Optimal age for contracting back into serps?

salty_seadog

Morning all,
Could someone please explain why there is an optimal age for contracting back into serps? What happens\changes at that age.

I am 35 and have been contracted out scince i was 18.

Also I have read of the option of contracting out will cease in 2012, does this mean everyone gets contracted back in automaticaly?

many thanks....

dunstonh

The rebates change with age. The Govt can also change the rebates so you tend to have found over the years the age you should contract back in has moved around a bit. In simple terms contracting out rebate needs enough time to grow to equal contracted in benefits. When the rebate is larger, the time is less. When its smaller, the time is longer. So, its a balance between size and time and currently its 43 for men and 40 for women.

in 2012, contracting out on personal pensions will end and everyone will be contracted back in for future years. Contracting out on occ schemes will still continue but that means something different with occ schemes.

salty_seadog

Thanks dunstonh,

i get the first part now but still unsure about the 2012 issue, will i be contracted back in early?

I have no pension yet but hope to start a Merchant Navy pension, it is not acctualy run by my employer but they will pay into it. It is an industry wide scheme.

ssd...

dunstonh

will i be contracted back in early?

The mechanics of it are not actually known but effectively the rebates to the pension companies will just stop and you will be contracted back in at DSS level. Your personal pension will continue without any further contributions (unless you personally add to it) and in future you will build an entitlement for the second state pension.

salty_seadog

thanks again.....