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Do you understand your state pension forecast?

Pension pot savings

Following a Which? investigation into state pension forecasts it’s clear to us that¬†the Department for Work and Pensions still has improvements to make.

I’m a fair way off qualifying for the state pension, but I was curious to see an estimate.

I’d say that the information in the paper and online statements I received was broadly useful. However, there were some key omissions.

State pension forecast

First, although they cover your National Insurance (NI) record to some degree, what this means and what you can do to plug any gaps is largely absent.

Secondly, your¬†contracting-out record¬†must be used to work¬†out your state pension¬†and ‘Contracted Out Pension Equivalent’¬†(COPE) estimates.¬†(Before 2012, you could contract-out, or choose not to make contributions to a second, top-up pension, provided by the government.)

COPE is an estimated figure used to give you a rough idea of what you’re likely to get from other pensions, if you’ve opted¬†out of the additional state pension.¬†But the workings aren‚Äôt¬†shared, and there‚Äôs¬†no way of checking¬†the DWP’s (Department for Work and Pensions) sums.

HM Revenue & Customs (HMRC) says that if you want to know whether you were contracted out, you should contact your pension scheme provider or employer. But this could take a great deal of time and effort, particularly if you’ve had several employers and some no longer exist.

Overall, this system¬†isn‚Äôt all that clear and¬†the confusion¬†could lead¬†people to question the¬†accuracy of DWP’s¬†calculations.

We think people need detailed¬†contracting-out¬†information to help them¬†understand their state¬†pension entitlement.The DWP should include¬†this information on both your paper and online statements ‚Äď and soon.

Working out your state pension

In fact, we think there’s still much more that could be done to improve pension forecasts.

In a separate piece of research we carried out earlier this year, we found that¬†over a third of people approaching retirement age find it difficult to keep track of their pension pots. So we were pleased to see the Treasury back¬†our call for a ‚ÄėPensions Dashboard‚Äô¬†to be delivered by the industry by 2019, this will house all the information necessary to help savers make informed decisions about their retirement choices.

If you want to find out what your state pension forecast is there are a number of ways you can do so. HMRC provides an online service, it takes about 10 minutes and you’ll need to confirm your identity and provide your NI number.

Or if you’re over state pension age or reach it in less than 30 days, you can get a paper statement from the Pension Service. And if you’re retirement date is further off then you can contact the Future Pension Centre.

Have you seen your state pension forecast? Did you find your forecast confusing at all?

This investigation originally appeared in the September 2016 edition of Which? Money.


How can I make up my pension deficit? Having just read this question in the October magazine I found the answer from Joanne puzzling. I will receive my state pension in November under the new rules and will also receive less than the full state pension of £155.65 due to contracting out. Can I also make Class 3 voluntary contributions to reduce the deficit? If so how much and for how long? My deficit is £28 per week. I have researched this on the Internet but posts refer to the old pension scheme.

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I used the online forecaster and was told that I’d get ¬£164.32 a week in April 2017. This appears to be more than the full pension and they also say they have made a deduction for contracting out. How can this be? I will have 42 years of contributions by then but I didn’t think that anything over 30 or 35 counted.

I tried to claim my state pension online several months ago but when nothing happened I decided to call DWP a few days ago. It was very straightforward and I will receive less than ¬£120 per week, presumably because I was contracted out. ūüôĀ

Paul Newnham says:
4 June 2017

I am 51 and I have just gone online for a state pension forecast. It say i will receive the full amount of the New State Pension, 159.55, if i pay in for another six years (which i more than likely will).

Later in the forecast it says my COPE (Contracted Out Pension Equivalent) estimate is £40.04.

Do i need to deduct the COPE amount £40.04 from the £159.55 to arrive at the figure i will receive? i.e £119.51.

I think you should check that out with the Department of Work and Pensions, Paul. At the very least that statement is open to misinterpretation and although I think I know what it means I would hesitate to comment without confirmation from the DWP.

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Duncan is right, but what you lose on the swings you might gain on the roundabout if the additional occupational pension provided by your employer matches or exceeds the COPE amount you have been quoted. ‘Contracting Out’ compensated people for paying more into a non-state pension for enhanced benefits as it relieves the state of some costs in retirement. As the article states, it is necessary to look at the whole picture taking your state pension and occupational pension together and it also advises checking your personal position with the DWP and I certainly think you need that clarification as there are various potential complications referred to in the article.

The article also says that formal state pension forecasts from the DWP are currently only available to those within ten years of state pension age, and at 51 you have some years to go before a firm projection will be available to you. Make a note in your forward planner to re-check your position when you are within ten years of your state pension entitlement date.

The Gov. Pensions website has told me of my intended pension amount when I reach retirement age in 6 years time. All well and good. It also tells me of the COPE amount I will get. My question is….As I am receiving my Company pension just now , is the COPE amount already in it , or will it be paid along with my Company pension on my state retiral age ?

If your Company scheme was contracted out, the element of COPE it relates to will normally be included in your Company pension. The contracted out bit of your Company pension may be payable at a later age ( for example your 65 th birthday) but it won’t normally lead to any increase in your Company pension at 65. There are some schemes that do have a step up of some kind at 65, so it is worth checking with them , but don’t get your hopes up.

Kevin says:
25 January 2018

I received my state pension forecast last year. It confirms that I will receive a state pension in 2023 when I reach 66 years of age. The figure it gave, which is reduced significantly as I have many years contracted out, was said to be the figure I will receive in 2023. Is this a forecast as 6 years of inflation will impact greatly on the supplied figures or is this current day prices which themselves will rise in line with inflation?

Mark Stables says:
20 January 2019

Question. Do you have to deduct your estimated COPE amount from your state pension forecast as it is shown on the screen or not?

So in simple terms do I have to deduct the amount of COPE from the forecast weekly pension to get the amount I will actually recived?

Steve says:
26 May 2021

I would ring DWP but Royal London say you do not have to knock it off your forecast:

“What is the ‚ÄėContracted Out Pension
Equivalent’ (COPE)?
As is clear from Box 1, it can be difficult to
understand what ‚Äėcontracting out‚Äô means, and
how and why it affects your state pension. To
try to clarify matters, the DWP has started
including an additional figure on state pension
forecasts. This is the ‚ÄėContracted Out Pension
Equivalent’ or COPE. Note that this figure is
for information only, and you do not need to
perform any additional calculations or deduct
this figure from your state pension forecast ‚Äď the
DWP has already done this for you.
The basic idea of the COPE is to remind you
that although you may not be getting a full
state pension, you are getting an occupational or
private pension and you benefited from a reduced
rate of National Insurance Contributions in
recognition of this. “

We are now six years on from my original comments (2016) re the scandal of the difference between the pension rates for pre and post 2016 starting dates for pensions. Since then the government “equalised” pension dates for women to 65 and has since introduced increasingly later date for all pensions. Results – i have a pre 2016 pension and because of savings ( scrimped and saved) we get no pension top up and the transferred Wife’s marriage allowance is peanuts . My wife was forced out of work before 60 and now has to wait until 67 for a pension which will be crippledd by the change in NI payment requirements . We survive on my OAP and a small private pension which means that because of repeated freezing of the (lower) income tax allowance and Gordon browns attacks the original pensioners tax rates, now gets taxed as well at 20% not 10%. Add on the attacks of the Conservative government on the triple lock , the proposed pension increase for 2022 will be less than half the rate of inflation (7.5%) even before the 54% hike in fuel prices is taken into account and even that increase will be taxed – justice for pensioners? i think not!