According to Sir Steve Webb, director of policy at Royal London and former pension minister, the “public is clearly confused by the COPE figure”.
He said: “I regularly get asked whether people should add it or subtract it from the state pension forecast figure!
“My view is that it probably creates confusion and should be scrapped.”
Baroness Altmann told FTAdviser that before the COPE was introduced, the DWP didn’t show any information about contracting out at all.
She said: “That was most misleading because people had no idea that they had built up some private pension that was designed to replace the state pension they never paid for.
“Of course the COPE is only an estimate because everyone will have built up different amounts of private pension, depending on the scheme they were in.”
Ms Altmann agrees that this is a very complex area.
She said: “I did not design the system, [I] merely believe it is important to try to explain the situation to people who had no idea about it.”
According to a DWP spokesperson, this question is addressed in one of the factsheets about COPE.
He said: “We have always been clear that the COPE amount on state pension statements is an estimate and people are signposted to further guidance on this and pension freedoms in order to build up an accurate picture of their private pensions savings.”
Last month, the government issued draft legislation on contracted-out bulk transfers without member consent, which will guarantee that savers rights are not lost under the new state pension rules.
With the introduction of the new state pension in 2016 and the abolition of contracting out, it’s no longer possible to transfer members contracted-out benefits without their consent to a scheme that has never been contracted out, which will be changed with the new legislation.
maria.espadinha@ft.com
