Contracted Out

davidjohn_2

Hi I have contracted out in the 80s and am 56,just asking for a little advise as to when I can contract back in,yes i realise anytime but can it be left to the last moment so I can judge at the time what to do.Thanks.

dunstonh

You should contract back in by age 45. So, a bit late for you!

Kylie

What happens to my UK pension if I move to another country and retire overseas?

(I'm contracted out)

davidjohn_2

Hi when you say A bit late what does that mean have i lost out loads on something?

dunstonh

davidjohn wrote: »

Hi when you say A bit late what does that mean have i lost out loads on something?

Basically, you have almost certainly been worse off by being contracted out this long. Back the 80s, the rebates were set with most pivotal ages being in the 50s. However, the rebates get amended each year and Labour reduced them in 97 (stealth tax) and the ages for where the time left and the size of the rebate made it right to contract back in came down. Currently its 40 for Women and 45 for men (although a few years either side can often be quoted depending on the type of pension).

In your case, the rebates probably from around age 49 or 50 have just been too small for the time left for them to stand a chance of giving you a better pension than had you contracted back in earlier.

You may have been able to offset this a little if your pension was a low cost and/or was invested in a professional way. Although given the year you took it out, neither of those things are likely. Although its not too late to get them looked at now.

You should contract back in ASAP.

EdInvestor

davidjohn wrote: »

Hi when you say A bit late what does that mean have i lost out loads on something?

Not necessarily.Depends on what you are contracted out into. If it is a personal pension or company money purchase pension you will be automatically contracted back in in 2012 ,when contracting out to these schemes will be abolished. May as well leave things as they are until then? There are a couple of other advanatges to contraxcting out :you can access the money at age 55, not state pension age, and you can take 25% of it in tax free cash.

So may be worth staying pout,unless the pension you are in is a woeful performer.Do you know how it has done?

It may be more useful to focus attention on its performance.

jamesd

Kylie wrote: »

What happens to my UK pension if I move to another country and retire overseas?

(I'm contracted out)

You can transfer to a QROPS if one is available in the place you're moving to.