I think I opted out of SERPS. Is that bad..?

Max_Headroom_3

I was watching something on the news about pensions recently, and it reminded me of something that happened many years ago.

Back around 1990 (I think) there was some big pension overhaul to do with (if I recall correctly, and I may have this all wrong) opting out of SERPS?

Anyway, at the time I was advised to do this, and did so. And that was it really. I think I opened a pension with the Prudential at the time, but never made any contributions.

I always intended to start my own pension scheme or at least start contributing to the Prudential scheme I think I'm in, but for one (financial disaster) reason after another I never did.

So here I sit, middle aged, having (I think) opted out of SERPS and (I think) with some sort of Prudential scheme running that I've never paid a penny into.

Wondering if I ought to be worried about it, or whether I've done something daft like opted out of any right to any sort of government pension when I'm 65 (if such a thing even exists then).

Any thoughts...?

molerat

Firstly get a pension forecast, that will show if you are opted out.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/StatePension/index.htm

EdInvestor

You can call the Pru and get them to check out the pension and send you an updated statement to your current address. If your memory is correct it should have been receiving annual NI rebates every year.You are opted out of the state 2nd pension, which is paid on top of the basic state pension (which you will still receive.)

It is advisable to opt back into S2P from the age of around 40 onwards and this will happen automatically in 2012.But your old pension will remain in addition and you should monitor it to make sure it is performing.

seven-day-weekend

What you opted out of (if you did) was SERPS, now known as S2P, the second State Pension - that is, the earnings-related part of State Pension.

If you have paid Class One National Inurance Contributions for thirty years by the time you retire, you will get the basic State Pension (£95 a week at today's rates). If you opted out you won't get any extra pension added. The idea of opting out is that extra money you would have got if you hadn't opted out is replaced or exceeded by a private or Occupational pension.

I agree with molerat, get a Pension Forecast.

Notlob

As your middle aged you would need to consider whether it is best for you to opt back into S2P, as the potential investment returns over the reduced period prior to retirement age could be less than that gained by opting back into S2P for the remainder of your working life.

Notlob

Max_Headroom_3

Aha, now, I have a "pension file", into which I carefully lob all correspondence from the Pru, ahem, unread.

Just dug out the latest statement which is May 2008. It says:

Plan Value on 14th April 2008 £28,878-38

Payments into your plan 0.00

Future "Protected rights pension" as at August 2033 (estimated yearly pension you might get) £2,570-00

Is that good, or bad? Is that £2,570 on top of my state pension?

Max_Headroom_3

seven-day-weekend wrote: »

If you have paid Class One National Inurance Contributions for thirty years by the time you retire, you will get the basic State Pension (£95 a week at today's rates).

I've been employed PAYE for 24 years, right up until last month in fact when I was made redundant. I've signed on (JSA) so I believe that keeps my NI payments up to date?

seven-day-weekend

Max_Headroom wrote: »

I've been employed PAYE for 24 years, right up until last month in fact when I was made redundant. I've signed on (JSA) so I believe that keeps my NI payments up to date?[/QUOTE]

Yes it does.

If you ever find yourself out of work and NOT claiming Benefits then you can pay Class Three Voluntary Contributions towards your pension.