NEVER THOUGHT I'D REACH PENSION AGE - I'm confused and scared !

Fountaine

My retirement date is later this year. I have worked most of my life, paying a full stamp apart from two shortish periods of signing on due to redundancy and illness following cancer.

I feel really dumb, but have recently thought of something which is really scaring me. Way back in the late 80s my then boss talked staff into a personal pension. We understood he would contribute into it, but he never did. I opted out of SERPs as that was the advice at the time. I was apparently just at the age (by about 6 months) that it made sense to do so. I paid in for a period of time then personal circumstances changed and I just let it sit there.

I received annual statements, which I will admit I never really understood. In recent years I enquired about taking the cash free lump sum of about £6k and falling … !! which would have only left me with a pension of around £1k per year, so we’re not talking Bank Executive’s Pensions here !

I always thought I would get my state pension (I had a forecast done a few years ago and it was at the higher rate for a single person) plus whatever pittance the private pension was worth at the time. Is that correct or am I missing something vital here.

I thought the funds in the pension were increasing only due to interest and investment. A few months ago I became aware that payments are still going in (presumably NI) so will this mean I don’t get ANY state pension. Is it an either or situation. The dangers of not understanding OPT OUT !!

I was always worried that the small pension which I have wished for 20+ years I had never signed up to would complicate means tested benefits such as council tax and income support. I have no savings behind me, have been on incapacity for the last 12 months and am resigned now to being so until my retirement date. So to summarise, will I get my state pension plus something from the private one, or just the private one ? Whatever it is, life is not going to be a struggle. I feel very stupid. Be gentle with me

EdInvestor

Yes, you will get your state pension ( update your forecast by applying here: https://www.thepensionservice.gov.uk). What you have opted out of is the state 2nd pension (S2P, formerly SERPS), amazing how many people don't realise there are 2 state pensions.

It sounds as though you will also be eligible for pension credit and other benefits, check here:

https://www.entitledto.com

Your fund may buy a bigger annuity than 1k a year.Try fiddling around with the pension annuity tables here to get an idea:

https://www.fsa.gov.uk/tables

Nigella_2

You should get a basic old age pension based on your NI.

As you contracted out of Serps by means of private/employer pension then that should get you some sort of pension

Any benefit application (Housing/Ctax/Pension Credit) will most likely take into all your incomes into account

WillowCat

Opting out of serps doesn't mean that you won't get the basic state pension £95 ish a week assuming you do have full contributions.

It just means that you won't have accrued serps for the period you were opted out. Why not get a forecast - you may have serps for other employment periods, or graduated contribution etc which was available prior to serps coming in.

Fountaine

I feel better now. I felt physically sick and have been worried and upset for weeks. Should have come on her sooner ! - a BIG thanks to one and all xxx

Fountaine

for her read here - and I used to proof read for my sins !

seven-day-weekend

Gat a State Pension Forecast here:

http://www.thepensionservice.gov.uk/state-pension/forecast/home.asp

missile

You may well be better of than you think. Think positive, you lived long enough to enjoy your retirement.

You are not obliged to take the pension offered by the company who is investing your pot. Shop around and you will almost certainly find a better deal. See here for a no nonsense explanation of your options in plain english > http://www.rbaifa.co.uk/pension_transfers.htm?gclid=CK_ElbjxxZkCFYFA3godRW7ZuA

Do not beat yourself up. Back in the 80s opting out of SERPs seemed like the right thing to do. IFAs were advising us (subject to the usual weasel word caveat) it was a sure fire way to increase your pension and many of us did it.

dunstonh

The SIB did a review of contracting out of SERPS in 1996 and found everyone who had contracted out before then was better off. Labour reduced the rebates after they got in power (stealth tax) and it made it harder for contracting out to beat contracting in (another reason why the age to contract back in fell.

Even now, its about 50/50 to being better/worse off and the differences between those better/worse off is very small. Nowadays its considered a cost neutral option but many still do it due to the advantages outweighing the negatives.

Francesanne

Can understand how you felt and hope you're feeling much happier & less stressed now. Have a long and happy retirement. I wasted 14 years by not joining my company pension scheme and that was due to ignorance and youth. Thankfully, I finally saw the light. It's a minefield of redtape and very scary to many of us.

kindofagilr

Opting out of SERPS is the best thing to do to be honest.

You get more money a week if you have a private pension and some Additional Pension than if you just had Additional Pension (SERPS)