Serps?

mamazaac

Can anyone tell me how I find out whether or not I am contracted into SERPS please?

dunstonh

Ask your pension provider

deemy2004

mamazaac wrote:

Can anyone tell me how I find out whether or not I am contracted into SERPS please?

If you don't have a private pension and the NI table on your P60 says Table A then your likely contracted in.

If you do have a private pension then you 'MAY' have elected to contract out of serps when you set it up in which case you need give them a buzz and ask them

Cook_County

However SERPS went a couple of years back, it is now called the State Second Pension (S2P) so ask your pension provider about this rather than SERPS if you want to get the jargon quite correct!

kiwichick

What is best then, SERPS or not? I got a form in the post today tofill in for my pension provider.

dunstonh

kiwichick wrote:

What is best then, SERPS or not? I got a form in the post today tofill in for my pension provider.

I assume you mean contracting in or out.

Take a look at the thread in the pensions section. Do note that there is not a "yes" or "no" answer to contracting in/out. It depends on a number of circumstances.

You shouldnt expect to make any more money contracting out. However, the ability to take it before state retirement age, whatever that ends up being and having 25% tax free lump sum available and giving you a lower tax liability and some increased death benefits can offset the small gains there may be by contracting in. If they are important to you that is.

One of the most important things about contracting out is where its invested and what charges you are paying. In a poor investment fund or in a plan with higher charges than modern plans then you could be losing thousands of pounds a year of retirement income.

So, everyone who is contracted out should ensure that it is still right for them.

EdInvestor

mamazaac wrote:

Can anyone tell me how I find out whether or not I am contracted into SERPS please?

Call up the
Pensions Service who are the people who administer your state pension and ask them.If you are contracted out, they should be able to tell you where the money is being sent to.

While you at it, why don't you request a state pension forecast so you'll have some idea how much you'll get when you retire? There are two pensions, so it's different for everyone - the basic 82 quid a week is only part of the story.

mrbnewc

You'd be better off calling the Inland Revenue and speak to someone who deals with Class 1 contributions. They will be able to tell from your category of National Insurance whether you're contracted in or out.

Ring them on 0191 2135000.

MrB

mamazaac

dunstonh wrote:

I assume you mean contracting in or out.

Take a look at the thread in the pensions section. Do note that there is not a "yes" or "no" answer to contracting in/out. It depends on a number of circumstances.

You shouldnt expect to make any more money contracting out. However, the ability to take it before state retirement age, whatever that ends up being and having 25% tax free lump sum available and giving you a lower tax liability and some increased death benefits can offset the small gains there may be by contracting in. If they are important to you that is.

One of the most important things about contracting out is where its invested and what charges you are paying. In a poor investment fund or in a plan with higher charges than modern plans then you could be losing thousands of pounds a year of retirement income.

So, everyone who is contracted out should ensure that it is still right for them.

Yes, I did seem to remember such a thread and have been looking unsucessfully for it on this site. Can you by any chance tell me which week's newsletter it was on? Thanks for your help.

Cook_County

The majority of insurance companies are recommending that the vast majority of people contract back in. They are not doing this for their own good, they would prefer to have the money to manage. However the contracting out experiment has failed. Insurance companies cannnot match the index-linked goverment promise that S2P offers. Sadly neither can the government. The difference is that insurance companies need actual investments whereas the govenment only has to make promises and leave these up to our children and grandchildren to fund...

It would rare to find an IFA actively selling contracting out today.

Another way of looking at this is to note that there is no other country that followed the UKs model of contracting out part of the State pension. It just does not make mathematical sense for most people except in an era when interest rates and annuities were much higher and average mortality ages were lower...

dunstonh

The majority of insurance companies are recommending that the vast majority of people contract back in.

We have to be careful here. Tied salesforce sold insurance companies are recommending contracting back in as its the easy option. Mainly as most the investors through them are in low potential with profits funds.

They are not doing this for their own good,

Yes they are. Its called TCF and with no advice channels, they have taken the safe option to avoid potential issues with the FSA later.

It would rare to find an IFA actively selling contracting out today.

Most IFAs I know have done some this year. Its certainly not as common but you can still do it with the right income levels, risk profile and goals. The ones I have done have done it for the tax free lump sum, early retirement, high risk investment strategy and commission free investing.

Another way of looking at this is to note that there is no other country that followed the UKs model of contracting out part of the State pension. It just does not make mathematical sense for most people except in an era when interest rates and annuities were much higher and average mortality ages were lower...

Its certainly a lot more hassle than its worth.