were short of the full pension for a reason, but in the end it caused more confusion than it saved. I, for one, am pleased to see the quiet death of the COPE."