As part of the changes to the State Pension introduced in April 2016 the Department for Work and Pensions (DWP) introduced a term called Contracted-out Pension Equivalent (COPE).
COPE is an estimated amount for those who were previously ‘contracted-out’ of the additional State Pension to see how National Insurance (NI) contributions paid before 6 April 2016 will contribute to their overall pension income. Members of the Firefighters' Pension Scheme (FPS) were ‘contracted out’ of the additional State Pension and paid lower National Insurance contributions.
To take into account that FPS members have paid less into the NI system, the amount of State Pension they’ll get directly from the Government will be lower than that received by people with similar earnings who were not contracted-out.
While those contracted-out may not be entitled to the full amount of new State Pension they will instead receive some of their pension income through a different route. In most cases, their occupational or personal pension scheme(s) should include an amount that is at least equivalent to the additional State Pension they would have got if they hadn’t been contracted-out. This is known as the COPE amount.
The COPE amount is now included on State Pension statements. However, the COPE is an estimated figure and has no direct relation to the benefits paid by individual pension schemes, including the FPS.
Additionally, the COPE is a single figure covering all of an individual’s contracted-out membership, so where a member has had contracted-out membership in more than one pension scheme (or more than one pension fund), it is possible that a person’s FPS pension will appear lower than the COPE.
If a member has divorced or dissolved their civil partnership, and the courts have awarded a share of their pension to their former partner as a result, the actual amount they receive may be lower than the COPE amount shown in their State Pension information.
The COPE amount will be paid as part of your occupational or personal pension scheme(s). It will usually be part of their total pension benefits under the scheme, and not identified separately.
Members should contact DWP’s Pension Service with queries regarding COPE. They can be contacted at https://www.gov.uk/contact-pension-service